False Claim Act

At Hospitals, Lessons in Detection of Fraud | NYT | 12.24.06

WASHINGTON, Dec. 23 — Most of the nation’s hospitals and nursing homes will have to teach their employees how to ferret out fraud and report it to the government under a federal law that takes effect next month.

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Starting Jan. 1, companies that do at least $5 million a year in Medicaid business must educate all employees and officers on how to detect fraud, waste and abuse. Moreover, health care providers must tell employees that if they report fraud, they will be protected against retaliation and may be entitled to a share of money recovered by the government.

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The new requirement will also apply to many pharmacies, health maintenance organizations, home care agencies, suppliers of medical equipment, physician groups and drug manufacturers.

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Frank E. Sheeder III, a health care lawyer with the firm Jones Day in Dallas, said the new requirement, just a few paragraphs in a lengthy law, had huge implications.

“Health care providers are putting all their Medicaid money at risk if they do not comply,” Mr. Sheeder said. “Compliance is a prerequisite to receiving Medicaid reimbursement.”

The 1863 False Claims Act comes to healthcare big-time in 2007. I see more mandatory continuing education coming…

31 USC § 3729

a. Liability for Certain Acts.— Any person who—

1. knowingly presents, or causes to be presented, to an officer or employee of the United States Government or a member of the Armed Forces of the United States a false or fraudulent claim for payment or approval;
2. knowingly makes, uses, or causes to be made or used, a false record or statement to get a false or fraudulent claim paid or approved by the Government;
3. conspires to defraud the Government by getting a false or fraudulent claim allowed or paid;
4. has possession, custody, or control of property or money used, or to be used, by the Government and, intending to defraud the Government or willfully to conceal the property, delivers, or causes to be delivered, less property than the amount for which the person receives a certificate or receipt;
5. authorized to make or deliver a document certifying receipt of property used, or to be used, by the Government and, intending to defraud the Government, makes or delivers the receipt without completely knowing that the information on the receipt is true;
6. knowingly buys, or receives as a pledge of an obligation or debt, public property from an officer or employee of the Government, or a member of the Armed Forces, who lawfully may not sell or pledge the property; or
7. knowingly makes, uses, or causes to be made or used, a false record or statement to conceal, avoid, or decrease an obligation to pay or transmit money or property to the Government, is liable to the United States Government for a civil penalty of not less than $5,000 and not more than $10,000, plus 3 times the amount of damages which the Government sustains because of the act of that person, except that if the court finds that—
   1. the person committing the violation of this subsection furnished officials of the United States responsible for investigating false claims violations with all information known to such person about the violation within 30 days after the date on which the defendant first obtained the information;
   2. such person fully cooperated with any Government investigation of such violation; and
   3. at the time such person furnished the United States with the information about the violation, no criminal prosecution, civil action, or administrative action had commenced under this title with respect to such violation, and the person did not have actual knowledge of the existence of an investigation into such violation;

   the court may assess not less than 2 times the amount of damages which the Government sustains because of the act of the person. A person violating this subsection shall also be liable to the United States Government for the costs of a civil action brought to recover any such penalty or damages.

b. Knowing and Knowingly Defined.— For purposes of this section, the terms “knowing” and “knowingly” mean that a person, with respect to information

1. has actual knowledge of the information;
2. acts in deliberate ignorance of the truth or falsity of the information; or
3. acts in reckless disregard of the truth or falsity of the information,

and no proof of specific intent to defraud is required.