Health Care Fraud under the False Claims Act

Although the Federal Government takes steps to discover health care fraud on its own, whistleblowers play an important role in bringing fraud to the attention of the Government.  The False Claims Act allows private individuals, known as relators in the legal system or whistleblowers in the news, to bring a qui tam lawsuit on behalf of the federal government to recover money.  The lawsuit is filed under seal and the Justice Department will investigate the claims made in the complaint.  Whistleblowers are rewarded with a percentage of the money recovered if the lawsuit is successful.  They are also provided protections against retaliation by Section 3730(h) of the False Claims Act.

To report fraud in the Health Care Industry, call 1-800-590-4116 to speak to a McEldrew Young whistleblower attorney.

Fraud by Medical Providers: Hospitals, Medical Groups and Physicians

Upcoding and Unbundling
Health care service claims are submitted for reimbursement according to the Healthcare Common Procedure Coding System based on the American Medical Association’s Current Procedure Terminology. The health care provider must accurately code services rendered. They can not submit a code to maximize reimbursement through upcoding or unbundling. Upcoding involves submitting a claim for services when the services actually provided do not warrant the code. Unbundling involves the intentional billing of separate procedures when it is normally billed for a single charge.

Red-lining
Hospitals must provide medical services to all patients even though they could increase their profitability by only admitting the healthiest patients. Medicare and Medicaid reimburse hospitals a fixed fee for patient stays based on the reason for admission. If a patient is sicker than average, the hospital still must admit them even though it will not be entitled to additional money for the expense of the patient. They may not steer them to other facilities.

Reimbursement for Services Not Delivered or Not Medically Necessary
The government reimburses medical providers for services performed. Providers may not file claims for treatment that are not actually provided or not medically necessary. They also may not double bill for services. Section 6402 of the Affordable Care Act further requires that providers who discover overpayments return them within 60 days or they are subject to liability under the False Claims Acts.

Improper Physician Referrals & Kickbacks
Physician referrals are governed by the Stark Law and the Federal Anti-Kickback Statute. The Stark Law is an amendment to the Social Security Act that prohibits self-referrals. Physicians may not refer patients to other service providers where they or an immediate family member have a financial interest. The provider of services may not bill for the services provided as a result of the improper referral. The Federal Anti-Kickback Statute prohibits payments for referrals for services covered by Medicare or Medicaid when the payment does not fall within a safe harbor. Violations of either law can create liability under the False Claims Act.

Learn more about the Anti-Kickback Statute and Stark Law.

Fraud by Pharmaceutical Companies

Off-label marketing
The FDA must declare that a drug is safe and effective for a particular use before it is used by customers. Once a drug has been approved by the FDA, drug manufacturers may only market the drug to physicians for the particular use approved. Physicians, however, may prescribe drugs that are medically necessary regardless of whether the drug is approved for that use by the FDA. When a pharmaceutical company markets drugs for off-label uses, it causes the Government to pay for drugs that it would not otherwise have to pay.

Pricing
The FDA must declare that a drug is safe and effective for a particular use before it is used by customers. Once a drug has been approved by the FDA, drug manufacturers may only market the drug to physicians for the particular use approved. Physicians, however, may prescribe drugs that are medically necessary regardless of whether the drug is approved for that use by the FDA. When a pharmaceutical company markets drugs for off-label uses, it causes the Government to pay for drugs that it would not otherwise have to pay.

Illegal Kickbacks
Kickbacks often take the form of speaker payments or “educational“ trips created to disguise the true purpose of their payment: to increase prescriptions of a drug written by the physician or their staff.

Adulterated Drugs
Drug manufacturers are required to produce pharmaceuticals according to the specifications provided to the FDA. When the drugs are not manufactured correctly, the U.S. Government is not getting the medicine it thinks it is buying.

Fraud in Other Areas of Health Care

Home Health Care Nursing
Home health agencies have been charged with numerous types of Medicare Fraud, from illegal kickbacks to performing unnecessary services.

Pharmacies
Pharmacies have been reported for inappropriate billing, drug switching and improper customer inducements.

PBMs
Pharmacy Benefit Managers have been accused of illegal kickbacks through improper rebates and fraud in their mail order pharmacies.

Clinical Labs
Medical laboratories have faced numerous charges by whistleblowers including improper coding and referral kickbacks

Durable Medical Equipment
DME fraud happens when a physician inappropriately uses products in patients while a partial owner of the company.

Ambulances
Ambulance companies are reimbursed by Medicare for non-emergency transportation when medically necessary. Ambulance operators commit fraud when they forgo less expensive alternatives without justification.

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