On September 23, 2014, the DePaul Health Law Institute welcomed attorneys Gabriel L. Imperato, Michael Granston, and John T. Boese to discuss certain federal healthcare statutes aimed at preventing fraud and abuse in federal healthcare programs. Imperato provided a generalized overview of the Anti-Kickback Statute (“AKS”), Stark Law (“Stark”), and the False Claims Act (“FCA”). Following Imperato, Granston and Boese focused on the complexities and interworkings of the FCA.
Imperato, Managing Partner of Broad and Cassel’s Fort Lauderdale office and Co-Chair of the firm’s White Collar/Health Care Criminal and Civil Fraud practice, began his lecture by contextualizing the federal healthcare fraud and abuse statutes. AKS, Stark, and the FCA were all created to make it easier to prosecute healthcare fraud, which can cost the federal government billions of dollars each year. AKS and Stark address certain prohibited payments and referrals between parties involved in Federal healthcare programs. AKS is a criminal statute that prohibits the exchange of anything of value, in an effort to induce the referrals of federal health care business. [i] The AKS has a knowledge requirement, [ii] and also provides around twenty-four safe harbor exceptions. [iii]
Stark was passed to fill in the gaps of AKS. Stark effectively prohibits a physician from referring Medicare and Medicaid patients for designated health services to an entity in which the physician (or immediate family member) has a financial relationship. [iv] Like AKS, Stark has many exceptions, [v] but differs greatly in the knowledge requirement. Stark is a strict liability offense. [vi] Imperato commented that many believe Stark to be overly complicated and suggested that it be repealed.
The False Claims Act, in Imperato’s view, is what “drives fraud and abuse enforcement agenda, and defines what fraud is.” The FCA prohibits persons from making fraudulent claims for government funds. [vii] The Office of the Inspector General (“OIG”) of the Department of Health and Human Services (“HHS”) prosecutes civil claims under the FCA, and works with the Department of Justice (“DOJ”) in the investigation of criminal FCA claims. OIG and HHS have a wide range of administrative sanctioning authority at their disposal in enforcing compliance. [viii] For example, OIG has discretionary authority to exclude individuals or businesses from participating in federal healthcare programs, namely Medicare and Medicaid, which often makes up a majority of a physician’s or hospital’s business. [ix] OIG may also suspend federal reimbursement payments and impose civil monetary penalties. [x] In some instances, OIG will settle claims against companies conditioned on their acquiescence to a Corporate Integrity Agreement, which obligates them to specific terms aimed at ensuring future compliance. [xi]
After Mr. Imperato’s overview on the federal fraud statutes, Granston and Boese gave a more in-depth discussion on the intricacies of the FCA. Due to the adversarial work done by Granston and Boese on the FCA, the audience was provided with a unique perspective. Granston, the Director of the Civil Fraud Section of the DOJ, was able to explain some of the difficulties in prosecuting FCA claims; while Boese’s experience as a defense attorney provided insight into some of the hardships defendant’s may suffer under the FCA. Boese is a member of the Litigation Department at Fried, Frank, Harris, Shriver, & Jacobson, LLP in Washington, D.C.
Granston and Boese conceptualized the depth of the FCA by explaining that their normal lecture, focusing solely on the FCA, spans over eight hours, and that this one and a half hour lecture would be far from comprehensive. They started by highlighting the recent changes to the FCA made under the Fraud Enforcement and Recovery Act in 2009, [xii] and some of the amendments made under the Patient Protection and Affordable Care Act in 2010. [xiii] They also noted FCA’s wide applicability and that the law is generally the product of the particular facts and circumstances of previously adjudicated cases.
Although the FCA prohibits seven different fraudulent schemes, the lecture only focused on three types, and two were lumped together for brevity and practicality. The first type, an affirmative false claim, has four main elements: 1) a claim made to the federal government for funds or property, 2) that is false 3) and material 4) and known. [xiv] The second type, a reverse false claim, occurs when an individual or business fails to repay money rightfully owed to the government. [xv] The FCA wields a sharp stick in its ability to impose treble damages, which can be as high as three times the amount of the loss sustained by the government, plus the penalties imposed per each violation, and other damages incurred through litigation. [xvi] These enormous damages often coax larger businesses to settle claims for millions of dollars to avoid litigation.
The Qui Tam provisions are a major aspect of the FCA. The FCA Qui Tam provisions allow whistleblowers who inform the government of FCA violations, or “relators”, to bring legal action under the FCA on behalf of the United States. [xvii] If the government considers the claim’s merits to be particularly strong, it will intervene and take over the investigation and litigation of the claim. If the government succeeds on the claim, the relator is entitled to receive up to 30% of the damages collected. [xviii] Because of the high amount of fines imposed on FCA violations, the potential award to relators provides a huge incentive for whistleblowers to bring information to the government. The speakers, however, noted it may incentivize potential relators into bringing less than adequate claims. This may be one reason why the government only chooses to take around one out of every five claims brought by whistleblowers. [xix]
Overall, the lecture provided significant insight into the litigation of fraud and abuse in the health care field. The Health Law Institute thanks the speakers for joining us and adding to the health law conversation at DePaul University College of Law!
[i] 42 U.S.C. § 1320a-7b.
[iii] OIG Safe Harbor Regulations, U.S. Department of Health & Human Services, https://oig.hhs.gov/compliance/safe-harbor-regulations/.
[iv] 42 U.S.C. § 1395nn(a).
[vii] 31 U.S.C. § 3729(a).
[viii] 42 U.S.C. § 1320a-7-a-7b
[xi] OIG Corporate Integrity Agreements, U.S. Department of Health & Human Services, https://oig.hhs.gov/compliance/corporate-integrity-agreements/.
[xii] Fraud Enforcement and Recovery Act of 2009, Pub. L. No. 111–21 (2009) (amending 31 U.S.C. §§ 3729–32).
[xiii] Patient Protection and Affordable Care Act, Pub. L. No. 111–148, 124 Stat. 119 (2010) (amending 31 U.S.C. § 3730(e)(4)).
[xiv] 31 U.S.C. § 3729(a).
[xv] Id. at § 3729(a)(1)(G).
[xviii] Id. at § 3730(d).