In February of 2006, Congress passed and the President signed, the Deficit Reduction Act of 2005 ("DRA"). All entities that annually receive at least $5 million in Medicaid payments are required to implement a compliance program as a "condition of receiving payment". Any applicable facility that does not comply could potentially be liable for submitting false claims under the False Claims Act ("FCA"), a federal law - New Jersey has not yet enacted a false claims act.
The DRA specifically requires that affected employers must provide information in written policies, employee handbooks and employee training that covers:
· The federal False Claims Act
· Any applicable state False Claims Act
· The right of employees for whistle-blower protections
· The employer's policies and procedures for detecting and preventing fraud, waste and abuse
While many healthcare providers in New Jersey do not receive the requisite Medicaid payments, providers should recognize that the DRA's requirements are also the basic components of a Corporate Compliance Program. Adherence to the Act's requirements is advantageous to all healthcare providers in their efforts to limit liability.
Legal Requirements
Let's discuss each of the requirements in more detail:
Federal False Claims Act: This is the federal statute that attempts to protect the government from fraud involving any federally funded contract or program, including Medicare and Medicaid programs. Originally known as the "Lincoln Law", this law was passed by Congress during the Civil War to help counter fraudulent activities involving military procurement. The key component of the law is the imposition of liability for any person who knowingly presents or causes to be presented a false or fraudulent claim to the U.S. government for payment.
"Knowingly" means that a person, with respect to information:
· Has actual knowledge of falsity of information in the claim;
· Acts in deliberate ignorance of the truth or falsity of the information in a claim; or
· Acts in reckless disregard of the truth or falsity of the information in a claim
Examples of submission of fraudulent claims to the federal government include but are not limited to:
· Knowingly making false statements
· Falsifying records (e.g.; certificates of medical necessity; falsifying treatment plans or medical records to maximize payments)
· Double-billing for items or services
· Submitting bills for services never performed or items never furnished
· Otherwise causing a false claim to be submitted
· Billing separately for services that should be a single service (i.e.; unbundling)
· Failing to report overpayments or credit balances
· Unlawfully giving health care providers, such as physicians, inducements in exchange for referrals for service (also known as "kickbacks")
For purposes of our industry, a false claim must involve submission of a healthcare claim for reimbursement. The potential liability for such a submission for health care providers and suppliers who violate the False Claims Act can range from civil monetary penalties of from $5,500 to $11,000 for each false claim submitted PLUS up to three times the amount of damages sustained by the U. S. Government (i.e.; treble damages) PLUS if convicted, possible exclusion from participation in federal health care programs.
Whistleblower Provisions of the Federal FCA: The federal False Claims Act also has provisions that protect employees who "blow the whistle". The protections are known as Qui Tam "Whistleblower" provisions ("Qui Tam" dates back to England when it was permitted for a citizen to bring charges on behalf of the King). The Qui Tam "Whistleblower" provisions permit any person with actual knowledge of allegedly false claims to the government to file a lawsuit on behalf of the U.S. government. The whistleblower is known as a "relator". The extent of whistleblower recoveries demonstrates the enormous liability: in 2004-2005, out of $1.4 billion in settlements and judgments for fraud committed against the federal government, fully $1.1 billion was recovered through lawsuits initiated by whistleblowers.
What motivates a relator other than a sense of civic duty? Money. The federal False Claims Act whistleblower provisions provide for successful relators to receive an award ranging from 15 to 30 percent of the amount recovered by the federal government as a result of a successful false claims prosecution.
There are explicit protections built into the False Claims Act for relators: employers can NOT retaliate against relators for complaining or filing lawsuits. If there is retaliation, relators are entitled to employment reinstatement, back pay and any other compensation arising from retaliatory conduct against a whistleblower for filing an action, investigating a false claim, or providing testimony for or assistance in a False Claims Act action.
How To Implement The DRA
The DRA contains a section titled - EMPLOYEE EDUCATION ABOUT FALSE CLAIMS RECOVERY. This section requires that all entities covered under the DRA establish policies and procedures for all employees, contractors and agents and to communicate those policies.
The policies must contain:
· detailed information about the False Claims Act
· administrative remedies for false claims and statements
