Healthcare False Claims Act Penalties May Double

The Department of Justice has just released a proposed rule that would include a doubling of the Healthcare False Claims Act penalties.   How worried should healthcare providers be?

The Healthcare False Claims Act penalties were flat for years

For over 20 years, there were no changes in the dollar amount of the Healthcare False Claims Act penalties.  The minimum penalty was $5,000 per claim, and the maximum was $10,000 per claim.  The Inflation Adjustment Act of 2014 provided for all federal agencies to adjust their respective civil monetary penalties for inflation – for the past 30 years.  This leaves us with proposed Healthcare False Claims Act penalties to be imposed by the Department of Justice of a minimum of $10,781, and a maximum of $21,563 – per claim.

Healthcare False Claims Act civil monetary penalties

The Healthcare False Claims Act penalties are the Federal Government’s “big hammer”.  They are designed to deter and punish fraudulent behavior that involves claims for payment from the Federal Government.  The False Claims Act (“FCA”) was established in 1863 after many disreputable contractors sold guns and ammunition and sick working mules to the Union Army during the Civil War.  Stark Law penalties can be steep, and the Anti-Kickback law is a criminal statute with jail time at stake, but it is the FCA penalties that can really add up quickly.

What are the risks of Healthcare False Claims Act penalties to the average physician or hospital?

Providers can be accused of activities like “upcoding” claims, billing for unnecessary services and submitting false diagnoses to qualify for payment.  These are relatively straightforward issues.  A more subtle issue is the claim that “substandard” services constitute a healthcare false claims act violation to the government.  In addition, violations of the Anti-Kickback statute can also result in allegations of false claims related to the services billed or provided as part of a kickback scheme.  In other words, jail time and a big Civil Monetary Penalty (“CMP”).

Avoid Healthcare False Claims Act penalties:  how can you reduce your risks?

Well, the best strategy to deal with things like Healthcare False Claims Act penalties is to prevent them!  An effective corporate compliance program  is one way to reduce your risk of submitting false claims to the government.  Activities carried out as part of a corporate compliance plan should include auditing and monitoring, and staff education and training.  They can go a long way to discovering and correcting issues before they become huge problems with large price tags.

The False Claims Act Healthcare regulations published last week are a draft.  The final regulations may change, especially since the minimum penalty amounts are growing very large in relationship to the value of individual claims submitted by small healthcare providers.  Of course, the current penalties are nothing to sneeze at.  A well maintained compliance program is a must!

When you need proven expertise and performance

Jim Hook, MPH

Mr. James D. Hook has over 30 years of healthcare executive management and consulting experience in medical groups, hospitals, IPA’s, MSO’s, and other healthcare organizations.

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