The False Claims Act (FCA) was enacted during the Civil War to impose civil liability on anyone who knowingly acts in defrauding governmental programs. Healthcare fraud has been a leading source of FCA violations for several years, leading to $1.7 billion in settlements and judgments in the last fiscal year alone. Healthcare providers and suppliers who participate in Medicare and Medicaid programs are at risk for FCA violation allegations and must take measures to ensure compliance with these programs by following proper billing procedures. Notably, violations can carry significant consequences, as they impose treble damages and significant per-claim penalties which increase each year with inflation. Cases for violations of the Anti-Kickback Statute (AKS), Physician Self-Referral Law (Stark Law), and other regulatory and compliance requirements are often brought as FCA cases.
Healthcare providers and suppliers who knowingly submit false claims or fail to pay back money owed to the government may be in violation of the FCA. The FCA also carries a whistleblower provision, which allows private citizens to bring qui tam actions against providers and suppliers who have allegedly violated the Act. The government then may intervene in the action, allowing the whistleblower to recover a portion of the recovery. Qui tam actions encompass a considerable portion of FCA litigation and have broadened the scope of the FCA significantly, increasing the risk of violation allegations for healthcare providers and suppliers.
On June 1st, 2023, the Supreme Court issued a unanimous decision in two consolidated FCA cases, U.S. ex rel. Schutte v. Supervalu Inc. and U.S. ex rel. Thomas Proctor v. Safeway, Inc., ruling that a defendant’s knowledge of a claim’s falsity refers to a subjective standard regarding what the defendant believed at the time it submitted the claims- not what an objectively reasonable person might have known or believed or what may later become reasonable in light of later facts or analysis. This ruling can generally be seen as an expansion of the “knowing” standard under the FCA and should caution healthcare providers and suppliers to take steps to ensure their knowledge and beliefs surrounding submission of claims to Medicare and Medicaid are compliant with these programs and are documented at the time claims are submitted, especially where there is a question of regulatory interpretation or ambiguity. Documentation of this knowledge in the form of written policies and procedures may be especially salient in ensuring compliance. Furthermore, if compliance issues or potential violations are raised, healthcare providers and suppliers should take immediate action to address and rectify them.
The Supreme Court issued another ruling on June 16, 2023, in U.S. ex rel. Polansky v. Executive Health Resources, Inc., which clarified the law surrounding the timing of governmental intervention and dismissal of qui tam lawsuits. In an 8-1 decision, Justice Kagan opined that the government may move to dismiss an FCA action, over the whistleblower’s objection, at any time in the litigation. This ruling can be seen as favorable to healthcare providers and suppliers, as it may lead to hesitation on behalf of potential whistleblowers to initiate an action with questionable merits. It may also limit a whistleblower’s ability to proceed with a lawsuit which the government declines to pursue further.
For over 35 years, Wachler & Associates has represented healthcare providers and suppliers nationwide in a variety of health law matters, and our attorneys can assist providers and suppliers in understanding new developments in healthcare law and regulation. If you or your healthcare entity has any questions pertaining to healthcare compliance, please contact an experienced healthcare attorney at 248-544-0888 or wapc@wachler.com