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Paul Zimmerman

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Health Care Providers Put On Notice As False Claims Act Penalties Are Doubled

Effective August 1, 2016, Health care providers will be subject to significantly increased penalties for improperly receiving reimbursements from or avoiding payment to the Federal government. The U.S. Department of Justice confirmed this week that civil penalties under the False Claims Act (FCA) will soon nearly double. Given that health care providers submit many thousands of claims each year, this increased penalty under the FCA could potentially result in huge liability. In light of the government’s enhanced statutory leverage, it is essential that providers maintain robust compliance programs that ensure best practices for billing and claim documentation.

Under the Bipartisan Budget Act of 2015, Congress required federal agencies to impose significant increases in civil monetary penalties, including the statutory penalties mandated by the FCA, followed by automatic annual adjustments. A majority of suits under the FCA are in the health care industry and relate to alleged fraudulent Medicare reimbursement claims, and thus providers are a primary target of this dramatic increase in statutory liability. Under the interim final rule, minimum per-claim penalties will jump to $10,781 from $5,500, and maximum per-claim penalties will rise to $21,563 from $11,000. Many FCA cases in the health care industry involve hundreds, or even thousands, of separate claims, meaning that the potential financial risk to providers has been exponentially increased.

While some legal analysts contend that this substantial increase will lead to more settlements from providers that are leery of a huge financial loss, others predict that it will foster an onslaught of Eighth Amendment constitutional challenges based on claims of “excessive penalties.” It remains to be seen how this jump in civil monetary penalties will affect FCA litigation generally, but one thing is certain: this development, combined with the Supreme Court’s recent decision approving the implied certification theory of liability under the FCA, means that health care providers must be vigilant in ensuring the accuracy and integrity of all Medicare reimbursement claims. A thorough compliance program is not just a good idea, it is a necessity.

This blog post is not offered as, and should not be relied on as, legal advice. You should consult an attorney for advice in specific situations.