R. Scott Oswald and David Scher, principal attorneys of The Employment Law Group® law firm, recently published an article in Westlaw’s Health Care Fraud Journal entitled “Health care law expands False Claims Act liability under Anti-Kickback Statute”.
In the article Oswald and Scher provide an outline of the various provisions of the Anti-Kickback Statute and illustrate how violations of the law can subject violators of the statute to liability under the False Claims Act (FCA).
Expansion of Liability
The Patient Protection and Affordable Care Act (PPACA), passed in 2010, has given the Anti-Kickback Statute “more teeth than ever before,” according to Oswald and Scher. “Now violations of the statute are per se violations of the False Claims Act. This means that even unintentional violations of the statute can be grounds for fraud liability.”
Additionally, even unwitting and non-benefiting parties who are within the stream of a reimbursement claim to Medicaid or Medicare may now have liability for fraud if unlawful kickbacks are part of the claim. As a means of enforcing this shift in the law, as of January 1, 2011, all drug, medical device, and medical supply manufacturers covered under the various federal health care programs have been required to keep records of “all transfers of value.” Failure on the part of these entities to keep record of these transfers of value now opens up the possibility of fraud litigation.
Measure of Damages
In such situations, the measure of damages for fraud claims under the Anti-Kickback Statute is, “the full value of the services provided,” even if the patients in question receive the medical benefits claimed. Any funds received from the federal government will now be forfeited in the presence of any unlawful kickback as the inappropriate kickback now renders physicians and other healthcare providers ineligible under federal programs. Notably, physicians who submit claims for reimbursement tainted by kickbacks may now be individually liable for violations of the FCA.
Implied False Certification Theory Now Obsolete
Prior to the passage of PPACA, the primary theory underpinning the interpretation of the False Claims Act as meaning that claims submitted as a result of Anti-Kickback Statute violations were false claims rested on the so-called ‘implied false certification theory’. Under this doctrine, a claim for payment is considered false when based on a false representation of compliance with a relevant federal law and such false certifications can be either express or implied.
In order to obtain reimbursements from Medicare and Medicaid, healthcare providers must certify that they are in compliance with all applicable laws, including the Anti-Kickback Statute. According to Oswald and Scher, “PPACA renders moot any reliance on a false certification theory for an Anti-Kickback Statute False Claims Act claim. In effect, the PPACA codifies as law more than 17 years of federal court decisions affirming fraud liability for Anti-Kickback Statute violations.”
Oswald and Scher summarize the effect of PPACA’s amendments to Anti-Kickback Statute as providing:
- Criminal penalties for physicians and other healthcare providers who engage in improper financial relationships involving kickbacks;
- A viable basis for False Claims Act liability for both parties that does not rely upon the controversial ‘implied-certification’ theory and the elimination of the requirement to demonstrate intent to defraud;
- That violations of the Anti-Kickback Statute are per se violations of the False Claims Act.
Finally, the authors note that while physicians have largely “stayed under the radar in terms of False Claims Act liability” this may “[have] less to do with legal hurdles” and is “more likely the effect of the government’s desire to prosecute only big, asset-rich violators”. This trend “may soon change”, Oswald and Scher surmise, with the PPACA amendments to the Anti-Kickback Statute eliminating the requirements to demonstrate intent for False Claims Act liability.
The Employment Law Group® law firm focuses in the areas of employment law and whistleblower protection law, has helped many clients file suit against employers that fraudulently billed the U.S. government, and has established favorable precedents under the retaliation provision of the False Claims Act.
- Accenture Whistleblowers Set to Receive a $14 Million Reward for Blowing the Whistle on False Claims Submitted to the Federal Government (employmentlawgroupblog.com)
- Citigroup Whistleblower Receives $31 Million Award as Part of False Claims Act Settlement (employmentlawgroupblog.com)