Is the Government Overreaching with its use of the False Claims Act? The AHA Sure Seems to Think So.

September 11, 2010 by  
Filed under False Claims Act, Featured

(September 11, 2010): Earlier this week, the American Hospital Association (AHA), a primary industry association for hospitals around the country, wrote to DOJ Attorney General Eric Holder and HHS Secretary Kathleen Sebelius, to express the hospitals’ concern that the government may be overreaching in its use of the False Claims Act (FCA). As you will recall, the FCA is the primary civil enforcement tool used by DOJ in pursuing civil health care fraud violations. The FCA’s reach is long (under certain circumstances it can cover claims up to ten years old) and its impact can be devastating on providers. Violations of the FCA can result in penalties of between $5,500 and $11,000 per false claim, plus treble damages.

As set out in the association’s letter dated September 7, 2010, the AHA is concerned that DOJ may be aggressively asserting alleged violations of the Act despite the fact that the problem was the result of “a mistake or overutilization.” As the association further expressed, this can lead to a “negotiated” settlement of the allegations.

Citing a “kyphoplasty” initiative current being pursued by at least one U.S. Attorney’s Office, the AHA stated:

“. . . notwithstanding the fact that kyphoplasty claims have long been subject to changing and ambiguous regulations and guidelines, the kyphoplasty initiative appears to observers to rely on data mining to establish a presumption that hospitals are liable for “knowing” violations of the civil FCA and subject to treble damages and penalties. Targets of the initiative have received letters disconcertingly similar to letters written prior to the issuance of the original “Holder Memo” in 1998 (Guidance on the Use of False Claims Act in Civil Health Care Matters).”

As the association suggests in its letter, the mere allegation that a hospital may be under investigation for violations of the FCA are sufficiently serious to require the hospital to retain experienced legal counsel to respond to represent its interests. This can be quite costly for the hospital. As a result, some hospitals elect to settle the allegations rather than litigate the issues.

As reflected that the current cases being brought, DOJ, HHS-OIG and CMS contractors (such as ZPICs, PSCs and RACs) are increasingly relying on data mining when identifying possible targets for criminal, civil and administrative action. Our concern is that an over-reliance on data mining in the identification of potential wrongdoers may lead to a presumption of guilt before any examination of the medical records and associated documentation has occurred.

Robert W. Liles, a Managing Partner at Liles Parker was instrumental in the drafting and implementation of the “Holder Memo” and has worked on many False Claims Act case over the years, both as a Federal Prosecutor and as defense counsel representing a provider’s interests.

Should your practice or clinic face False Claims Act allegations, give us a call at 1 (800) 475-1906 for a free consultation.