By Russell Paul
If someone violates the False Claims Act (“FCA”), the repercussions are extensive and severe. They include civil monetary penalties, damages, expenses, permanent exclusion from the Medicare and Medicaid programs, and, under the Anti-Kickback Statute, criminal penalties.
Civil Monetary Penalties
With civil monetary penalties, the government assesses a penalty on a per claim basis. This means that each individual false claim carries its own penalty. Thus, for a court to impose a civil penalty, it must first determine how many distinct violations occurred.
For example, a single Medicare reimbursement form (CMS Form 1500) may include several distinct claims for payment. Even though each individual claim on the form may be a false claim (i.e., that particular service was never performed), most courts consider the entire form submitted to the Government to be a single false claim. United States v. Krizek, 192 F.3d 1024, 1026 (D.C. Cir. 1999). The current minimum penalty per claim is $10,957, and the current maximum penalty per claim is $21,916.
These per claim amounts are adjusted annually by comparing the cost of living adjustment for each of the two preceding Octobers, rounded to the nearest dollar. The Supreme Court has held that a district court has discretion in determining the amount awarded as civil penalties. United States v. ITT Continental Baking Co., 420 U.S. 223, 230 (1975).
However, penalties that are too high when compared to the gravity of the violation may violate the Excessive Fines Clause of the Eighth Amendment, which limits the government’s power to extract payments, whether in cash or in kind, as punishment for an offense.
Damages are calculated by taking the amount the False Claims Act violator received from the federal government and multiplying that amount by three. 31 U.S.C. § 3729(a)(1). This is referred to as “treble damages.”
The violator is also liable for the costs to the federal government for bringing the civil action. 31 U.S.C. § 3729(a)(3)
In addition, a successful relator is entitled to the reimbursement of attorneys’ fees, costs, and expenses whether the government intervenes in the case [31 U.S.C. § 3730(d)(1)] or declines and the relator litigates the matter to a successful conclusion herself. [31 U.S.C. § 3730(d)(2)]
Permanent Exclusion from the Medicare and Medicaid Programs
A violator may be permanently excluded from the Medicare and Medicaid programs. This means that the provider who violated the FCA could not treat the more than 55 million Medicare and Medicaid beneficiaries. The Office of Inspector General (“OIG”) publishes the names of excluded individuals on its website.
Rather than being excluded from Medicare and Medicaid, the violator can be forced to sign a Corporate Integrity Agreement (“CIA”) with the government. CIAs have many common elements, but each one addresses the specific facts at issue and often attempts to accommodate and recognize many of the elements of preexisting voluntary compliance programs. A comprehensive CIA typically lasts 5 years and includes requirements to:
- hire a compliance officer/appoint a compliance committee;
- develop written standards and policies;
- implement a comprehensive employee training program;
- retain an independent review organization to conduct annual reviews;
- establish a confidential disclosure program;
- restrict employment of ineligible persons;
- report overpayments, reportable events, and ongoing investigations/legal proceedings; and
- provide an implementation report and annual reports to OIG on the status of the entity’s compliance activities.
The Anti-Kickback Statute and Criminal Penalties
The federal Anti-Kickback Statute (“Anti-Kickback Statute” or “AKS”) is a criminal statute that prohibits the exchange (or offer to exchange), of anything of value, in an effort to induce (or reward) the referral of federal healthcare program business. See 42 U.S.C. § 1320a-7b.
The Anti-Kickback Statute is broadly drafted and establishes penalties for individuals and entities on both sides of the prohibited transaction. Conviction for a single violation under the Anti-Kickback Statute may result in a fine of up to $25,000 and imprisonment for up to five years. See 42 U.S.C. § 1320a-7b(b). Individuals who violate the AKS, such as the CEO, CFO or Medical Director of a healthcare entity, may be subject to these criminal penalties.
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