Barclay Damon
Barclay Damon

Legal Alert

Expansion of Federal False Claims Act

The Federal Fraud Enforcement and Recovery Act of 2009 (FERA) was enacted in May 2009. FERA is a major expansion of the Federal False Claims Act and has significant application to Medicaid providers, managed care plans, and their contractors.

Under the Federal False Claims Act, a “Claim” is redefined to include not only claims submitted by a health care provider to the Government, but now also includes any claim submitted by a contractor or subcontractor to the provider or managed care organization “if the money or property is to be spent or used on the Government’s behalf, or to advance a Government Program or interest.” Thus, for example, health care providers can be liable for the penalties under the statute for false claims submitted to Medicare or Medicaid managed care organizations and licensed home care services agencies can be liable for the penalties for false claims submitted to certified home health agencies. In addition, retention of an overpayment under Medicare or Medicaid and violations of regulations can be pursued as False Claims Act cases.

False Claim Act cases can be brought by the Government or by whistleblowers who receive a percentage of any recovery. Whistleblower cases are called qui tam actions. The anti-retaliatory provisions that protect employees who act to stop Medicare or Medicaid violations from retaliation by a provider are expanded to also include contractors and agents.

Penalties that may be imposed under the Federal False Claims Act are civil penalties from $5,500 to $11,000 per claim plus three times the amount of the claim.

An effective Compliance Program is more important than ever to assist health care providers and their contractors in establishing systems designed to maintain statutory and regulatory compliance, as well as identify and then correct non-compliance as soon as practicable. An active Compliance Program also demonstrates to government enforcement agencies good faith compliance efforts and may mitigate any penalties under the False Claims Act.

Hiscock & Barclay’s Health Care and Human Services Practice Area has substantial experience in helping providers in the development and implementation of Compliance Programs and the training of Boards of Directors, executive team members, and staff of providers. Our attorneys also have extensive experience in defending Medicaid and Medicare provider audits, investigations and sanctions and in the defense of matters brought by the State Attorney General. Should you have any questions regarding this Legal Alert, feel free to contact Eugene Laks or any member of the Health Care and Human Services Practice Area.