As healthcare fraud and abuse , unfortunately, becomes more prevalent, it is key to understand some of the basic information pertaining to fraud and abuse which may impact healthcare organizations.  As part of “learning the basics”  BHM will focus this blog post on an overview of the False Claims Act (FCA).

Click here to access the compete False Claims Act

The False Claims Act, an American federal law, has been around since the Civil War. It was known as the Lincoln Law. During the Civil War, horses and mules in poor health, faulty rifles and ammunition, and rancid supplies were sold to soldiers on a regular basis; Congress passed the Lincoln Law to respond to this entrenched fraud. It included a “qui tam” provision, permitting citizens to sue on behalf of the government and be paid a percentage of the recovery.

Today, it has greatly expanded to encompass any fraud against government spending programs. This law imposes liability on any person or company who defrauds the government. Specifically, those guilty of a violation of the False Claims Act (FCA) are liable for three times the government’s damages plus civil penalties of $5,500 to $11,000 per false claim.

In 1986, the FCA was amended, strengthening the qui tam provisions and offering incentives for citizens to assist the government in combating fraud. In fact, the law relies upon these ‘whistleblowers’ or ‘qui tam relators’ who have evidence of fraud against government contracts and programs to come forward and act on behalf of the government. Relators are allowed to file a lawsuit against the person or business that committed the fraud. If the action is successful, the qui tam plaintiff is rewarded with a percentage of the recovery.

The qui tam relator’s portion of the damages recovered depends on whether the Justice Department intervenes and takes over the case. If the Justice Department takes over, the qui tam relator is entitled to between 15% and 25% of the recovery. If the Justice Department does not intervene, and the suit is pursued individually, the qui tam plaintiff can be granted between 25% and 30% of the recovery.

Recognizing that the government could not fight against rampant fraud alone, Congress put into play a powerful public-private partnership for uncovering fraud against the federal government and obtaining the maximum recovery for American taxpayers. As Sen. Charles Grassley (R-IA) and Rep. Howard Berman (D-CA) have noted:

“Studies estimate the fraud deterred thus far by the qui tam provisions runs into the hundreds of billions of dollars. Instead of encouraging or rewarding a culture of deceit, corporations now spend substantial sums on sophisticated and meaningful compliance programs. That change in the corporate culture — and in the values-based decisions that ordinary Americans make daily in the workplace — may be the law’s most durable legacy.”

In the next blog post, we will explore, in more detail, the qui tam provisions and how they specifically relate to healthcare compliance  and healthcare financial management.