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False Claims Law

In the United States, the False Claims Act (based on the Federal False Claims Act 31 U.S.C. 3729 et seq) provides a powerful legal tool to counteract fraudulent billings turned into the Federal Government. Citizens with insider knowledge of false claims in health care, military, or other government spending programs can be rewarded.

The General Accounting Office (GAO) estimates that medical fraud (Medicare and Medicaid fraud) and abuse approaches 10% of all health care expenditures, or $100 billion dollars.

It may be hard to detect when a care provider is engaging in fraudulent practices, but it is suggested that each citizen should be a savvy consumer. Some simple actions are believed necessary to help in reducing the public damage caused by these frauds, starting by singularly and attentively reviewing related bills. Checking service dates against the dates in one's own calendar, or requesting an itemization of services and an explanation for unclear charges, or looking for double billing or services that were not performed.

The savvy consumer is invited to always ask for explanations and adjustments of the bill, if appropriate, and to be especially concerned if mistakes occur regularly. In case such a complaint goes unheard, or if there is a suspect that the provider is engaged in fraudulent practices, the consumer can help his government recover misappropriated tax dollars through the citizen lawsuit provisions of the False Claims Act.

The False Claims Act establishes liability when any person or entity improperly receives from, or avoids payment to, the federal government—except for tax fraud. It is designed to give private citizens the power to file a civil lawsuit to recover money on behalf of the federal government when the federal government has been defrauded.

Individuals can then file a lawsuit to recover misused federal dollars in almost any situation where federal dollars are involved including education grants; housing programs; defense contracting; and Medicare/Medicaid fraud.

Some common categories in which the fraud occurs are home health care, nursing home care, hospital billings, and medical equipment rental.

The following is a partial list of practices that violate the False Claims Act:

  1. double billing;
  2. use of untrained personnel to provide services;
  3. failure to supervise unlicensed personnel;
  4. distribution of unapproved devices or drugs;
  5. forgery of physician’s signatures;
  6. creation of phony insurance companies or employee benefit plans;
  7. upcoding (using an improper reimbursement code to get more money than is warranted by the medical procedure, e.g., billing as if a doctor saw a patient, when a nurse actually saw the patient);
  8. unbundling (billing one medical procedure as multiple medical procedures);
  9. kickbacks;
  10. services provided without medical necessity;
  11. fraudulent cost reports;
  12. inadequate care;
  13. use of substandard equipment.

In case there is a suspect that a Medicare or Medicaid fraud is occurring, the government suggests to contact an attorney knowledgeable about this area of law. It is a complicated area of law, but, if handled correctly, the citizen could be rewarded for helping to recover federal dollars. Initially, all cases must be served, under seal, on the U.S. Department of Justice and the competent local U.S. Attorney. The U.S. Attorney will review the case and will intervene in about one out of every five cases. If the U.S. Attorney declines intervention, one may pursue the lawsuit on his own with the help of his attorney.

If the Justice Department intervenes in a case, is good news. The prospective defendant is apt to be intimidated by the government’s massive effort and settle quickly. For example, in recent times, 17 major hospitals in Northern Ohio have settled False Claims Act cases with the Justice Department. However, if the government intervenes, the reward is a bit smaller.

For more information, the local Bar Association can be contacted for a referral to an attorney specializing in this area of the law.


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