FALSE CLAIMS ACT VIOLATION EXAMPLES

Have you ever wondered what happens when a company tries to cheat the government? The False Claims Act (FCA) is a powerful federal law that holds individuals and organizations accountable for defrauding federal programs like Medicare, Medicaid, and other federal healthcare programs.

This guide will help you understand what constitutes a violation of the FCA, common examples of false claims, and how whistleblowers can play a vital role in bringing these violations to light. Let’s dive into the complexities of this important legislation with real-life examples and insights.

What Is Considered a Violation of the False Claims Act?

The federal False Claims Act plays a crucial role in deterring fraudulent activities that can drain taxpayer funds. It dates back to the Civil War when it was initially enacted to fight fraud by defense contractors. Today, the law is used to hold companies and individuals accountable for submitting false or fraudulent claims for payment from government programs.

Submitting inflated claims for services to a federal healthcare program like Medicare is a common violation under the FCA. The FCA targets anyone who knowingly submits false claims, overcharges the government, or underdelivers on contracts. Submitting a false or fraudulent claim can result in severe penalties, including repayment of funds and additional fines.

Recap of Key Terms:

• False Claim: Any claim for payment or approval that is knowingly based on false information.
• Knowingly: The person submitting the claim knows the information is false, acts with reckless disregard, or deliberately ignores the truth.
• Qui Tam: A legal provision that enables private individuals, referred to as whistleblowers, to initiate a lawsuit representing the government’s interests. Successful whistleblowers may receive a portion of the recovered funds. To learn more about your rights as a whistleblower, consider a free, confidential case assessment with our legal team.

What Is Considered a Valid Claim?

For a claim to be valid under the FCA, it must be truthful and made with actual knowledge of its accuracy. If someone genuinely believes their claim is correct but it turns out to be false, they may not be liable under the FCA. However, if they act with “deliberate ignorance” or “reckless disregard” of the truth, that’s where the FCA steps in.

This means if a healthcare provider bills for services they know weren’t performed or were unnecessary, they could be held accountable. On the other hand, if they unknowingly make an error, they might not face the same penalties.

“Materiality” Makes a Claim False

A key concept under the FCA is materiality, which means that the false information must be significant enough to influence the government’s decision to pay the claim. For instance, if a medical provider claims reimbursement for a service that wasn’t performed, this false information would be considered material.

An important part of this is implied certification, where a claim suggests compliance with certain conditions, like patient care standards, but those conditions were not met. This type of false representation can lead to serious consequences if it misleads the government into making payments.

Violations Covered by the False Claims Act

The FCA covers a range of violations, many of which involve deception and manipulation to obtain government funds. Here are some of the most common ways individuals and companies violate the act:

• Making False Statements: This can include falsifying records, altering billing codes, or submitting incorrect information to secure payments. For example, a healthcare provider might claim higher rates for services than what was actually provided. Healthcare providers must ensure that their billing practices align with federal regulations to avoid FCA violations.
• Submitting False Claims: In the healthcare industry, providers who bill federal healthcare programs for medically unnecessary services like extra laboratory tests or unnecessary durable medical equipment are violating the FCA.
• Improper Remuneration: This includes violations of the Anti-Kickback Statute and physician self-referral law (Stark Law), where providers receive improper payments in exchange for patient referrals.
• Misuse of Government Funds: Companies that misuse funds related to government contracts or misrepresent costs during the bidding process are also subject to penalties under the FCA.

Who Is Liable for a False Claim?

Under the FCA, those directly responsible for submitting false claims are liable, but so are those who cause such claims to be submitted. For example, a manager who pressures their team to falsify billing records could be held liable even if they didn’t submit the claims themselves. However, if a person genuinely doesn’t know about the false claim, they aren’t considered liable. In this case, the responsibility falls on the party who knowingly caused the false claim to be presented.

Common Examples of False Claims Act Violations

Now, let’s explore some real-world scenarios where companies and individuals have been found in violation of the FCA:

Billing for Services Not Provided

A frequent violation in the healthcare industry is billing for services that never actually occurred. For example, a hospital might bill Medicare for extended patient stays that didn’t happen or charge for home health services that were never provided. Such false claims deceive the government into paying for services it never received, leading to hefty penalties.

Misrepresenting the Quality of Care

In some cases, providers exaggerate the quality of care they provide to secure higher reimbursements. For example, a nursing home might claim to meet all health and safety standards while providing substandard care to its residents. This misrepresentation can result in significant fines and repayment of the funds obtained under false pretenses.

Kickbacks for Patient Referrals

Violations of the Anti-Kickback Statute are another common FCA violation. This happens when a healthcare provider receives payments or other incentives for referring patients to a particular specialist or facility. For instance, if a medical device manufacturer pays a doctor to use its products, both parties could be liable under the FCA for any resulting fraudulent claims.

Real-Life Examples of FCA Violation Cases

There are numerous False Claims Act cases that highlight how fraud against the government can be uncovered and prosecuted. Here are some notable examples:

Arriva Medical LLC and Alere Inc.

• Settlement Amount: $160 million
• Allegations: In a recent false claims act case, a major hospital group was fined millions for overbilling MedicareArriva, a major supplier of diabetic testing supplies, was accused of submitting false claims to Medicare by paying kickbacks to patients and billing for glucometers for deceased patients. The whistleblower, Gregory Goodman, reported that the company misled patients with offers of “free” glucometers while waiving copayments to boost sales.

St. Jude Medical

• Settlement Amount: $27 million
• Allegations: In a recent false claims act case, St. Jude Medical was fined millions for overbilling Medicare. The company faced allegations for selling defective heart devices that were implanted in patients covered by federal programs. Despite knowing about defects in their devices, St. Jude failed to disclose this information, leading to false claims submitted to Medicare.

Archdiocese of New Orleans

• Settlement Amount: Over $1 million
• Allegations: The Archdiocese was accused of submitting false claims to FEMA following Hurricane Katrina. They allegedly provided inflated damage descriptions and repair estimates, including claims for non-existent damages..

Precision Lens

• Judgment Amount: $487 million jury verdict (later resolved via a $12 million financial ability-to-pay settlement along with separate multi-million dollar physician settlements).
• Allegations: Precision Lens was found liable for paying kickbacks to ophthalmic surgeons to induce them to use their products in cataract surgeries. The staggering initial judgment included treble damages and thousands of individual per-claim statutory penalties.

Whistleblowers May Be Protected for Reporting Violations

If you’re considering blowing the whistle on fraudulent activity, you might be wondering about the protections available to you. Whistleblowers have rights under the FCA and other laws, such as the Whistleblower Protection Act. Other articles on our site explain how these protections work, including how they can shield you from retaliation like being fired or demoted for reporting fraud.

Whistleblowers play a crucial role in identifying and stopping fraud against the government. They can file a qui tam lawsuit on behalf of the government and may receive a portion of the recovered funds. However, it’s important to understand the legal process, which is why consulting with a False Claims Act lawsuit attorney can be beneficial.

Violators Do Face Penalties

Violators of the False Claims Act can face serious consequences, including civil fines, treble damages (triple the government’s losses), and in some cases, criminal penalties. 

For instance, if a healthcare provider knowingly submits fraudulent claims to Medicare, the financial fallout can scale into millions of dollars, driven by mandatory statutory penalties applied to every single false invoice submitted.

Check out our other articles on Medicaid and Medicare Fraud where we discuss the penalties meted out in such cases.

What To Do if Your Company Is Violating the False Claims Act

If you believe your company is violating the FCA, it’s crucial to take the right steps to protect yourself and ensure the proper authorities are notified:

Whistleblowers Can File a Lawsuit Under the FCA Qui Tam Provision

The FCA’s qui tam provision permits private individuals to file lawsuits on the government’s behalf when they possess evidence of fraudulent activities. This is especially useful in industries like healthcare fraud, where whistleblowers can uncover fraudulent billing practices. If successful, whistleblowers may receive a portion of the recovered funds. These cases can be complex, so having legal support from the experienced trial attorneys at The McCabe Law Firm is essential for navigating the process.

Secure Legal Support

Before you take action, it’s important to consult with a False Claims Act lawsuit attorney who can guide you through the process. The legal team at The McCabe Law Firm can help you evaluate whether your evidence qualifies for a statutory claim, ensure your identity and rights are protected under federal safe harbors, and work to maximize your potential relator reward.

Report Through Proper Channels

To ensure your whistleblower report is protected, you should direct it to the appropriate authorities, such as your organization’s compliance office or an inspector general. Avoid discussing the issue with unauthorized parties to maintain the integrity of your claim.

Conclusion

Whistleblowing can be a daunting but necessary action to hold companies and individuals accountable for defrauding government programs. Understanding the types of violations under the False Claims Act, the risks, and the legal protections available to you can help you make an informed decision. Whether you’re uncovering healthcare fraud, improper remuneration, or Medicaid fraud, you play a vital role in protecting taxpayer dollars and maintaining the public’s trust. You can check some examples of qui tam cases here on our website.

If you believe you have evidence of a false claim, don’t hesitate to consult with a False Claims Act attorney. With the right support from The McCabe Law Firm, you can navigate the complexities of qui tam lawsuits, protect your rights, and make a positive impact in the fight against fraud. Contact our firm today to schedule a confidential review of your case.