Proposed Amendment to False Claims Act: Relief for Innocent Mistakes?
Health care providers and suppliers are well aware that they are living in a world of increased enforcement and that the Federal government has a growing arsenal of tools it uses to enforce the Federal health care laws and regulations. The Department of Justice, the Department of Health and Human Services, the Office of Inspector General, and other agencies have increasingly used a particular tool, the Federal False Claims Act, to recover billions of dollars paid to providers and suppliers as a result of health care fraud and abuse. The False Claims Act penalties of $5,000 to $11,500 per false claim plus treble damages, coupled with other enforcement mechanisms such as program exclusion, cannot be ignored. Given the number of recent False Claims Act settlements and the time and dollars it takes for a provider or supplier to investigate and settle a case, many in the industry are left wondering about innocent mistakes – those that are not the result of fraud – and whether there is any potential reprieve.
In response to concerns over innocent mistakes, the Fairness in Health Care Claims, Guidance, and Investigations Act of 2013, HR 2931, was introduced in Congress. The proposed bill would amend the False Claims Act to carve out unintentional billing mistakes and, as a result, not penalize health care providers and suppliers who submit erroneous claims that bear no relation to fraud.
First, the bill would require that, in order to launch an investigation, the U.S. Attorney General certify that the Federal agency investigating the potential health care fraud has reviewed its own rules and regulations, billing instructions, and communications with the alleged perpetrator to determine whether agency’s guidelines were ambiguous. If all guidelines and communication were unambiguous, the False Claims action could proceed.
The bill would also require that the Federal government develop a “de minimus” threshold and only pursue claims of a “material” amount. The bill does not set a dollar amount, but states that the threshold should be based on a percentage of total dollars/reimbursement received from the Federal government. If the claims at issue exceed a set percentage, the False Claims Action could proceed.
Next, the bill would establish safe harbors and prohibit False Claims Act enforcement in limited circumstances. For example, enforcement would be prohibited where the provider or supplier acted in good faith and relied upon statements or audit findings from Federal agencies. The bill would also prohibit enforcement where the provider or supplier adopted and implemented a compliance program in accordance with the model compliance program guidance issued for providers and suppliers. Finally, the bill would raise the Federal government’s burden of proof for health care false claims and require “clear and convincing evidence” of a violation.
The legislation is only proposed and it is difficult to predict the odds of the bill becoming law. The bill has received attention and support from many in the health care industry, including the American Hospital Association which notes that “conflicting and confusing regulations covering [Federal Health Care] programs can easily result in unintentional billing mistakes.” The health care environment is changing rapidly and now, more than ever, health care providers and suppliers are required to keep abreast of new developments in Medicare and Medicaid regulations, manuals, billing instructions, and other guidelines. Most would agree that efforts are needed to pursue and deter intentional waste, fraud, and abuse in health care. However, for those providers and suppliers that have invested substantial time, money, and effort to develop robust compliance procedures in response to the ever-changing health care environment, the Fairness in Health Care Claims, Guidance, and Investigations Act of 2013 would offer some relief and reduce the potential for costly investigations and litigation involving unintentional mistakes.