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Sharp Rise in False Claims Act Cases - Navigating the FCA Waters

Client Alert
May 5, 2023


The Department of Justice has announced that False Claims Act (FCA) settlements and judgments exceeded $2 billion in the Fiscal Year 2022 and $5.6 billion in the Fiscal Year 2021. A large portion of such settlements and judgments involve healthcare businesses such as physician practices, hospitals, and pharmacies. The number of FCA cases has increased over the past several years, and it is evident that governments on both the state and federal levels are becoming more aggressive in their use of the FCA to obtain recoveries.

The FCA, 31 U.S.C. § 3729 et seq., was enacted in 1863 during the Civil War to counteract fraud by companies selling supplies to the Union Army. War profiteers would swindle the Union Army by providing rotten food, worn-out garments, and defective weapons. Today, the FCA is one of the government's strongest anti-fraud statutes. It imposes liability on individuals and businesses that defraud and cause financial loss to the federal government. The FCA also provides the potential for rewards for whistleblowers who report such fraudulent activities.

FCA claims can also be a source of stress and complication for businesses when they find themselves to be the target of either a federal investigation or state investigation. Whenever there is government money at stake, there is a chance for an FCA claim. Among other industries, FCA investigations are commonly seen among healthcare businesses that bill state and federal healthcare programs, such as Medicare and Medicaid. Since fraud in the healthcare industry can lead to rising healthcare costs, the government is keen on cracking down on such activity.

Recently, on April 18, 2023, the United States Supreme Court heard arguments regarding the FCA’s scienter, or mental state, requirement. To prove violation of the FCA, the statute requires that a defendant “knowingly” file false claims for payment. The term “knowingly” is defined within the statute to mean a person that acts with actual knowledge, deliberate ignorance, or reckless disregard. Circuit courts are split on how to interpret and apply the knowledge element of the FCA, and based on the Supreme Court’s decision, there will be a large impact on healthcare defendants and their businesses as well as anyone who contracts with, or receives money from, a federal program. A broader interpretation of the FCA would unnecessarily target and stifle healthcare, and other businesses, for simple errors in daily operations. This goes against the intended application of the FCA, which was to prevent fraudulent activity.

Violation of the FCA can potentially lead to liability for treble damages, or three times the actual losses, so it is imperative to have the proper legal counsel as you navigate the FCA waters. Whether you are facing allegations of violating the FCA or you want to put in place safeguards to ensure your business does not face such allegations, our team and BMD is ready, willing, and able to help. Our team has experience successfully defending against FCA claims and large qui tam cases, and they would be happy to discuss any concerns you may have. Questions should be directed to Shalini Bhatia at sbhatia@bmdllc.com or 216.658.2214.

FCAHealthcare
Client Alert

EEOC Provides Updated Guidance Regarding Employer COVID-19 Vaccine Policies

June 3, 2021On May 28, 2021, the U.S. Equal Employment Opportunity Commission updated its guidance regarding employer COVID-19 vaccination policies. The new guidance provides much-needed clarification of expectations for employers seeking to promote workplace safety and prevent the spread of COVID-19, including discussion of mandatory vaccination policies, voluntary vaccination incentives, and accommodation of employees based on disability or sincerely held religious beliefs. The full text of the update is found in Section K of the EEOC’s COVID Q&A document. You can also learn more about these and other developments from BMD's Bryan Meek and Monica Andress through the Employment Law After Hours YouTube channel, available here.Client Alert

What Telemedical Barriers Practices Face and How They Can Manage Them

May 28, 2021The onset of the COVID-19 pandemic has led to many businesses and industries having to rapidly adapt new practices in order to stay profitable, and the healthcare industry is no exception. Although telehealth tools and practices have existed and been used since the Vietnam War, the pandemic has caused many individual healthcare practices to heavily rely on telehealth as a large portion of their service mix in order to continue to provide care for patients. Because of this rapid adoption of telehealth practices in order to combat the restrictions of COVID-19, the telemedicine industry’s revenue has exploded in the last year. Experts predict that telehealth will continue to grow in use beyond the current pandemic, estimating the industry’s worth to be $25 billion by 2025. However, this rapid adoption of telehealth was prompted out of need and has not been without its own barriers that practices now face.Client Alert

Which Entity Should I Form When Starting a New Business?

May 21, 2021As a tax law attorney, friends and acquaintances ask me this question all the time: what type of entity should I form when starting a new business? With many business options available it can be confusing determining which business structure would be appropriate. Below is a general overview of each business structure and the tax responsibilities of each.Client Alert

IMPORTANT UPDATE: IRS Opens Portals for Advanced Child Tax Credit Payments 2021

May 20, 2021The American Rescue Plan Act (the “Act”) expands the Child Tax Credit for tax year 2021. In addition to expanding the Child Tax Credit, the Act provides for advance payments of the 2021 Child Tax Credit. Beginning in July, the IRS will automatically send Advanced Child Tax Credit payments to eligible taxpayers based on their 2020 tax return (or 2019 tax return if the 2020 tax return has not been filed and processed yet). The amount of the advanced payment will be up to $300 each month for each qualifying child under 6 years old at the end of 2021 and $250 each month for each qualifying child between 6 and 17 years old at the end of 2021. For example, if you have 2 qualifying children, one 4 years old and one 8 years old, you may receive up to $550 each month in advance child tax credit payments.Client Alert

Employment Law After Hours: CDC SAYS NO MORE MASKS FOR VACCINATED PEOPLE: What does this mean for employers and employees?

May 17, 2021This morning, ELAH published an emergency episode discussing the questions employers sent us since the CDC’s release of its revised mask guidance late last week. This episode explores questions such as whether an employer can allow vaccinated people to go without masks, while requiring unvaccinated people to wear a mask, whether employers can inspect an employee’s vaccine card, and it discusses the risks of liability an employer faces based on the decisions and policies it makes following the release of this CDC guidance, along with many other questions.
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