Health Law

RAC AUDITS AND NEW FEDERAL FALSE CLAIMS ACT EXPOSURE.UNDER THE FRAUD ENFORCEMENT RECOVERY ACT OF 2009 (?FERA?).

By Greg Piche'

The federal squeeze of health care providers is underway. Federal Medicare recovery ?bounty hunters,? the Recovery Audit Contractors (?RAC?), are marshalling resources for the anticipated, algorithm primed, data mining hunt for Medicare overpayments from hospitals, physicians, DME companies, hospices and other providers, which is likely to bloom in the second half of this year. Those that attempt to mislead the government or its computer toting agents in order to limit the harvest are facing additional potential exposure under the Federal False Claims Act, 31 U.S.C. §3729-3733 (?FCA?).

The FCA is a product of the Civil War and was once known as ?Mr. Lincoln?s Law.? It permitted individual citizens to bring lawsuits on behalf of the United States to recover fraud upon the government. It allows plaintiffs or ?relators? as they are called to keep a percentage of the recovery for their efforts on behalf of the treasury. These are also known as Qui Tam lawsuits. The reach of the Qui Tam lawsuits have been narrowed over time by federal case law.  One limitation was the ?public disclosure bar? that limited the cases to fraud that had not been previously disclosed to the public. Recent cases such as the United States Ex. Rel. Tatten v. Bombardier, 380 F. 3d 488 (D.C. Cir. 2004) (claim must be presented to an officer or agent of the United States to be actionable) and Allison Engine Co. v. United States Ex. Rel. Sanders, 128 S. Ct. 2123 (2008) (false claim submitted by subcontractor in large government contractor not actionable unless can prove intent to defraud the government).

On May 20, 2009, President Obama signed the FERA which substantially amends the FCA to make it clear that its scope is much broader and applies to fraud in government funded (i.e.? Stimulus?) projects. The amendments make it clear that it applies to fraudulent claims made to.

[A] contractor, grantee, or other recipient, if the money or property is to be spent or used on the Government?s behalf or to advance a government program or interest or the government provided any portion of the money or property . . . . 

Now ?any government interest? is pretty far reaching. Perhaps to underscore how far reaching the limits may be defined by the specific exclusions in the Statute. The amendments specifically exclude only government compensation paid to federal employees and unrestricted income subsidies. Given the government?s involvement in banking, automotive and other bailouts, the reach of this statute is extraordinary. Oh, and the statute now specifically defines a government ?obligation? to mean,

[A]n established duty, whether or not fixed, arising from an express or implied contractual, grantor-grantee, or licensor-licensee relationship, from a fee based or similar relationship, from statute or regulation, or from retention of any overpayment.

The actual or perceived ?doctoring? of RAC requested files, (no pun intended), may open a whole new avenue of exposure for careless or unwary providers.

Full post as published by Healthcare Law Blog on May 30, 2009 (boomark / email).