Member Submission
AN OUNCE OF PREVENTION
Review of the Current Health Care Fraud
Enforcement Environment
By Brian F. McEvoy and Todd P. Swanson
Chilivis, Cochran, Larkins & Bever, LLP
O
ver the past several years, the Federal Government’s
approach to health care fraud enforcement has
become significantly more active. This increase in
activity has been triggered not only by increased funding for
health care fraud enforcement, but also by recent legislative
provisions that expand fraud and abuse exposure for health
care providers under the False Claims Act (“FCA”). In light of
these developments, corporate health care clients are more
dependent than ever on competent counsel to investigate
potential health care law violations and to defend them if
the Government begins an investigation of its own into the
client’s activities.
However, preventing (or minimizing) institutional health
care fraud is the best medicine. To take such prophylactic
measures, counsel must be familiar with the current changes
in federal health care regulation and recent enforcement
initiatives taken by federal law enforcement. This paper
will focus on the recent expansion of the FCA, and the
Government’s recent initiatives in enforcement under the FCA.
I.
Pervasiveness of Health Care Fraud
The arguable birthdate of the new focus on health care fraud
enforcement was January 28, 2010, at the National Summit
on Health Care Fraud. There, Attorney General Eric Holder
described health care fraud as a serious problem whose
scope is “simply shocking,” noting that more than $60 billion
in public and private health care spending is lost to fraud each
year. Attorney General Holder also echoed the concerns of
HHS Secretary Kathleen Sebelius when he admitted that,
due to the size and amount of money involved in the national
health care system, “so long as health care fraud pays and
these crimes go unpunished, our health care system will
remain under siege.” Attorney General Eric Holder, Remarks
at National Summit Health Care Summit (January 28, 2010).
However, according to some experts, the $60 billion dollar
health care fraud figure cited by Holder may in fact be too
conservative of an estimate of the amount of money lost to
health care fraud each year.
16 THE ATLANTA LAWYER
April 2014
In May 2009, while testifying before the Senate Committee on
the Judiciary: Subcommittee on Crime and Drugs, Malcolm
K. Sparrow, a Harvard Professor of Public Management and
expert in fraud detection and control strategy, stated:
The units of measure of losses due to health care fraud and
abuse in this country are hundreds of billions of dollars per
year. We just don’t know the first digit. It might be as low as
one hundred billion. More likely it is two or three. Possibly
four or five. But whatever that first digit is, it has eleven
zeroes after it.
Per Sparrow, some 10-20% of the annual Medicare and
Medicaid budg et is spent on fraudulent or false claims.
Other experts agree with Sparrow’s conclusions, putting
the estimated annual loss between $70 and $100 billion.
Rudman, et al., Health care Fraud and Abuse, 6 Perspectives
in Health Information Management 1 (Fall 2009). Statistics
like this have motivated law makers to expand exposure of
health care providers under the FCA, and have motivated
the present administration to increase funding of health care
fraud prevention.
II.
Expansion of the False Claims Act
On May 20, 2009, President Obama signed into law the Fraud
Enforcement and Recovery Act (“FERA”). Less than a year
later, on March 23, 2010, the President signed the Patient
Protection and Affordable Care Act (“ACA”). The passing of
these two laws has significantly expanded the exposure of
health care providers that receive federal funds.
A.
Expansion of the FCA resulting from FERA
FERA expanded both the procedural and substantive
provisions of the FCA. Procedurally, FERA resolved two
important areas of ambiguity. First, FERA specifically provided
that the Government’s complaint-in-intervention, which
typically replaces, amends, or adds to the relator’s complaint
under seal, relates back to the date of the filing of the relator’s
complaint. 31 U.S.C. § 3731(c). Second, FERA also resolved
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