False Claims Counsel

Sometime before the end of the Supreme Court’s term this week (possibly at their Monday, June 25 session), the justices will decide the fate of the Patient Protection and Affordable Care Act (ACA), passed in March 2010. Although best known for its reform of the nation’s health insurance system, the ACA also comprised significant changes to fraud enforcement statutes, including the False Claims Act. The Court was widely seen as unexpectedly hostile to the ACA’s individual mandate to purchase health insurance, and heard 90 minutes of argument on the severability of that provision from the rest of the ACA. (In January 2011, Senior Judge Roger Vinson of the Northern District of Florida had struck down the entire ACA on the grounds that the other provisions were not severable.)

If the Court strikes down the entire ACA, it would have significant effects on federal anti-fraud laws, effects which would be felt most acutely, but not solely, in the area of healthcare fraud enforcement. The major consequences of striking down the ACA would include:

• False Claims Act: The public disclosure bar (31 USC 3730(e)(4)) would revert to its pre-ACA version, which is much more hostile to whistleblowers. The pre-ACA public disclosure bar has been interpreted to include a broader range of triggering disclosure types, and the amendments gave the United States a veto over defendants’ motions to dismiss qui tam suits on these grounds. Because there is typically a significant delay between the filing of a false claim and the bringing of a whistleblower suit, and because this amendment has been interpreted to be prospective only, there are few cases known to rely on the new language. Nevertheless, the change would have eventually made it much more difficult for defendants to dismiss suits on public disclosure grounds, and so they would welcome striking down the ACA.
  The ACA also created an obligation for health care providers to report and return overpayments within 60 days after it was identified (or the date of a corresponding cost report), and deemed overpayments beyond the deadline to be an obligation under the False Claims Act.
• Tougher Criminal Provisions: The ACA made several changes that, while incremental, made federal criminal law relating to health care fraud tougher. These included adding drug misbranding charges to the definition of federal health care offense, removing wilfulness as an element of a health care fraud violation, and increasing sentencing guidelines (including a provision which makes the aggregate amount of claims submitted prima facie evidence of the intended loss for sentencing purposes.
• The Stark Act: This law (42 USC 1395nn) regulates the relationship between health care providers and those to whom they refer federal beneficiaries for treatment or tests. The ACA added several provisions to the statute, including one that requires HHS to develop a self-disclosure protocol for violations of the law, and another that requires physicians providing advanced imaging services to disclose to patients their right to have another provider perform the service, and provide them with a list of providers in the area.
• Medicare and Medicaid Program Integrity Provisions: The ACA established a new statute (42 U.S.C. 1320a-7k) that required greater interagency sharing of health claim data, and provided for administrative punishment of beneficiaries participating in fraud schemes.
• Medicare Civil Monetary Penalties: The ACA expanded the civil monetary penalties available under 42 USC 1320a-71 to include making and using false records or statements and delaying access to the Office of Inspector General of HHS performing inspections and audits.