Healthcare Fraud

Federal spending on healthcare reached $856 billion in 2012 and is expected to increase due to expansions in Medicare and Medicaid and other provisions of the Patient Protection and Affordable Care Act (“PPACA”). In fact, the Centers for Medicare and Medicaid Services (“CMS”) estimates that by the year 2019, healthcare spending will account for 19.6 percent of gross domestic product. Medicare and Medicaid are the largest single purchaser of healthcare in the world. As such, those programs are prime targets for illicit profit through fraud.

In 1996, Congress took a major step in combating healthcare fraud when it passed the Health Insurance Portability and Accountability Act (“HIPAA”). HIPAA established a national Health Care Fraud and Abuse Control Program (HCFAC or the Program) under the joint direction of the Attorney General and the Secretary of the Department of Health and Human Services (“DHHS”). The program was designed to coordinate federal, state, and local law enforcement activities with respect to healthcare fraud and abuse. In the last eighteen years, the program has proven a successful example of a collaborative approach to identify and prosecute the most egregious instances of healthcare fraud.

Due to the healthcare field’s susceptibility to fraud and abuse, and the federal government’s significant financial stake, the government has looked for additional tools to combat fraud. The False Claims Act has developed into an essential tool in protecting consumers, reducing inflated health care costs, and recovering government funds lost to health care fraud. Whistleblower actions and government prosecution of health care fraud under the False Claims Act accounts for nearly $6.7 billion of the $8.9 billion in total False Claims Act recoveries obtained since January 2009. Indeed, the healthcare field has become the principal target for enforcement of the False Claims Act.

In recent years, the False Claims Act has enabled whistleblowers with knowledge of fraud by hospitals, medical device manufacturers, drug and pharmaceutical companies, and other health care providers to bring an action under the False Claims Act on behalf of the government to seek recovery of government funds compromised by fraud. The False Claims Act prohibits a wide range of fraudulent activity connected with the submission of false claims to Medicare, Medicaid, and other federally-funded health care programs. These are some of the most common fraudulent healthcare schemes relating to Medicare/Medicaid that are covered by the False Claims Act:

• Upcoding and Unbundling
• Services Not Rendered
• Lack of Medical Necessity
• Inflated Cost Reporting

In contrast with egregious forms of fraud such as inventing “ghost patients” or billing for services not rendered, doctors or hospitals accused or convicted of fraud have often claimed they did doing nothing wrong because they were merely trying to navigate the complex bureaucratic rules of an underfunded public system in order to do what was best for their patients and to receive fair reimbursement. Accordingly, many types of manipulative behavior are commonplace even by respected and established doctors who might exaggerate diagnoses in order to obtain insurance coverage for a particular treatment they think is proper but that is not actually covered by Medicare or Medicaid. In any case, this kind of behavior can still constitute fraud, and it can be actionable under the FCA.