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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

2020 EEOC Statistics – More Money and Fewer Charges

March 16, 2021The U.S. Equal Employment Opportunity Commission (EEOC) released its comprehensive report on the workplace discrimination it received in Fiscal Year 2020. The Enforcement and Litigation Statistics provide detailed breakdowns of charges of employment discrimination and resolutions under a variety of statutes. Here are the highlights:Client Alert

A New Formation Solution – is the SSLC Right for Your Business?

March 4, 2021In early January 2021, Ohio adopted Senate Bill 276 which established a Revised Limited Liability Company Act (“ORLLCA”) as Ohio Revised Code Chapter 1706, which effectively replaces the current Ohio Limited Liability Company Act (Ohio Revised Code Chapter 1706). The ORLLCA will become effective on January 1, 2022. One of the principal changes within the ORLLCA is the ability to establish “series LLCs”. Ohio becomes the 15th state to adopt a “series LLC” (“SLLC”). The below FAQs will help you better understand the mechanics and nuances of a series LLC.Client Alert

Surprise! A Cautionary Tale for Out-Of-Network Billing: The No Surprises Act and the Impact on Healthcare Providers

February 25, 2021SURPRISE! Congress passed The No Surprises Act at the end of 2020. Providers, particularly those billing as out-of-network providers, should start thinking about strategies to comply with this new law, set to take effect on January 1, 2022. In its most basic sense, the new law prohibits providers from billing patients for more than the in-network cost-sharing amount in most situations where surprise bills happen. It specifically applies to non-government payers and the amounts will be set through a process described in the new law. In particular, the established in-network cost-sharing amount must be billed for the following services:Client Alert

Ohio Enacts Substantial Changes to Employment Discrimination Laws

February 25, 2021In January, Governor Mike DeWine signed into law the Employment Law Uniformity Act, amending the employment protections in the Ohio Civil Rights Act in several significant ways. Such changes to the state’s anti-discrimination and anti-harassment laws have been considered and debated for years and finally made their way into Ohio law. What has changed for employment claims under the amended Ohio Civil Rights Act?Client Alert

OHIO ADOPTS THE SERIES LLC: Implementation of Ohio’s Revised Limited Liability Company Act is Coming

February 24, 2021On January 7, 2021, Ohio adopted S.B. 276. The new legislation establishes the Ohio Revised Limited Liability Company Act (“ORLLCA”) which effectively replaces the current Ohio LLC Act. ORLLCA will be fully effective as of January 2022. While the new law contains numerous changes to the existing LLC landscape, below is an overview of some of the key differences under the ORLLCA.
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