The Impact of the False Claims Act on Healthcare Fraud Cases in California
Healthcare fraud cases are a major focus of federal and state prosecutors in California, where complex healthcare laws, a high volume of Medicare and Medi-Cal claims, and strict regulatory oversight intersect. In that light, a powerful tool known as the False Claims Act (FCA) allows the federal government—and even private citizens—to pursue claims against healthcare providers suspected of submitting false claims for payment. For California healthcare professionals, understanding how the FCA impacts healthcare fraud cases is essential, especially as the consequences of an FCA violation can be severe. Read on for a discussion of this critical area, and contact The Law Offices of Stanley L. Friedman for strategic and effective representation from a California Board-Certified Criminal Law Specialist and experienced Los Angeles healthcare fraud defense attorney.
What Is the False Claims Act?
Enacted during the Civil War to prevent fraud in military procurement, the False Claims Act is now widely used to address fraud against government programs, particularly Medicare and Medicaid (known as Medi-Cal in California). Under the FCA, it is unlawful to submit false or fraudulent claims for payment to the federal government. Violations can result in hefty civil penalties, repayment of overbilled funds, and even exclusion from participation in government healthcare programs.
One of the distinctive features of the FCA is its qui tam provision, which permits private individuals, also called whistleblowers or relators, to file lawsuits on behalf of the government. If successful, the whistleblower may receive a portion of the recovered funds, creating a strong incentive for employees, competitors, or other insiders to report fraud.
Key Elements of a False Claims Act Violation in Healthcare Fraud Cases
For an FCA violation to be proven, several elements must be established:
- Submission of a Claim: The alleged fraudulent claim must be submitted to a federal program, such as Medicare or Medi-Cal.
- Knowledge: The healthcare provider must have known, or should have reasonably known, that the claim was false or misleading. This includes reckless disregard or deliberate ignorance of the truth.
- Falsity: The claim itself must be objectively false or misleading, either through a deliberate overstatement, a service never rendered, or other deceptive means.
In California, where a large volume of government healthcare claims is processed, the standard of “knowing falsity” is particularly important in distinguishing fraudulent behavior from simple mistakes.
Common Examples of False Claims Act Violations in Healthcare
The application of the False Claims Act in California healthcare fraud cases has seen a wide range of alleged misconduct. Some of the most common examples include:
- Billing for services not provided: Submitting claims for medical procedures, tests, or consultations that were never performed.
- Upcoding and unbundling: Claiming reimbursement for more expensive procedures or splitting services to increase payments.
- Kickbacks and referrals: Offering financial incentives to encourage referrals, which violate anti-kickback statutes and can lead to FCA liability.
- Misrepresenting medical necessity: Performing and billing for tests or procedures that are unnecessary for patient care, solely to inflate claim amounts.
California has seen significant cases involving these forms of fraud, with hospitals, clinics, individual physicians, and other providers facing investigations under the FCA.
Federal and State Enforcement of the FCA in California Healthcare
In California, healthcare fraud cases under the FCA can be initiated by either federal or state agencies, and they may involve collaboration between the U.S. Department of Justice (DOJ), the Office of Inspector General (OIG), and state authorities. California’s False Claims Act, while modeled on the federal law, applies specifically to state programs like Medi-Cal and adds a layer of state jurisdiction, increasing the chances of prosecution for providers suspected of fraud.
The DOJ has taken an aggressive stance on healthcare fraud in recent years, and California, with its substantial healthcare market, often finds itself at the forefront of enforcement efforts. Through initiatives like the Health Care Fraud Prevention and Enforcement Action Team (HEAT), federal and state authorities have ramped up FCA investigations, particularly in regions like Los Angeles and the Bay Area, where fraud rates are statistically higher.
Whistleblowers in California: The Qui Tam Factor
The qui tam provision of the FCA is especially powerful in healthcare cases, and California providers should be aware of its implications. Healthcare employees, competitors, or consultants who suspect fraud can file a lawsuit as whistleblowers and share in the proceeds if the government recovers funds. This provision often leads to whistleblower lawsuits when there is even a hint of improper billing or fraudulent practices, exposing healthcare providers to costly legal challenges and reputational harm.
However, while whistleblowers are essential in identifying fraudulent practices, the risk of false allegations exists. For healthcare providers, a defense attorney can help to ensure that accusations are properly scrutinized and that innocent errors are not mistaken for intentional fraud.
Consequences of an FCA Violation in California Healthcare
A healthcare provider found liable under the FCA in California may face serious consequences, including:
- Civil Penalties: Providers may be ordered to pay civil fines ranging from $5,000 to over $20,000 per false claim, in addition to triple damages.
- Repayment of Funds: Repayment of all funds received as a result of fraudulent claims, which can total millions of dollars in larger cases.
- Exclusion from Government Programs: Providers found guilty of fraud may be excluded from participation in Medicare, Medi-Cal, and other federal healthcare programs.
- Reputational Damage: Beyond financial penalties, the reputational damage of an FCA case can be long-lasting, affecting patient trust and referrals.
Defenses Against FCA Healthcare Fraud Allegations
If a California healthcare provider faces an FCA claim, several defense strategies may be available, including 1) lack of intent, by demonstrating that the alleged violations were unintentional, such as due to billing errors or miscommunication; 2) lack of falsity, by proving that the services rendered were medically necessary and properly coded; and 3) technical violations, by arguing that errors do not amount to fraud if they were technical or clerical in nature and not knowingly deceitful.
Working with a defense attorney who has expertise in healthcare fraud is essential, as the complexities of billing codes, healthcare regulations, and intent standards require precise legal knowledge.
Protecting Against FCA Violations in California
Given the increased attention on healthcare fraud in California, proactive compliance is key. Regular audits of billing practices, training staff on proper coding and compliance standards, and consulting legal counsel on ambiguous billing practices can all reduce the risk of FCA claims. Compliance programs tailored to California’s regulatory landscape can also help healthcare providers navigate both federal and state requirements, avoiding potential legal entanglements.
Contact The Law Offices of Stanley L. Friedman for Effective Defense Against Allegations of Healthcare Fraud in Los Angeles
For healthcare providers in California, the False Claims Act poses unique risks that require careful attention. The healthcare sector is under intense scrutiny, and even unintentional billing errors can lead to complex legal battles. Healthcare providers can mitigate these risks by understanding the FCA’s requirements, ensuring robust compliance measures, and consulting a knowledgeable defense attorney if faced with an FCA investigation. Through vigilance and adherence to compliance standards, providers can avoid the severe repercussions associated with False Claims Act violations and maintain their good standing in California’s healthcare community.
If you have been charged with healthcare fraud in Los Angeles, Contact The Law Offices of Stanley L. Friedman at 310-598-2000 to discuss your case in detail. We will work tirelessly to defend you and ensure the best possible outcome.
