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False Claims Act Penalties You MUST Know

False Claims Act (FCA) penalties often have grave consequences, ranging from significant civil monetary penalties up to imprisonment. That’s why you should do your best to avoid violating this act as a healthcare provider.

The U.S. Department of Justice reveals that it has already obtained over $2.2 billion in settlements and judgments from civil cases related to fraud and false claims against the federal government, as of Sept. 30, 2020.

If you own a healthcare company, or you are working as a healthcare professional, you must be aware of the FCA and its violations. Examples include submitting inaccurate claims for services, billing for products and services you did not provide, or paying and receiving a kickback for referrals.

Let’s uncover common False Claims Act penalties so you can steer clear of them.

Judges gavel sitting on a a book with money

What is the False Claims Act?

The False Claims Act refers to a federal statute that establishes liability for deliberately and knowingly presenting a false claim for payment to the U.S. government or to a government contractor.

This act imposes civil and criminal penalties to individual persons and business entities who fraudulently bill the government, understate a financial obligation, and over-represent the total amount of a delivered product or service.

The False Claims Act is usually enforced by the Justice Department. Private citizens are also allowed to file “qui tam” suits on behalf of the government.

Common False Claims Act Penalties

Exclusion From Medicare and Medicaid Programs

A healthcare provider or company may potentially be excluded from the Centers for Medicare & Medicaid Services (CMS) on a permanent basis if they violate the FCA.

It will be challenging for a medical professional or entity to continue operating if it loses the privilege of treating the millions of Americans who are beneficiaries of Medicare and Medicaid. Being blocked from these government programs could be damaging to healthcare careers and businesses.

Other healthcare organizations will not be able to hire and bill certain individuals and entities if their names are not included in the list published by the Office of Inspector General (OIG).

In some cases, a healthcare professional or company can settle and pay fines in place of permanent exclusions. They may also agree to be monitored continuously by the U.S. government.

Nevertheless, CMS recommends that you prevent fraud in the first place by protecting your organization from participating in abusive practices. It suggests that you increase your awareness of Medicare fraud and abuse examples and familiarize yourself with resources for reporting suspected violations.

Civil Monetary Penalties

Healthcare providers and entities who transgress the FCA could be subject to civil monetary penalties (CMP). These penalties are evaluated on a per-claim basis, meaning that every fraudulent claim will result in its own penalty. On average, the amount of the CMP typically ranges from $10,781 to $21,563.

On top of the CMP, damages are computed by multiplying the amount that the violator received from the U.S. government by three. Civil action fees may be charged to the offender as well.

The Civil Money Penalties Law (CMPL) grants the Secretary of Health and Human Services the authority to impose civil money penalties. In general, monetary sanctions are usually greater than the damages sustained by the government.

While the CMP itself is limited, the total amount that an individual or company needs to pay may potentially balloon into hundreds of thousands or even millions because of the related damages and fees.

You need to be careful as a healthcare professional and as a healthcare company to avoid being liable for false claims or fraudulent actions.

Criminal Penalties

While CMS exclusion and financial penalties are significant, criminal penalties are particularly grave consequences. A healthcare entity cannot be jailed, but individual persons who lead the organization may be imprisoned. These may include the medical director, president, CEO, or CFO of the healthcare company.

The submission of fraudulent claims to government healthcare programs can result in up to five years in prison for individual persons. A fine of $25,000 may also be charged in addition to imprisonment.

How To Avoid False Claims Act Penalties

FCA penalties are serious matters, so you should take proactive steps to avoid transgressing this act. Here are some ways that you can prevent FCA violations in your healthcare organization:

  • Educate your healthcare staff to increase their knowledge and awareness of FCA.
  • Design and implement standard procedures and policies which will encourage team members to comply with the act.
  • Keep accurate, timely financial records to document all financial transactions.
  • Assign an officer who will take charge of maintaining compliance with the FCA within the workplace.
  • Train your managers to pinpoint and detect occurrences of fraud and abuse among leaders and staff members.
  • Instill a sense of responsibility in everyone to report suspected or confirmed cases of fraud among the team.
  • Cooperate with federal and state agencies in case they need to perform investigations regarding false claims.

Get Expert Counsel

The guidance of our legal team can help prevent you and your healthcare company from making FCA violations. In case you or one of your team members fail to comply with the FCA, our team of lawyers can expertly defend you to minimize the gravity of the FCA penalties.

Call us at (310) 444-5244 or send us a message to learn how our legal services can benefit you as a healthcare provider or company.