False Claims Act liability can flow from submitting false, exaggerated, tainted, or otherwise illegal claims to government healthcare programs such as Medicare, Medicaid, and TRICARE, among others. Under the False Claims Act, private individuals can sue in the name of the government to recover dollars lost to fraud on government healthcare programs, and successful whistleblowers share in 15%-30% of recovered dollars.

The Act has proven hugely successful, particularly in the healthcare space. In fact, since the 1980s, roughly 75% of dollars recovered under the False Claims Act have been healthcare-related recoveries.

Healthcare fraud is as varied and ever-evolving as the healthcare industry itself. Schemes can range from the simple, like billing the government for services not provided, to more complex frauds such as clandestine kickback payments or accounting maneuvers designed to capture referral streams in ways that are illegal and anticompetitive.

The attorneys at Whistleblower Partners have been advocating for healthcare industry whistleblowers for decades. Our team is experienced in cases involving all manner of healthcare frauds, including fraud under all parts of the Medicare program, numerous state Medicaid programs, TRICARE, CHIP, the Federal Employee Health Benefits Plan, and state-specific programs that allow whistleblowers to bring cases to expose fraud on private insurers. In our years combatting healthcare fraud, our attorneys have become fluent in the healthcare industry and have developed strong relationships with many government offices that are dedicated to recovering dollars lost to fraud. Our knowledgeable attorneys have the breadth and depth of experience needed to manage these difficult and complex cases.

Certain financial arrangements in medical care can drive up healthcare costs, lead to over-utilization of healthcare services and supplies, stifle competition, and interfere with sound medical decision-making. The Anti-Kickback and Stark Laws are meant to address these concerns and help keep medical decisions free from the influence of purely financial incentives. These laws prohibit medical providers from paying or receiving kickbacks, remuneration, or anything of value in exchange for referrals of patients whose treatment will be paid for by government healthcare programs such as Medicare and Medicaid, and from entering certain kinds of financial relationships that aim to capture referral streams. 

The Anti-Kickback Statute

The Anti-Kickback Statute, often called the AKS, 42 U.S.C. § 1320a-7b(b), broadly applies to any medical provider that arranges or recommends medical services that are ultimately paid for, fully or partially, by federal healthcare programs like Medicare. This includes a number of industry players such as hospitals, nursing homes, companies that sell pharmaceuticals or durable medical equipment, and dialysis facilities, to name a few. AKS violations require “intent to induce referrals.” An AKS violation can constitute a violation of the False Claims Act even if the provider did not specifically intend to violate the AKS. 

Relationships between healthcare providers and referring physicians are often extremely complex, and kickbacks can take nearly limitless forms. The key is that something of value was provided with a purpose to induce healthcare referrals. 

• Garden-variety AKS violations can include direct payments from providers to referring physicians, including payments for consulting or administrative roles, salary payments that are inflated or offered in exchange for little to no work, or performance bonuses that are tied to the volume of referrals or procedures ordered.

• AKS violations can also include more novel arrangements meant to incentivize patient referrals, such as providing a referring physician access to free staff services, below-market rent, or favorable terms on investment opportunities and other business ventures. Patient copay waivers can also constitute AKS violations if intended, for example, to encourage patients to utilize a particular drug or medical equipment. 

The Stark Law

The Stark Law, 42 U.S.C. § 1395nn, prohibits healthcare providers from making referrals for certain health services, payable by Medicare, to another entity that the provider or an immediate family member has a financial relationship with, unless an exception applies. The Stark Law, unlike the AKS law, is a “strict liability” statute, meaning proof of intent to induce referrals is not required. 

• A textbook Stark Law violation is a hospital paying a physician an inflated wage that is far above fair market value in the hopes of capturing that physicians’ Medicare-insured patient referrals for ancillary services such as lab testing and imaging.

The AKS has several “safe harbors” from liability and the Stark Law contemplates numerous exceptions from liability. If you think you know about conduct that may violate one or both laws, consult with an experienced attorney who can help you get to the bottom of it.

Managed care is a health insurance option that is meant to improve outcomes and contain costs through coordinated, efficient patient care. Managed care has dramatically increased in popularity in recent years. Medicare Part C, also called Medicare Advantage, is the largest government-funded managed care program. As of 2023, more than half of Medicare-eligible individuals are enrolled in a managed care plan under Medicare Part C. Many states’ Medicaid programs also use managed care, and the majority of Medicaid beneficiaries are enrolled in some type of managed care plan. As government spending on managed care has risen, so have dollars lost to fraud.

Managed care models often pay health insurers, providers, or both based on risk incurred, and not based on the volume of services provided (also known as “fee for service” payment). Generally, this means that insurers operating under a managed care model are paid by the number of enrolled beneficiaries. Through a process called “risk adjustment,” the payment per beneficiary is often increased for groups of individuals more likely to incur higher expenses, such as older beneficiaries or beneficiaries with known chronic conditions. These increased payments, or “risk adjustment” payments, are often calculated based on plan enrollees’ known diagnoses for costly, chronic conditions. 

Risk adjustment fraud cases have become increasingly common in the managed care world, including in Medicare Part C and under various states’ Medicaid programs. These cases can involve insurers or providers that submit exaggerated or otherwise false diagnosis codes to the government, conduct that can amount to a False Claims Act violation. Another common scheme involves “one way chart reviews” to mine for additional risk adjustment codes without reporting codes or returning payment for codes identified as invalid through the reviews. Nearly every major insurer in the Medicare Advantage program is facing, or has recently resolved, litigation involving some form of risk adjustment fraud. 

Government-sponsored managed care programs are vulnerable to other frauds too. One example is accounting tactics to evade the Medical Loss Ratio requirement, which mandates that Medicare managed care plans spend a certain percentage of revenue on patient care and quality improvement. Managed care fraud takes many other forms, and whistleblowers are critical to exposing all manner of fraud in Medicare Part C.

Billing fraud in healthcare takes many forms, and is one of the most common cases we see in our practice. It can include billing a government healthcare program for services not provided, “upcoding” or billing for a more complex service than actually performed, billing for medically unnecessary services, billing for services not covered by the government program, or misstating the equipment used or staff who performed the billed services. 

Medicare, Medicaid, TRICARE, and other government healthcare programs cover an incredible breadth of services and billing requirements can vary depending on the services performed, the program being billed, and various other factors. It is impossible to think of every billing scheme that would be a violation of the False Claims Act. The key, generally speaking, is that the government healthcare program either would have refused to pay or would have paid less for the services had they known the truth. Whistleblowers are particularly crucial in reporting medical billing fraud. Insiders are often experts in both the regulations governing their field and the facts on the ground in their workplace.

Many of the common fraud types are just as applicable to pharmaceutical companies as to other healthcare industry players like providers, hospitals, and laboratories. For example, pharmaceutical companies can be found liable for paying kickbacks to physicians in exchange for prescribing the company’s drugs. However, pharmaceutical companies are also uniquely positioned in the healthcare industry as players that deal more often with healthcare providers or insurers than with patients. 

This means that there are some additional fraud schemes that are relatively specific to pharmaceutical companies. These include not giving the government the best price for drugs, increasing the cost of certain drugs paid for by the government faster than the rate of inflation, pushing off-label use of certain drugs, and submitting fraudulent evidence to the FDA in the drug approval process. All these fact patterns can amount to False Claims Act violations.