If the Senate version of the Medicare reform bill ends up becoming law, providers would be subject to higher penalties for federal False Claims Act abuses.
In the version of the law the Senate passed in June, Sen. Charles Grassley (R-Iowa), the father of the modern False Claims Act, added a provision that would increase the minimum and maximum penalties that whistleblowers and government fraud-enforcement agencies would be able to seek from providers. The minimum would rise from $5,000 to $7,500 per alleged violation and the maximum would rise from $10,000 to $15,000.
Under the bill, HHS' inspector general could seek higher civil monetary penalties from providers who inflate charges submitted to federal health programs, bill for unnecessary services or violate antikickback laws. The amounts would rise from the current $10,000 to $12,500 per "alleged fraudulent service or item," from $15,000 to $18,500 for individuals who falsely certify or offer misleading information, and from $50,000 to $62,500 per fraudulent act.
The Senate bill also would provide nearly $50 million over a three-year period to HHS' inspector general for policing the federal money spent on the new prescription drug benefit.
The House version of the bill does not currently include the increases, but House and Senate staffers said the House usually has deferred to Grassley on False Claims Act issues and consider it likely the provisions would remain in the final version of the legislation.
Washington healthcare defense lawyer John Boese of the firm Fried, Frank, Harris, Shriver & Jacobson said the new penalties would make the False Claims Act even more oppressive to healthcare providers and their attorneys. Boese said it's difficult to predict how providers charged under the proposed new Medicare law, which would apply to violations committed after Jan. 1, 2004, would respond to the increased penalties.
"Everyone responds differently to risk," Boese said. "A provider may cave in and settle because under the new law the financial risks will be much higher. Others may say they have nothing to lose and litigate and may even win cases they would have settled under the current law."
Boese said the law could benefit defense lawyers and providers.
"The more oppressive the law, the easier it is to get a judge to see things your way," Boese said. "I just think it's stupid. It's piling on and it's upping the punitive nature of an already punitive statute."
William Mahon, president of the Washington-based National Health Care Anti-Fraud Association, applauded the increase in fraud-fighting resources for the inspector general's office as well as the increase in penalties for violating the False Claims Act.
"The inspector general will need every penny of it," said Mahon, whose organization represents private commercial, state and federal health insurers fighting fraud.
"The reaction to this law will follow a pattern: This is new money and fraud perpetrators will chase after the money in that benefit," Mahon said. "I'm glad they're allocating resources that recognize the reality they're dealing with."
Mahon said it's about time the government upped the ante for cheating Medicare and violating the whistleblower law.
"Perhaps an increase in penalties is overdue as a deterrent," he said.
While whistleblower attorney Marc Raspanti of the Philadelphia law firm Miller, Alfano & Raspanti said he welcomed the added penalties to the law, realistically, he said, they will affect only the few False Claims Act lawsuits that go to trial.
"For example, I would rather Congress change the public disclosure aspects of the statute, which are being interpreted and misinterpreted all around the country," Raspanti said. "These changes will not have a dramatic effect on healthcare providers."