Healthcare fraud False Claim Act cases, include coding false claims, DRG false claims fraud, PPS false claims fraud, Medicare kickbacks, outpatient PPS false claims fraud, Stark law violations, DME fraud and DRG fraud, are brought by whistleblowers, often those who have attempted to call attention to the problem within their company. Qui tam, which the lawsuits are known as, is a unique mechanism in the law that allows persons and entities with evidence of fraud against federal programs to sue the wrongdoer on behalf of the government. Currently, qui tam provisions include strong financial incentives to file a lawsuit on behalf of the government. Below is a more detailed explanation of healthcare fraud scenarios under the False Claims Act.

I. FRAUDULENT HEALTH CARE BILLING

Health care fraud cases including coding false claims, DRG false claims, PPS false claims, outpatient PPS false claims, kickbacks, Stark law violations, DME fraud, and DRG fraud (DRG creep) now comprise the majority of all False Claims Act cases, which increased from 12% in 1987 to over 45% in 2007.

A. FALSE BILLING

1. Billing for services not rendered or products not delivered.

2. Misrepresenting services rendered or product provided e.g. Upcoding, inappropriate coding. Also, misrepresenting the nature of the patient's condition e.g. DRG fraud, DRG creep.

3. Ungrouping services or products billed- in this scenario, tests and other services that are automatically performed as a panel, group or set, should be billed as a single service. When a provider breaks these services out of the group and bills them individually, the provider is deemed to be "unbundling", therefore this is a case of DRG false claims.

4. Billing for medically unnecessary services - this includes furnishing services in excess of the patient's needs, based on their diagnosis, or furnishing a battery of diagnostic tests, where, based on the diagnosis, only a few were needed; it also includes misrepresenting the diagnosis to justify the services or products.

5. Duplicate billing.

6. Falsifying records to meet or continue to meet the conditions of participation; this includes the alteration of dates, the forging of physicians' signatures, and the adding of additional information after the fact. This is somewhat common with Durable Medical Equipment (DME) fraud.

7. Increasing units of service, which are subject to a payment rate.

8. Billing procedures over a period of days when all treatment occurred during one visit i.e. split billing.

9. Billing Medicare improperly based on a higher fee schedule or unit schedule than that used for non-Medicare patients.

10. Submitting bills to Medicare that are the responsibility of other insurers under the Medicare Secondary Payer rule.

B. FALSE COST REPORTS

Involves Medicare Part A providers, such as hospitals, nursing homes, and home health agencies; such fraud falls into several general categories:

1. Inflating costs relating to patient care; i.e. including cost of non-covered services, supplies and equipment.

2. Seeking reimbursement for costs apportionable to non-Medicare patients; i.e. manipulating statistics to obtain additional payment, such as increasing the square footage of Medicare certified areas.

3. Seeking reimbursement for costs that are not related to patient care.

4. Failing to disclose the related nature or the relationship between business entities with whom the provider is dealing.

5. Improperly manipulating statistics (e.g. patient census, cost center allocations, square footage).

6. Claims for bad debts without genuine attempts to collect payment.

C. KICKBACKS

Usually involves the following two different types of payment;

1. Cash payment made in return for patient referrals, typically involving non-physicians.

2. Non-cash payment to physicians in return for patient referrals, such as free or below market value rent, contractual arrangements providing for payment in exchange for non-existent services, etc. Also includes Stark law violations.

D. STARK VIOLATION

The Stark law, 42 U.S.C. §1395nn, is also known as the Physician Self-Referral Law. If a physician (or immediate family member) has a direct or indirect financial relationship (ownership or compensation) with an entity that provides any of certain designated health services ("DHS"), the physician cannot refer patients to the entity for DHS and the entity cannot submit a claim to Medicare for such DHS unless the financial fits in a statutory or regulatory exception

.

The Stark law was intended to prohibit physicians from profiting (actually or potentially) from their own referrals. The Stark law acts to sanction improper physician referrals, and does so by providing penalties for illegal referrals prospectively. Its effect is to prohibit relationships that have been demonstrated to encourage over-utilization. It is a strict liability statute, i.e. there is no need to show knowledge or intent.

The Medicare and Medicaid programs depend on physicians and other health care professionals to exercise independent judgment in the best interests of patients. Financial incentives tied to referrals have a tendency to corrupt the health care delivery system in ways that harm the federal programs and their beneficiaries. Corruption of medical decision-making can result when a physician refers a patient to a provider on the basis of the physician's financial self-interest instead of the patient's best interests.

Overpaid medical directorships, interest free loans/forgiveness of debts, illegal recruitment arrangements and improper discounts, may represent financial windfalls to physicians resulting in hospital referrals in violation of the "Stark Law" statute. Examples also include sham contracts which provide for "backdoor" "sweet deals" between hospitals (which afford to physicians benefits like, office space, renovations, equipment, furniture, housekeeping services, office supplies, copy and fax machines, telephone and utility as well as transcription services) and referring physicians, which amount to benefits to physicians for free or less than fair market value.

A violation of the Stark law can be the basis for False Claims Act liability.

 

E. MANAGED CARE FRAUD

Arises with Managed Care Organizations which are providing services (or lack thereof) to Medicare and Medicaid beneficiaries. Conduct includes :(1) refusal to pay for needed medical care by specialists; (2) submission of false (inflated) patient census to Medicare in order to received increased reimbursement.

II. WHAT TYPES OF PEOPLE FILE QUI TAM LAWSUITS?

EMPLOYEES: A current or former employee who blows the whistle on his or her employer is one of the most common type of qui tam plaintiffs. Detecting fraud is usually very difficult without the cooperation of a close observer of the fraudulent activity. In the case of a former employee, they were usually terminated or quit as a result of complaining about the fraud or trying to blow the whistle internally. Typically, the complaints fall on deaf ears.

An employee is, without a doubt, the most common and helpful whistleblower to bring qui tam cases based on coding fraud, DRG fraud, PPS fraud, outpatient PPS false claims and other Medicare fraud. Without insiders, proof of fraud will almost always be by circumstantial evidence. It is for this reason why whistleblowers are so important. Whistleblowers can explain the who, what, where and when of the alleged fraud.

COMPETITORS AND SUBCONTRACTORS: Another less common type of whistle blower is the competitor of the company committing the fraud or an employee of the competitor who has direct knowledge of the fraud being committed. Also, companies or persons who subcontract with a government contractor have filed qui tam actions against the contractor.

INDUSTRY EXPERTS: In a few cases, industry experts have successfully brought suit against multiple defendants alleging an industry-wide practice. Their understanding of the industry and the common scheme throughout helped them to be in a position to blow the whistle.

In general, coding false claims, DRG false claims, PPS false claims, outpatient PPS false claims, kickback, Stark law violations, DME fraud, and DRG fraud (DRG creep) may be uncovered by people with knowledge of the requirements of the government programs involved and the misrepresentations made by the companies engaging in the conduct.

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