The Ethical Health Lawyer: Ethical Lawyering in the Gray Areas: Health Care Fraud and Abuse

Blumstein J. F. , “What Precisely is ‘Fraud’ in the Health Care Industry?” Wall Street Journal, December 8, 1997, at A25.

The FCA generally imposes liability when: (a) a defendant presents or causes to be presented a claim for payment or approval; (b) the claim is false or fraudulent; and (c) the acts are undertaken knowingly. 31 U.S.C. § 3729(a)(1). The Anti-Kickback Statute prohibits offering, paying, soliciting, or receiving any remuneration to induce someone to refer patients to any facility, or to purchase, lease, or order any item or service, for which payment may be made by a federal health care program. 42 U.S.C. § 1320a-7b(b). The Stark Law, nicknamed for its congressional sponsor, Representative Fortney “Pete” Stark (D-CA), is a civil statute designed to prohibit the referral of Medicare and Medicaid patients to health care providers with which the referring physician has a financial relationship. 42 U.S.C. § 1395nn.

For a discussion of these trends, see Krause J. H. , “A Conceptual Model of Health Care Fraud Enforcement,” Journal of Law & Policy 12 (2003): 55–147.

See 42 U.S.C. § 1395nn(b)-(e) (2003) (listing detailed exceptions). For a detailed discussion of the Stark Law and regulations, including the use of the FCA as a vehicle for enforcing the statute, see Krause , supra note 3, at 77–81.

42 U.S.C. § 1320a-7b(b) (2000). At present, it is unclear whether the statute requires proof of specific intent. In Hanlester Network v. Shalala, the Ninth Circuit held that the statute could not be violated unless the defendant both knew the law prohibited giving or receiving remuneration in return for referrals and acted with specific intent to violate the statute. 51 F.3d 1390, 1400 (9th Cir. 1995). In contrast, other circuits have held that specific intent is not required because the Anti-Kickback statute is not the type of “highly technical…regulation that poses a danger of ensnaring persons engaged in apparently innocent conduct.” United States v. Starks, 157 F.3d 833, 838 (11th Cir. 1998).

See 42 U.S.C. § 1320a-7d (advisory opinion process); 42 C.F.R. § 1001.952 (safe harbor regulations). A list of advisory opinions and special fraud alerts is available on the Office of Inspector General web site at <http://www.oig.hhs.gov/fraud.html> (last visited January 3, 2006).

See Medicare & State Health Care Programs: Fraud and Abuse; OIG Anti-Kickback Provisions, Federal Register 56: 35,952, 35,954, 35,956 (July 29, 1991). Together with questions of fair market value, intent is one of the two issues that the Advisory Opinions are statutorily prohibited from addressing. See 42 U.S.C. § 1320a-7(d)(3).

See 31 U.S.C. 3729(b); S. Rep. 99–345 at 7 (1986), reprinted in 1986 U.S.C.A.A.N. 5266, 5272 (“The Committee is firm in its intention that the act not punish honest mistakes or incorrect claims submitted through mere negligence”).

195 F.3d 457 (9th Cir. 1999).

Id., at 463.

See, e.g., Peterson v. Weinberger, 508 F.2d 45, 47–48 (5th Cir. 1975) (imposing liability on a physician who submitted bills to Medicare for physical therapy services that were not performed); United States v. Krizek, 111 F.3d 934, 936 (D.C. Cir. 1997) (addressing liability of psychiatrist who billed for 40–50 minute treatment sessions despite having spent only 20–30 minutes with patients).

914 F. Supp. 1507 (M.D. Tenn. 1996).

Id., at 1509.

Id., at 1507.

945 F. Supp. 1485, 1487 (W.D. Okla. 1996) (alleging that environment was not “reasonably safe” because under-staffing placed patients in danger of physical injury and sexual abuse).

Id., at 1488. Because the opinion arose on a motion to dismiss, the court did not have occasion to address whether the plaintiff ultimately would have prevailed on the merits.

See, e.g., Hoffman D. R. , “The Role of the Federal Government in Ensuring Quality of Care in Long-Term Care Facilities,” Annals of Health Law 6 (1997): 147–56 (detailing the prosecuting attorney's discussion of United States v. GMS Management-Tucker, Inc., No. 96-1271 [E.D. Pa., settled Feb. 21, 1996]).

Sheehan J. , “Bio-Tech Fraud: Reality or Fantasy?” Houston Journal of Health Law & Policy 2 (2002): 11–29, at 18.

See 31 U.S.C. § 3729(a) (statutory penalties); 28 C.F.R. § 85.3(a)(9) (increasing penalties for inflation); 42 U.S.C. § 1128(b) (permitting permissive exclusion of health care providers).

See Krause J. H. , “Health Care Providers and the Public Fisc: Paradigms of Government Harm Under the Civil False Claims Act,” Georgia Law Review 36 (2001): 121–217, at 202–06 (discussing problems created by mass settlement of FCA allegations); Reinhardt U. E. , “Medicare can Turn anyone into a Crook,” Wall Street Journal, January 21, 2000, at A18. (“Rather than engaging in a long, protracted fight to set the record straight, throughout which share prices suffer and business slumps, a health company's best bet may simply be to hand over the fines and get on with business.”)

See Krause , supra note 20, at 205–06.

A complete list of Compliance Program Guidance documents is available at <http://www.oig.hhs.gov/fraud/complianceguidance.html> (last visited January 3, 2006).

See, e.g., “OIG Draft Supplemental Compliance Program Guidance for Hospitals,” Federal Register 69 (June 8, 2004): 32,012, 32,030.

Note that if the client is operating under a Corporate Integrity Agreement (which is negotiated as part of a fraud settlement in return for OIG's agreement not to seek permissive exclusion), the client may have no choice but to report under the terms of the Agreement.

See 42 U.S.C. § 1001.952 (safe harbors); Medicare and State Health Care Programs, supra note 7, at 35,954 (noting that legality of arrangements that do not fall within safe harbors will depend on a fact-specific analysis).

See United States v. Anderson , CR 98–20030–JWL (D. Kan. March 9, 1999) (Trial Transcript, copy on file with author).

Id., at 4–5.