A couple of years ago, we discussed in an article in this publication the willingness of Centers for Medicare & Medicaid (“CMS”)and the United States Attorneys’ Office to pursue actions for violations of the False Claims Act in circumstances where there are no actual monetary damages flowing from the violation. In United States v. MedQuest Associates, Inc.[1]  , the U.S. District Court for the Middle District of Tennessee severely punished an Independent Diagnostic Testing Facility (“IDTF”) for failing to file change of ownership forms timely and thereby submitting Medicare claims using another entity’s Medicare number. Fortunately, the United States Court of Appeals for the Sixth Circuit reversed that holding in April of 2013. However, the case remains an example of the government’s aggressive approach to recoveries in health care settings.

The MedQuest litigation was an example of a Qui tam action. Qui tam, as many health care providers have come to know, is an abbreviation from the Latin phrase meaning “who as well for the king as for himself sues in this matter.”  Qui Tam actions, along with related False Claims Act actions being brought by both federal and state law enforcement agencies, have become a high growth segment in health care law. We have seen the defense of health care providers grow exponentially in these matters over the last three years. And, as the old Sonny and Cher song says, “and the beat goes on…” as governmental agencies attempt to balance the costs of the Affordable Care Act with recoveries from health care providers.

I.        Significant Developments

Qui tam lawsuits have become a major component of Federal and State health care regulation.  On November 20, 2014, the U.S. Department of Justice announced they had “obtained a record $5.69 billion in settlements and judgments from civil cases involving fraud and false claims against the government in the fiscal year ending September 30, 2014.”  Of that amount, the U.S. DOJ recovered $2.3 billion, or forty percent, from health care entities.

In addition to qui tam actions that are instituted by individuals, CMS began employing the more formalized tool of Recovery Audit Contractors (or “RAC” audits) in 2005 as a demonstration project.  RAC auditors are paid a bounty (bonitas, in Latin) for the recoveries they make.  This demonstration project was ostensibly undertaken by CMS as an effort to “extend” the Medicare Trust Fund.  According to a recent article in the publication the Fierence Health Payer.com, the program collected nearly $10 billion through last year.

It has been reported that the RAC audit program was to be discontinued by CMS following Congressional pressure resulting from a pending backlog of some 350,000 appeals.  However, this report is not entirely correct.  According to the CMS website, “effective June 4, 2015, CMS has withdrawn the Requests for Quotes for the next round of Recovery Auditor contracts.  CMS plans to update the Statement of Work and release new Requests for Proposals shortly.  In the meantime, the current Recovery Auditors will continue active recovery audits through at least December 31, 2015.”

II.        Practical Application

It is clear that both the Federal government, and the state governments that are now allowed to share a percentage of the recoveries of federal funds that they help recover, plan to continue to step up their enforcement actions against health care providers.  In addition to the tools discussed above, a new favorite of both federal and state government lawyers is the use of Civil Investigative Demands (“CIDs”), which can be utilized to gather vast amounts of information. 

Once the CID investigative process is complete, the governmental agencies can determine whether to drop the matter, proceed to civil litigation, or proceed with a criminal indictment.  They will also often employ the specter of a criminal action to extract a civil settlement.  Penalties for violations of the False Claims Act may include fines per claim, treble damages, and criminal sanctions, including debarment from federally funded programs such as Medicare and Medicaid. 

When served with a demand for information from a bounty hunter, an RAC auditor, or a CID, contact your legal counsel immediately.  Often the way a provider responds is as important as what they actually say.

III.        CONCLUSION

The Federal Government and CMS have made no secret of their intention to step up both enforcement efforts in the health care community and financial recoveries from violations of the law. The tools currently employed, as discussed above, are examples of the government’s approach a step beyond “recovery” for inappropriate billing to the next level of seeking targets of opportunity.  All of this leaves us with one final bit of “modern” Latin, illegitimi non carborundum.