Class 10 – FRAUD AND ABUSE LAWS


Some Fraud and Abuse Questions

  • Are we talking criminal, civil, or a combination of both
  • Who are the parties involved? From the government’s perspective there may be various agencies involved such as: Office Inspector General (OIG), Federal Bureau Investigations (FBI), Department of Justice (DOJ), Internal Revenue Service (IRS), Health Human Service (HHS), Attorney General, Securities Exchange Commission (SEC), and others.
  • Is it at state or federal level or both?
  • What are damages or penalties involved?

Fraud and abuse is a very broad category with many convoluted laws and regulations.  See the Laws Section for more details.

When you hear the term fraud and abuse, ask some questions, such as are we talking criminal, civil, a combination of both.  Who are the parties involved? From the government’s perspective there may be various agencies involved such as the: Office Inspector General (OIG), Federal Bureau Investigations (FBI), Department of Justice (DOJ), Internal Revenue Service (IRS), Health Human Service (HHS), Attorney General, Securities Exchange Commission (SEC), and others.  Is it at the state or federal level or both?  Also, consider what are the damages or penalties involved.


Among other things, Physicians should be aware of fraud and abuse related laws and AVOID:

  • Upcoding
  • Overbilling, and
  • Billing for services not rendered for Medicare and Medicaid patients

Something important to be aware of is that in the fraud and abuse area providers can pass the requirements under one law and yet still be subject to liability under another law.  The response by some is that “Just as every fire is not an arson, not every billing mistake is an example of fraud and abuse.”  An $18 billing error could result in a $10,000 fine against a provider.

Also, consider “global settlements” if you end up settling one of these type of cases. You want to make sure that you get all of the agencies and others involved subject to the settlement – including qui tam actions that you might not even be aware of are pending.

If investigators or auditors begin making inquiries or requesting records, it is advisable to get outside counsel involved immediately. Routine inquiries can turn into full-scale “fishing expeditions”. The investigators may initially have no evidence that wrongdoing occurred but search the provider’s books and records to see if they can find anything wrong. Every provider, whether for-profit, not-for-profit or government sponsored is a potential target.

Some attorneys recommend that in responding to an investigation you have to keep in mind two things: (1) what do you tell your employees; and (2) what do you tell the public. Some recommend to honestly address the employees. Explain what is and is not going on. This does not mean they have to talk to agents and you have to be careful about obstruction of justice type of issues. In terms of what you tell the public, some recommend that you tell it first, tell it all, and tell it yourself.

According to the First Annual Report from the Fraud and Abuse Control Program:  In 1997, nearly $1 billion was returned to the Medicare Trust Fund from collections of criminal fines, civil judgments and settlements, and administrative actions.  More than 2,700 individuals and entities were excluded from Medicare and Medicaid for fraud or other misconduct, an increase of more than 92 percent over 1996.  Convictions for health care fraud related crimes rose nearly 20 percent, and 61 percent more civil health care fraud cases were pursued (a total of 4010 actions).

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