Class 10 – Laws

Fraud and Abuse laws include:

  • Federal Medicare and Medicaid Anti-kickback Statute
  • Federal False Claims Act
  • Stark I and II: Physician Referrals (See: 42 USC 1395nn)

The Federal Medicare and Medicaid Anti-kickback Statute is a criminal statute. Basically, this statute prohibits a person from soliciting or receiving payment of any kind for Medicare or Medicaid type of referrals. Also, any person who offers or pays to induce a person to make these type of referrals is subject to this law. The Federal Medicare and Medicaid Anti-Kickback Statute (42 U.S.C. 1320a-7b(b) is written with very broad language and it  prohibits a person from knowingly and willfully:

(1) soliciting or receiving any remuneration, “directly or indirectly, overtly or covertly, in cash or in kind,” in return for referring an individual for services or in return for securing or arranging for any good, facility or service (or recommending same), for which payment can be made under Medicare or Medicaid; or

(2) offering or paying any remuneration, “directly or indirectly, overtly or covertly, in cash or in kind,” to any person to induce such person to refer an individual for services or to secure or arrange for any good, facility, or service (or recommending same), for which payment can be made under Medicare or Medicaid.

Violations of the Statute are classified as felonies, punishable by fines of up to $25,000 per violation, imprisonment for up to five years, and exclusion from the Medicare and Medicaid programs. Enforcement is under the authority of the Office Inspector General (“OIG”) and the United States Department of Justice.

There are statutory exemptions under this law, known as “safe harbors“ which describe practices or arrangements that will not be considered violations of the Anti-Kickback Statute. For example, an employer/ employee relationship might be exempt.  Periodically the Office Inspector General (OIG) issues “Special Fraud Alerts” to give continuing guidance with practices they consider unlawful.

The False Claims Act (“FCA”) is a civil statute. This Act is important to know about because civil actions are really the heart of the federal government’s Medicare fraud and abuse effort. This is because of the triple damages involved.

This Act prohibits the “knowing” submission of a false or fraudulent claim for payment to an officer or employee of the United States Government. For example, to HCFA representative in connection with the Medicare program.

The government does not have to prove specific intent to establish a false claim. Those who act with “reckless disregard” or “deliberate ignorance” of the facts can be held liable for violations of this statute.

The penalties are $5,000 to $10,000 per false claim submitted plus treble the damages sustained by the government because of the false claim.

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