Qui tam changes may bring more fraud suits

As if the False Claims Act (FCA) wasn't already enough of a headache for risk managers, recent changes to the law could bring even more reason to worry. Risk managers should be aware of how the Fraud Enforcement and Recovery Act of 2009 (FERA) will affect them, says Richard Glovsky, JD, a partner with the Boston-based law firm Prince Lobel.

The message for risk managers is clear, Glovsky says: Whatever you were doing in regard to the FCA before is not enough. You have to step up your game.

FERA brought important changes to the FCA, the primary civil enforcement tool for health care fraud and the source of qui tam whistle-blower plaintiffs. The FERA amendments expand liability under the FCA and may make it more difficult to defend some cases, Glovsky says.

Some of the provisions are retroactive, and the amendments provide more resources for the Department of Justice to pursue fraud cases. That means risk managers can expect more enforcement efforts in the coming year.

"In a down economy, the government is looking for new ways to bring in money, just like everyone else. Finding more of those who are defrauding government is a popular way to do it," he says. "Given the limited tax dollars, the government is providing prosecutors with more resources and telling them to go find more false claims."

Glovsky cites one part of FERA called the "Reverse False Claims Act" as particularly worrisome for risk managers. Under this new provision, if you recognize that you were overpaid by the government, even through no fault of your own, you must return the excess funds, and will face penalties and criminal prosecution if you don't. That means the provider is obligated to recognize that the government made a mistake and overpaid; even if the fault lies entirely with the government, it is the health care provider's responsibility to find the error and rectify it. By creating the obligation for the health care provider to act affirmatively, this puts an onus on health care providers that did not exist before, Glovsky says.

In response to FERA, Glovsky says risk managers must ensure their revenue systems are set up in such a way as to flag overpayments.

"It is no revelation to say that the federal government occasionally makes mistakes, but now if Uncle Sam errs and you don't catch it, you could conceivably have exposure," Glovsky says. "It looks like the government is going to take these issues very seriously and delegate substantial authority to the attorney general's office to deal with them."

In particular, the government has broadened civil investigatory demands, a tool whereby prosecutors can request documents, interrogatories, and testimony to facilitate FCA investigations.

The revisions also mean that the government no longer needs to show intent on the part of the health care provider to prove fraud, Glovsky says. Now, the government only needs to show that the provider was reckless or deliberately indifferent — such as might be the case if a provider dealt with a fraudulent durable medical equipment supplier without properly investigating the company up front.

"There is a lot more muscle to this law now," Glovsky says. "I suspect that on the law enforcement side, there will be more vigor in pursuing these cases."


For more information on FERA, contact:

• Richard Glovsky, JD, Partner, Prince Lobel Glovsky & Tye, Boston. Telephone: (617) 456-8012. E-mail: rglovsky@princelobel.com.