Elements of the DOJ's False Claims Act 'guidance'

The Department of Justice's newly released "Guidance on the Use of the False Claims Act in Civil Health Care Matters" represents the DOJ's first real concession to provider concerns that they've been unfairly targeted for prosecution because of simple billing mistakes.

In his brief preface to the guidance, Deputy Attorney General Eric H. Holder Jr. emphasizes that U.S. attorneys "are obligated to use their authority under the act in a fair and responsible manner," particularly when it comes to national initiatives "which can have a broad impact on health care providers across the country."

The guidance, which Holder claims is designed to ensure the fairness of such prosecutions, includes the following provisions:

First, and most significantly, Holder says that before even alleging that a provider has violated the False Claims Act, DOJ attorneys must establish "legal and factual predicates." That means they must first evaluate whether the provider submitted false claims and then whether the false claim was submitted "with knowledge of falsity."

"These are separate inquiries," Holder maintains. "Department attorneys shall not allege a violation of the False Claims Act unless both of these inquiries lead to the conclusion that there is a sufficient legal and factual predicate for proceeding."

To determine whether false claims were submitted, DOJ attorneys must:

1. Examine relevant statutory and regulatory provisions and interpretive guidance from the program agency (such as HCFA or TRICARE) to determine whether the claims are false.

2. Verify the accuracy of the data or other evidence, either independently or with with the assistance of HCFA's fiscal intermediaries, the HHS Office of the Inspector General, the Federal Bureau of Investigation, or another investigative agency.

3. Conduct "the necessary investigative steps," such as subpoenaing documents and interviewing witnesses.

Once the DOJ has established to its satisfaction that false claims were filed, it must then establish that the provider knew the claims were false before pursuing a False Claims Act case. Note, however, that to the DOJ "knowing" can also mean acting with "deliberate ignorance or reckless disregard as to the truth or falsity of claims." According to the guidance, DOJ attorneys will consider the following factors in determing whether providers meet the criteria for knowing falsity:

- Notice to the provider.

Was the provider on actual or constructive notice of the rule or policy on which a potential case would be based?

- The clarity of the rule or policy.

Under the circumstances, is it reasonable to conclude that the provider understood the rule or policy?

- Guidance by the program agency or its agents.

Did the provider contact HCFA for clarification of the billing rule at issue? If it did, was HCFA "forthcoming and accurate" in its response? Did the provider reasonably rely on such guidance in submitting the false claims?

- The pervasiveness and magnitude of the false claims.

Is the pervasiveness or magnitude of the false claims enough for the DOJ to conclude that they resulted from deliberate ignorance or intentional reckless conduct?

- Compliance plans and other steps to comply with billing rules.

Does the provider have a compliance plan in place, and is it adhering to the plan?

- Past remedial efforts.

Has the provider already independently identified the wrongful conduct and taken steps to remedy the problem? Was the problem reported to a government agency?

- Prior audits.

Have there been prior audits or other notice to the provider of the same or similar billing practices?

- Any other information that bears on the provider's "state of mind" in submitting the false claims.