Shannon S. Smith Assistant United States Attorney Eastern ......Assistant United States Attorney...
Transcript of Shannon S. Smith Assistant United States Attorney Eastern ......Assistant United States Attorney...
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Shannon S. Smith
Assistant United States Attorney
Eastern District of Arkansas
(501) 340-2628
[email protected] views expressed in this presentation are solely those of the author and should not be represented as the
policy or opinion of either the United States Department of Justice or the United States Attorney for the Eastern
District of Arkansas.
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Provides for recovery of treble damages
Do not need to prove specific intent to defraud
Only need to show reckless disregard or
deliberate indifference
Lower standard of proof than criminal cases
Overview of the False Claims Act31 U.S.C. Section 3729-33
Reaches individuals, corporations and
partnerships
Corporations can be liable for acts of employees
even if they did not know about the conduct if the
conduct benefits the corporation
Liability is joint and several
Statute of limitations is 6 years from date of fraud
or three years from date of discovery (not to
exceed ten years)
Targets the incentive for fraud: Money
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FALSE CLAIMS ACT AND FERA
• On May 20, 2009, the Fraud Enforcement and
Recovery Act of 2009 (FERA), P.L. 111-21,
became law. Section 4 of FERA revised certain
provisions of the False Claims ACT (FCA), 31
U.S.C. §§ 3729-33.
• First significant revisions since 1986.
• Revisions focused on only a few sections of the
statute.
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•Congress labeled the FCA
amendments “Clarifications to the
False Claims Act to Reflect the
Original Intent of the Law.”
•“…The effectiveness of the FCA
has recently been undermined by
court decisions limiting the scope
of the law and allowing
subcontractors and non-
governmental entities to escape
responsibility for proven frauds. In
order to respond to theses
decisions, certain provisions of the
FCA must be corrected and
clarified….”
S. Rep. No. 111-10, 111th Cong., 1st Sess. 10 (March
23, 2009).
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Provisions of the False Claims Act
31 U.S.C Sections 3729-33
3729(a)(1)…Any person who…
(A) knowingly presents or causes to be presented, a false
claim or fraudulent claim for payment or approval….
3729(a)(1)(B)
• 3729(a)(1)…Any person who…
(B) knowingly makes, uses, or causes to be made or used,
a false record or statement material to a false or
fraudulent claim.
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Pertinent Dates
• Although the changes made by FERA
generally apply only to conduct that occurs
on or after May 20, 2009, the date FERA
was enacted, FERA expressly states that the
changes to the former paragraph 3729(a)(2)
apply to claims pending on or after June 7,
2008 (two days before the Supreme Court’s
decision in Allison Engine).
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Conspiracy
3729 (a)(1)(C)
• 3729(a)(1)…Any person who…
(C) conspires to commit a violation of
subparagraph (A), (B), (D), (E), (F), or (G).
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More effects of changes…
• A violation of the new conspiracy provision will occur
when a person conspires to violate any of the FCA’s other
liability provisions.
• Proof of a specific intent to defraud should not be required.
• It should be sufficient to show that the defendants agreed
to violate one of the FCA’s substantive liability provisions,
which can include an agreement to act recklessly or with
deliberate ignorance.
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Failure to Deliver Property
3729(a)(1)(D)• 3729(a)(1)…Any person who…
(D) has possession, custody, or control of property or
money used, or to be used, by the Government and,
knowingly delivers, or causes to be delivered, less than all
of that money or property.
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Broad effect
• Intended to cover failure to deliver property.
• Little use in past.
• Eliminated wording about intent to defraud,
willfully concealing, and requirement for
receipts or certificates.
• May be used more since archaic language
and “willfully” removed.
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Reverse False Claims
3729(a)(1)(G)• 3729(a)(1)…Any person who…
(G) knowingly makes, uses, or causes to be made or used,
a false record or statement material to obligation to pay or
transmit money or property to the Government, or
knowingly conceals or knowingly and improperly avoids
or decreases an obligation to pay or transmit money or
property to the Government.
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Changes to Reverse False Claims
• Eliminated “to conceal, avoid, or decrease” from existing
statute.
• Eliminated intent language.
• Result is that a person violates the reverse false claims
provision where he knows that he has received federal
money to which he is not entitled – including money that
he initially was entitled to receive, but is no longer entitled
to retain – and does not return it.
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FCA, FERA and PPACAWhat the large print giveth, the small print
taketh away…
• FCA with FERA change to 3729(a)(1)(G)-
the reverse false claim
• PPACA Section 6402(d) – receipt of
overpayment must be reported within
allotted time period – see Kane case
• Can be a felony – up to 5 years in prison,
plus serious fines (up to $250,000 per
individual or $500,000 per corporation)16
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Odds and Ends• 3733(a)(1)
Attorney General may delegate authority to permit
FCA civil investigative demands (subpoenas).
Information may be shared with Relator.
• 3732
Complaint, while under seal, may be served on co-
plaintiff, State or local government.
• 3731
Government’s Complaint relates back to relator’s
filing date.
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QUI TAM ACTIONS
If a private party files the action, the complaint is
filed under seal for at least 60 days while the
United States investigates the complaint.
The seal period can be extended for "good cause"
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If the United States provides any portion of the
money or property which is requested or
demanded, or if the United States will reimburse
anyone for any portion of the money or property
which is requested or demanded the False Claims
Act applies
Any false invoice
Claims to Medicare
Cost reports
Fraudulent attempts to redeem food stamps
Federal insurance claims
Fraudulent negotiations of Treasury checks
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Federal Health Care Programs
• Medicare – 55 million beneficiaries, $597 billion
in expenditures for 2014
• Medicaid – 70 million beneficiaries, over $400
billion in expenditures
• TRICARE - DOD
• VA
• FEHBP
• Public Health Service Entities
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General HCF schemes
• Overbilling for services rendered
• Billing for services not rendered
• Providing and/or billing for medically unnecessary
services
• Failing to provide adequate care or services
• Billing for defective goods
• Program integrity concerns (Antikickback/Stark)
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ANTI-KICKBACK ACT
41 U.S.C 51-58
Prohibits payment of any kind to or by a
contractor for the purpose of receiving favorable
treatment
Double damages plus a civil penalty
Part A Fraud Schemes
Year-End Cost Reports• Billing for costs unrelated to patient care (e.g.
lavish entertainment, furs, jewelry)
• Disguising non-reimbursable costs as
reimbursable costs (e.g. including Labor and
Delivery in OR costs)
• Shifting non-Medicare patients to cost report (e.g.
nursery)
• Falsifying wage index (hours and salary date) to
increase DRG payments
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Continued….
• Shifting costs related to private-pay patients
to Medicare (e.g. nursing salaries)
• Cost shifting to cost-based services
• Related parties billing at rates including
exorbitant profits on supplies or services
• Overstating costs (e.g. fail to report rebates
on supplies and equipment)
• Physician kickbacks included in cost report25
Still going……
• Double billing
– Billing both Part A and Part B for same
item/service
– Billing Medicare when provider has been paid
by another payor
– Billing the same cost twice on a single cost
report (e.g. billing for management fees and
then including same fees as A & G costs)
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Last one!
• Making false statement to the carrier, fiscal
intermediary or the OIG in furtherance of
the scheme.
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COMMON LAW REMEDIES
Breach of Contract
Unjust enrichment
Mistake of Fact
Conversion
Breach of Fiduciary Duty
Restitution
Single damages
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Questions???
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