Legal: Keep specter of FCA present

A. Part one of this two-part article discusses the False Claims Act (FCA) and its whistleblower (or “qui tam”) provision. Part Two discusses how suppliers can decrease their risk of FCA liability.

The FCA creates liability for any person who knowingly submits a false claim to the government or causes another to submit a false claim, or knowingly makes a false record or statement to get a false claim paid by the government. The “reverse FCA” section of the law creates liability when one acts improperly to avoid having to pay money to the government. Another section creates liability for those who conspire to violate the FCA.

Penalties under the civil FCA include a civil penalty of $5,500 to $11,000 for each false claim, plus triple the amount of the government's damages. Under certain conditions when a person self-reports the FCA violation to the government, the person may qualify for double damages.

The FCA allows private persons to file a lawsuit for violations of the FCA on behalf of the government and themselves. Often, the “whistleblower” is a former employee who alleges that a company's billing practices are fraudulent.

If a “whistleblower” brings suit under the FCA, the complaint is filed under seal for at least 60 days. During these 60 days, the government will investigate the allegations in the complaint. Often, the defendant is not aware that it is the target of a FCA suit.

After the investigation, the government must notify the court whether or not it wants to take over in the lawsuit; if it takes over, it will have primary responsibility to prosecute (or settle) the lawsuit. If it doesn't, the “whistleblower” can proceed with the lawsuit.

In the past, the government's decision not to intervene gave defendants a dash of hope because attorneys for “whistleblowers” were seen as being less aggressive than the government, but this is no longer the case. The industry can expect to see FCA lawsuits pursued by private litigants more vigorously with the resultant potential for higher monetary awards.

To be sure, the specter of FCA claims should be ever-present for businesses who participate in federal programs.

Jill Vogel is a senior health care attorney at Brown & Fortunato, P.C. Reach her at jvogel@bf-law.com.