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The Repercussions Of Medical Fraud

This week Your Legal Corner discusses medical fraud and you.  

Abraham Lincoln is widely considered one of our greatest presidents. While preserving the Union and ending slavery are pretty significant achievements, Honest Abe was also responsible for signing the False Claims Act also known as "Lincoln's Law." The False Claims Act was first utilized to address contractors who were swindling the military during the Civil War.

Now over 150 years old, the False Claims Act is a powerful tool to combat fraud and false claims submitted to the federal and state government. In 2014, the U.S. Department of Justice recovered nearly $6 billion under the Act. False claims against federal health care programs such as Medicare and Medicaid accounted for $2.3 billion of the total amount.

Why should we care about medical fraud? According to the Center on Budget and Policy Priorities, approximately 25% of our federal budget or approximately $938 billion dollars is spent on government health insurance programs such as Medicare, Medicaid, Children's Health Insurance Program (CHIP) and Affordable Care Act subsidies through our tax dollars.

False Claims Act    

Under the False Claims Act, any person who knowingly submits a false claim to the government or causes another to submit a claim is liable under the Act. Additionally, making a false record or statement to get a false claim paid is also prohibited under the Act. Violations can result in fines up to three times the programs' loss plus up to $11,000 per claim.

There are many different ways individuals and businesses have defrauded federal and state health care programs. Two examples of medical fraud are: when a doctor submits a bill to Medicare for medical services not provided; or submits a claim for services such as treatment, diagnostic tests or medical devices for a patient who does not exist.

Other examples include up-coding services and unbundling medical procedures. Up-coding services occurs when a health care provider submits a claim for services which represents a more serious and more expensive procedure than that which was actually performed. Unbundling involves billing for services separately that are typically billed together such as laboratory tests.  

Anti-Kickback Statute

The Anti-Kickback statute is a criminal law that prohibits the "knowing" payment of remuneration to induce or reward patient referrals. Remuneration means not only cash but also gifts, free rent, expensive hotel stays and meals for example. The statute covers the payers of kickbacks as well as the recipients.

Penalties include fines, jail terms and exclusion from participation in the Federal health care programs in addition to civil penalties of up to $50,000 per kickback plus three times the amount of the remuneration.

Physician Self-Referral Law

The Physician Self-Referral Law prohibits physicians from referring patients to receive services payable by Medicare or Medicaid from entities owned by or having a compensation arrangement with the physician. This law is a strict liability statute meaning actual intent is not required for a violation. Penalties include fines and exclusion from participation from the program.

While most physicians provide an invaluable service in keeping our loved one's healthy, fraudulent medical practices cost us billions of dollars each year. In New Jersey, call 1-877-553-7283 to report medical fraud.

Till next time, God bless, keep smiling, when Your Legal Corner will discuss

"Medical malpractice, the Affordable Care Act and you." Victoria M. Dalton is a dedicated Family/Elder Law Attorney with the Law Offices of Hoffman DiMuzio. Email correspondence to [email protected] or call 856-845-8243.

Please note that Your Legal Corner was created to provide educational material about the law and is not legal advice.

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