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The False Claims Act is Not a Compliance Tool

Philip Betbeze, for HealthLeaders Media, May 3, 2013

If you've not been following the news surrounding the use of the False Claims Act to snare providers for Medicare fraud, let me catch you up. On April 2, the 6th U.S. Circuit Court of Appeals in Cincinnati overturned a lower court's $11 million judgment against MedQuest Associates Inc., a diagnostic imaging company. MedQuest had been accused of a False Claims Act violation—in other words, fraud—for violating Medicare's conditions of payment.

So what's the big deal? What's $11 million to an operator of more than 90 diagnostic imaging centers? Well the decision's importance has little to do with the amount in question. Some attorneys think it will be precedent-setting, in that good faith efforts to comply with the myriad (and that's putting it lightly) regulations involved in Medicare contracting are ultimately worth the effort.

That's because the court ruled that since the regulations MedQuest was accused of violating are not conditions of payment, bringing a suit for violations of the False Claims Act (as the Department of Justice did in this case) is not appropriate.

Instead, said the court, such violations are addressable within the administrative sanctions CMS has available, including suspension and expulsion from the Medicare program.

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