Fraud Recovery Bill Has Healthcare Implications

The Senate on Tuesday approved the Fraud Enforcement and Recovery Act of 2009, which would give additional resources to law enforcement for fighting fraud and abuse, and strengthens fraud laws and statutes.

Although the bill's primary function it to prevent the growing number of mortgage fraud cases, it also broadens the scope of claims that fall under the False Claims Act, which can affect any organization that submits claims to the government for payment, including healthcare providers.

Specifically, the bill would extend the reach of the False Claims Act to include any false or fraudulent claim for government money or property, regardless of whether:

• The claim is presented to a government official or employee
• The U.S. government has physical custody of the money
• The defendant specifically intended to defraud the U.S. government

"If the bill becomes law, it's easier for the government and private whistleblowers to succeed in false claims act cases," says Claire Turcotte, a healthcare attorney with Bricker & Ecker LLP in West Chester, OH.

Not that False Claims cases have been particularly unsuccessful. In a press release, the bill's co-author, Sen. Patrick Leahy (D-VT), called the False Claims Act "one of the best civil tools available to root out fraud in government." Leahy also said the Justice Department recovered more than $15 billion in fraud using the False Claims Act from 2000-2008.

According to Leahy, the bill redefines terms in the False Claims Act to more accurately reflect the intention of the law. In particular, the term "knowingly" has been redefined to in a way that overturns the Allison Engine Supreme Court decision of 2008, which required prosecutors to prove specific intent to defraud the government.

The new language specifically states intent is not a requirement of the False Claims Act and the prosecution only needs to show the violator did one of the following, in regards to information:

• Had actual knowledge of the information
• Acted in deliberate ignorance of the truth or falsity of the informationbr
• Acted in reckless disregard of the truth or falsity of the information.

Turcotte says this change would take away a key tool organizations use to fight false claims allegations because now the government is not burdened with the difficult task of proving intent. But the new question is how can an organization show that it acted without "deliberate ignorance" or "reckless disregard"

Turcotte says time will tell how the courts will interpret these terms. However, she believes those terms could refer to compliance programs.

Turcotte says government representatives have said they are looking more closely at whether an organization has a prudent compliance program, and based on the severity of the violation, the government will likely offer more leniency to an organization that can prove it properly educated educate employees on claim submissions.  

The bill is headed to the House of Representatives.