The Role of the False Claims Act in Combating Healthcare Fraud

The False Claims Act (FCA) is a federal law that imposes civil liability on individuals or entities who submit fraudulent claims to the federal government. It also allows individuals, including whistleblowers, to file lawsuits on behalf of the government (or a ‘​”qui tam” lawsuit) against entities or individuals accused of defrauding the government. Although the FCA has been an important tool in combating healthcare fraud, it also rewards whistleblowers with the opportunity to capitalize on gaining a percentage of any recovery funds. This creates a complicated legal process where the accused appear to have little recourse despite no wrongdoing. 


What Is Healthcare Fraud?

Healthcare fraud can be committed by a variety of individuals and entities. These include patients and medical providers who willfully attempt or succeed at defrauding the healthcare system through unlawful payouts and or benefits. Some examples of healthcare fraud include the following:


Patient Fraud: Using another individual’s insurance information to receive services, allowing another person to use your insurance, malingering to gain benefits, or receiving duplicate prescriptions with the intent to sell.

Provider Fraud: Billing and providing services as a medical professional without a license, billing for services not received, or billing for services that were more expensive than the services actually received. 

Prescription Fraud: Selling prescriptions, forging prescriptions, or bribing healthcare professionals to encourage them to prescribe specific prescriptions.

General Fraud: Identity theft, marketing fraudulent benefit plans, and using private information to sign individuals up for benefits plans without consent.


Fraudulent activity within the healthcare industry is extremely common and can cause harm to the U.S. healthcare system, however, the incentivization procedure within the FCA can also harm those who are not willfully or actively participating in fraud.


Defense For an FCA “Qui Tam” Lawsuit

Combatting fraud for the Department of Justice (DOJ) is big business. At the end of the 2021 fiscal year, the DOJ collected more than $5.6 billion in settlements and judgments from civil cases involving fraud and false claims. The FCA states that violators are liable for three times the government’s damages and a penalty of $2,000 for each false claim. For would-be whistleblowers, the prospect of getting a cut of those penalties is good enough to assume that even inaccurate accounting was done in bad faith.


Once the whistleblower files the qui tam lawsuit, similar to a bounty, they may receive around 25% or more of the damages collected from the suit. If the government decides to intervene in the suit on its own behalf, the kickbacks for the whistleblower are cut substantially to around 15%. Moreover, the government may prefer to settle outside of court, or dismiss the case entirely, making it sometimes preferable to involve the government in an FCA lawsuit. In the event that a qui tam lawsuit is brought against you, you would follow the same basic rules as any other defense case: Consult a lawyer at the first possible opportunity and do not discuss business practices or matters involving the case without a lawyer present.


FCA lawsuits are filed “under seal” which means that the investigation could be happening without your knowledge. Once informed of the case made against you, you have minimal time to build a defense, which is why it’s essential that you work with a dedicated attorney who is experienced in fraud cases. For questions or legal guidance on healthcare fraud, contact the firm of Weisberg Kainen Mark at (305) 374-5544 for a consultation.

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