The Atlanta Lawyer April 2014 | Page 16

Member Submission AN OUNCE OF PREVENTION Review of the Current Health Care Fraud Enforcement Environment By Brian F. McEvoy and Todd P. Swanson Chilivis, Cochran, Larkins & Bever, LLP O ver the past several years, the Federal Government’s approach to health care fraud enforcement has become significantly more active. This increase in activity has been triggered not only by increased funding for health care fraud enforcement, but also by recent legislative provisions that expand fraud and abuse exposure for health care providers under the False Claims Act (“FCA”). In light of these developments, corporate health care clients are more dependent than ever on competent counsel to investigate potential health care law violations and to defend them if the Government begins an investigation of its own into the client’s activities. However, preventing (or minimizing) institutional health care fraud is the best medicine. To take such prophylactic measures, counsel must be familiar with the current changes in federal health care regulation and recent enforcement initiatives taken by federal law enforcement. This paper will focus on the recent expansion of the FCA, and the Government’s recent initiatives in enforcement under the FCA. I. Pervasiveness of Health Care Fraud The arguable birthdate of the new focus on health care fraud enforcement was January 28, 2010, at the National Summit on Health Care Fraud. There, Attorney General Eric Holder described health care fraud as a serious problem whose scope is “simply shocking,” noting that more than $60 billion in public and private health care spending is lost to fraud each year. Attorney General Holder also echoed the concerns of HHS Secretary Kathleen Sebelius when he admitted that, due to the size and amount of money involved in the national health care system, “so long as health care fraud pays and these crimes go unpunished, our health care system will remain under siege.” Attorney General Eric Holder, Remarks at National Summit Health Care Summit (January 28, 2010). However, according to some experts, the $60 billion dollar health care fraud figure cited by Holder may in fact be too conservative of an estimate of the amount of money lost to health care fraud each year. 16 THE ATLANTA LAWYER April 2014 In May 2009, while testifying before the Senate Committee on the Judiciary: Subcommittee on Crime and Drugs, Malcolm K. Sparrow, a Harvard Professor of Public Management and expert in fraud detection and control strategy, stated: The units of measure of losses due to health care fraud and abuse in this country are hundreds of billions of dollars per year. We just don’t know the first digit. It might be as low as one hundred billion. More likely it is two or three. Possibly four or five. But whatever that first digit is, it has eleven zeroes after it. Per Sparrow, some 10-20% of the annual Medicare and Medicaid budg et is spent on fraudulent or false claims. Other experts agree with Sparrow’s conclusions, putting the estimated annual loss between $70 and $100 billion. Rudman, et al., Health care Fraud and Abuse, 6 Perspectives in Health Information Management 1 (Fall 2009). Statistics like this have motivated law makers to expand exposure of health care providers under the FCA, and have motivated the present administration to increase funding of health care fraud prevention. II. Expansion of the False Claims Act On May 20, 2009, President Obama signed into law the Fraud Enforcement and Recovery Act (“FERA”). Less than a year later, on March 23, 2010, the President signed the Patient Protection and Affordable Care Act (“ACA”). The passing of these two laws has significantly expanded the exposure of health care providers that receive federal funds. A. Expansion of the FCA resulting from FERA FERA expanded both the procedural and substantive provisions of the FCA. Procedurally, FERA resolved two important areas of ambiguity. First, FERA specifically provided that the Government’s complaint-in-intervention, which typically replaces, amends, or adds to the relator’s complaint under seal, relates back to the date of the filing of the relator’s complaint. 31 U.S.C. § 3731(c). Second, FERA also resolved The Official News Publication of the Atlanta Bar Association