CMS False Claims Act

CMS False Claims Act

The CMS False Claims Act is designed to combat fraud in the Medicaid and Medicare programs. It was estimated by CMS (Centers for Medicare and Medicaid Services) that $500 billion was spent in 2006 alone on the two programs. The potential-and the incentive-for fraud are enormous given an amount of money as large as that. CMS is fighting back, however, as they acquired nearly 2.3 billion from fraud cases they won in 2006.

CMS False Claims Act History

The False Claims Act was established back in 1863, during the Civil War. Due to when it was established, it is sometimes referred to as the "Lincoln Law." The Act was an attempt to prevent pricing fraud by individuals and corporations who were selling items to the Union. Knowing that the fraud would often be known by employees or persons who weren't necessary involved in the fraud itself, or who were forced to participate, the act allowed individuals to sue on behalf of the government.

Though the False Claims Act was originally drafted to combat fraud by defense contractors, it has sense expanded to cover health care fraud, as the health care industry has grown exponentially in the past decades. Though it is still the False Claims Act, because of the association with Medicare and Medicaid fraud, it is now sometimes called the CMS False Claims Act.

In 1986, Congress made some changes to the Act to strengthen it, mostly with the intention of hoping it would help fight against health care fraud. Some of the more significant changes to the Act in 1986 include:

  • Increasing the reward for plaintiffs to 15-30 percent of the money recovered from the plaintiff
  • Having the defendant pay the attorney's fees of a successful plaintiff
  • Whistleblower protections for employees who file suit

What Is Qui Tam?

One of the most important provisions of the False Claims Act is the qui tam provision, which allows citizens to file suit on behalf of the government. Qui Tam is Latin, and is an abbreviation for a Latin saying that translates to "He who sues for the king as well as for himself." What this means is that if you know of fraudulent activities that are occurring, you can file a suit. You will still need a lawyer, however, since only a lawyer may file a suit for the U.S. government.

Unlike most civil and criminal matters that you might turn to a lawyer for, with a False Claims lawsuit, you don't need to have been personally involved with or harmed by the actions of the defendant.

Essentially, if you know of fraud that is taking place, find an attorney and file a lawsuit. If you win, you'll collect 15-30 percent of what is recovered by the government, and the defendant will be responsible for paying all of your attorney's fees. It's really a pretty good deal.

What Constitutes Fraud?

According to the CMS False Claims Act, liability occurs when someone submits a claim or record to the government that is known (or should be known) to be false. There is also liability if you receive money from the government that you know (or should know) you are not entitled to, and then you submit false statements in order to avoid refunding the money back to the government.

Some examples of fraudulent activities include:

  • A doctor who submits a bill to Medicare or Medicaid for services that were never provided
  • A hospital who receives medical funds they are not entitled to, and then submits falsified cost reports to the government in order to keep the money instead of refunding it

Penalties for Fraud

If the defendant is found liable under the False Claims Act, they are responsible for paying not less than $5,000 and not more than $10,000 to the government, in addition to three times the amount of damages the government sustains because of the fraudulent activity.

Whistle Blowing

Since it is hospital and doctor's offices employees who are most likely to know about the fraud taking place, the Act does provide for support for whistleblowers, which includes:

  • Reinstatement to your job
  • Special damages
  • Double back pay

Consult an attorney before filing suit for guidance on how exactly the whistleblower provisions can protect you.

External Resources

Visit the CMS website to learn more about the False Claims Act.

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CMS False Claims Act