False Claims Act Penalties
Those submitting false claims to the federal government, whether it be a Medicare provider or a defense contractor, should think twice. The False Claims Act (FCA) is a federal law that allows the federal government, and even private individuals, to sue those making fraudulent government claims.
In order to be liable under the FCA, those violating the law must have some form of knowledge or deliberate ignorance of the falsity of their claim, so an inadvertent clerical mistake isn't enough. However, where someone is found to have knowingly submitted a fraudulent claim, the penalties can be severe.
Below you'll find a general overview of FCA penalties and how they work to deter fraud claims.
Civil Penalties and Damage Awards Under the FCA
Under the text of the FCA, those who submit fraudulent claims to the government are subject to a civil penalty of between $5,000 and $10,000 for each claim. However, because the Act allows for inflationary adjustments, as of 2016, violators now face penalties of between $10,781.40 and $21,562.80 per claim.
In addition to these civil penalties, the government is entitled to recover treble damages, or triple the amount of any money it may have lost due to a false claim.
FCA Penalties in Action
Just to see how FCA penalties can add up and deter fraudulent activities, let's look at a hypothetical Medicare fraud claim.
Corey, a retired construction worker now receiving Medicare coverage, has had ongoing but relatively minor low back pains due to his many years of swinging hammers on jobsites. Corey goes to his primary care physician who refers him to an orthopedic doctor for back treatment.
When he arrives at the orthopedic clinic, the doctor performs a full examination of his back, but also of his knees and neck, recommending surgery for his back and pain medication for his knees and neck. Corey never complained of any neck or knee pain. After his back surgery, he sees what was billed to Medicare in addition to the back examination -- the original basis for the referral. The charges were as follows:
|Orthopedic Examination of Neck||
|Orthopedic Examination of Knees||
|Pain Medication (Neck)||
|Pain Medication (Knees)||
If the government pays these claims and later determines that they're fraudulent because the surgery, pain medication, and neck/knee evaluations weren't necessary, then an FCA case could potentially recover triple the government's damages, or at least $303,366. In addition, since there are five different fraudulent claims, the government could recover separate civil penalties of up to $107,814 ($21,562.80 per claim). So, based on one referral for minor back pain, the orthopedic clinic faces at least $411,180 in losses. Not a smart move.
False Claims Act: Related Crimes
The activities that gives rise to liability under the FCA also typically violate criminal laws. So, in addition to civil penalties and damages, those submitting fraudulent claims could also face prison time for their offenses. Some crimes that are often associated with FCA cases can include:
Questions About False Claims Act Penalties? Talk to a Legal Professional
Fraudulent government claims siphon away taxpayer dollars which could otherwise be used to help the disadvantaged in society. The False Claims Act is one deterrent, but blowing the whistle on fraud can get a little complicated, especially if you work for the entity engaging in the fraud. That's why it's crucial to speak with an attorney to ensure that your rights are protected. Get in touch with a whistleblower-qui tam attorney near you today to learn more.