What Is False Claims Act?
The False Claims Act (31 USC 3729-3733) is a federal law imposing civil liability on a person who knowingly submits, or causes to be submitted, a false or fraudulent claim for payment to the U.S. government. The statute provides for a civil penalty per claim, adjusted annually for inflation, plus three times the government’s damages.
- Maintain a documented compliance program: periodic coding audits, a confidential internal reporting channel, prompt investigation of possible overpayments, and a defined process for returning them.
- On timing, work from the regulation rather than from memory.
- Those definitions do real work, and an organization relying on them should have counsel confirm how they apply to its own facts.
False Claims Act
Also known as: FCA; 31 USC 3729-3733; Lincoln Law
The False Claims Act (31 USC 3729-3733) is a federal law imposing civil liability on a person who knowingly submits, or causes to be submitted, a false or fraudulent claim for payment to the U.S. government. The statute provides for a civil penalty per claim, adjusted annually for inflation, plus three times the government’s damages.
Definition
The FCA imposes civil liability on a person who knowingly presents a false or fraudulent claim for payment, knowingly makes or uses a false record or statement material to such a claim, or knowingly conceals or improperly avoids an obligation to pay money to the government — and the statute defines “obligation” to include “the retention of any overpayment”. “Knowing” is defined at 31 USC 3729(b)(1) as actual knowledge of the information, deliberate ignorance of its truth or falsity, or reckless disregard of its truth or falsity, and the same provision states that these “require no proof of specific intent to defraud”. The statute sets the civil penalty at “not less than $5,000 and not more than $10,000, as adjusted by the Federal Civil Penalties Inflation Adjustment Act of 1990”, plus three times the damages the government sustains; the adjusted figures change annually and should be read from the current federal inflation-adjustment rule rather than from any number quoted on a web page. A court may assess double rather than treble damages where the defendant furnished the government with all known information within 30 days, fully cooperated, and no investigation had begun. Private relators may sue on the government’s behalf under the qui tam provisions. This page explains the statute; whether a particular billing practice meets its standard is a question for counsel on the specific facts.
Example
Billing an evaluation and management level the documentation does not support, billing for services not rendered, billing duplicates, and unbundling services that should have been billed together are the fact patterns that appear most often in healthcare FCA matters. Whether any one of them creates liability turns on the knowledge standard at 31 USC 3729(b)(1) and on materiality, both of which are fact questions decided case by case. Overpayments are the other common route: an identified Medicare or Medicaid overpayment has to be reported and returned, and the regulation defines both identification and the timetable precisely — see the practical-application note below.
Common Misconceptions
The FCA’s knowledge standard is not intent to defraud: deliberate ignorance and reckless disregard also count, and the statute says so expressly. That is not the same as saying a mistake is never a defense. The three states of mind are defined terms, and whether a particular error falls inside or outside them is a legal question on the specific facts, not something a compliance summary can settle. The relationship with the Anti-Kickback Statute works the same way. The AKS provides that “a claim that includes items or services resulting from a violation of this section constitutes a false or fraudulent claim” for FCA purposes (42 USC 1320a-7b(g)), so the causal link between the kickback and the claim is an element to be established rather than an assumption. Get counsel on the specifics before treating either question as settled.
Practical Application
Maintain a documented compliance program: periodic coding audits, a confidential internal reporting channel, prompt investigation of possible overpayments, and a defined process for returning them. On timing, work from the regulation rather than from memory. 42 CFR 401.305 requires an identified overpayment to be reported and returned by the date 60 days after it was identified, states that “a person has identified an overpayment when the person knowingly receives or retains an overpayment”, and allows the 60-day deadline to be suspended for up to 180 days while the provider investigates and quantifies it. Those definitions do real work, and an organization relying on them should have counsel confirm how they apply to its own facts.
Related Terms
Anti-Kickback Statute
The Anti-Kickback Statute (42 USC 1320a-7b(b)) is a federal criminal law prohibiting the knowing and willful offer, payment, solicitation, or receipt of any remuneration to induce or reward referrals of items or services payable by a federal health care program.
Read definitionStark Law
The Stark Law (42 USC 1395nn) is a federal civil statute that bars a physician from referring a patient for designated health services payable by Medicare to an entity with which the physician, or an immediate family member, has a financial relationship unless an exception is satisfied, and bars that entity from billing for services furnished on a prohibited referral.
Read definitionHIPAA
HIPAA is the 1996 federal law that establishes national standards for protecting the privacy and security of individually identifiable health information held by covered entities and their business associates.
Read definitionWhere This Applies on MedPrecision
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