Health Law Blog - Healthcare Legal Issues

What Is The Different Between Fraud, Abuse, and Criminal Conduct

Fraud, Abuse, Over-payment – When Does a Mistake Become Fraud?

Fraud Abuse OverpaymentIf you are involved in any way in the health care system, it should be obvious by now that the government has committed ever increasing resources to the prosecution of fraud and abuse cases. Simply put, from a governmental standpoint, prosecuting fraud and abuse is good business. Every dollar that the government puts into pursuing health care fraud and abuse brings a return of around 7 or 8 dollars. If you are in business what do you do if you know that you can invest $1 and obtain a consistent $7 return on that investment; you spend the $1 as many times as you can. That is exactly what the government is doing when it comes to health care fraud and abuse. It is worthy of note that we are not just talking about pursuing criminals when we talk about health care fraud and abuse.

Certainly there are a lot of criminals out there who are intentionally trying to steal from the system through fraudulent schemes. Fraud and abuse encompasses a much broader type of activity. There are numerous situations where unintentional activity (i.e. a billing or coding error) can result in being overpaid by the federal government under a governmental health care program. I don’t want to say that this happens to everyone in the health care system; but it certainly happens to a lot of people, usually as a result of some sort of neglect or misinterpretation of some very complex regulations. Take for example the supervision rules that are discussed in another article in this newsletter. They are extremely convoluted and it is hard to imagine who every doctor could have it clear in his or her mind which rules apply and exactly what is required in each specific instance. Nevertheless, a billing occurs and if the proper supervision is later found to not be present, an over-payment results. This is an example of what the government considers to be “abuse.” No criminals are involved here, but an over-payment and technical abuse of the system has occurred.

The manner in which this situation is dealt with becomes critically important in determining whether there is a simple correction of the situation or whether it is escalated to higher levels of culpability; whether the simple inadvertent abuse becomes fraud. Let’s skip forward to a time when the doctor discovers that a mistake has been made in the level of supervision that was provided in the past. What happens now it very important. First, lets imagine that the doctor comes forward and admits the error. There is some money owed back to the governmental health program. This part of it will never go away. But lets say that the doctor lets it slide for half of a year and does nothing. Under current law, the doctor’s potential exposure has just escalated into a completely different zone of risk and potential culpability. Federal law says that the Federal False Claims Act applies if an over-payment is not corrected within 60 days after discovery. There are a lot to technical rules about when an over-payment is deemed to have been discovered. I am not going to get into that right now.  the doctor is potentially exposed to three times the original over-payment. But that is not the extent of it. The doctor is also exposed to additional damages in the amount of $11,000 per claim; for every individual service claim that resulted from the initial mistake in complying with the supervision regulations. This case has now escalated from abuse into fraud. From here it is just a matter of establishing intent to make this a criminal case.

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John H. Fisher

Health Care Counsel
Ruder Ware, L.L.S.C.
500 First Street, Suite 8000
P.O. Box 8050
Wausau, WI 54402-8050

Tel 715.845.4336
Fax 715.845.2718

Ruder Ware is a member of Meritas Law Firms Worldwide

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