Blowing the whistle on health care fraud
William J. Blechman
A recent Supreme Court decision upholding the False Claims Act is good news for health care purchasers in the public and private sector.
Hidden amid the steady stream of media coverage of the Columbia/HCA saga is the story of the more than a dozen lawsuits filed by employees and others associated with the mammoth health care entity. Filed under the federal False Claims Act – and known to the legal community as qui tam suits and to the public as whistleblowing – all charge Columbia with defrauding the government.
Such is the province of the False Claims Act, which authorizes any citizen with knowledge of a false claim submitted to the government to sue the offending party on behalf of the United States. In a narrow decision handed down by the Supreme Court in June of this year, the justices left that right intact. Hughes Aircraft Co v. United States ex rel. Schumer focuses on the defense industry but has implications for other industries funded by the government, health care chief among them.
While the ruling may not be hailed by leaders in the industries most affected, employers that purchase health care for their workers have reason to be pleased. The more money the government recovers through such civil suits – the Justice Department estimates that qui tam suits led to the recovery of more than $1 billion in just over a decade – the less likely that costs will be shifted to the private sector.
Combating health care fraud is especially important now, in view of predictions of a new round of premium hikes. The problem has escalated in recent years, with government spending on health care increasing dramatically but with no corresponding increase in federal spending on the detection of fraud and abuse. Indeed, the GAO reports that less than one quarter of 1 percent of Medicare dollars is spent on audits. From 1989 to 1994 alone, HCFA slashed the proportion of processed claims reviewed for billing fraud from 20 to 5 percent.
All of this has put today’s health care industry in a position comparable to that of the defense procurement industry a decade ago: It’s dependent on government funding for its existence but lacking in conventional means of policing and preventing the submission of false and fraudulent government claims.
Managed care, which emerged more slowly in the public than the private sector, is now increasingly prevalent in both Medicaid and Medicare. That, too, has contributed to the government’s inability to effectively police health care fraud. As more and more Medicaid recipients enroll in capitated, risk-based plans and Medicare beneficiaries join HMOs, the government is losing access to encounter and claims data it traditionally relied on to police the health care industry.
“Patients – and, in the case of Medicare and Medicaid, taxpayers – pay a high price for health care fraud and abuse in the form of higher health care costs, higher premiums, and at times, serious risks to patients’ health and safety,” a 1994 Senate report declared. Two years later, fraud and abuse in government-funded health care programs had become so widespread that the Justice Department launched Operation Restore Trust in an attempt to target and prosecute offenders.
The False Claims Act, as amended in 1986, upholds a citizen’s right to file claims against offenders – and protects an employee from retaliation for blowing the whistle against an employer that submitted a false government claim. A comparison of the number of such cases filed prior to the 1986 amendments and the number filed afterward is a meaningful measure of the law’s effectiveness: Between 1943 and 1986, according to one study, there were an average of three qui tam suits per year; by another tally, there were fewer than six a year before 1986. In the years since, according to the Justice Department, the government has recovered more than $3 billion in civil fraud actions – with more than $1 billion attributed to 153 whistle-blower cases.
WILLIAM J. BLECHMAN, ESQ. is a partner in the law firm of Kenny Nachwalter Seymour Arnold Critchlow & Spector in Miami.
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