Penalties for health providers under the federal False Claims Act (FCA) are set to double under a proposed rule by the U.S. Department of Justice.
The interim final rule would increase minimum per-claim FCA fines from $5,500 to $10,781 and maximum per-claim penalties would rise from $11,000 to $21,563.
The adjusted civil penalty amounts would apply to civil penalties assessed after Aug. 1, 2016, whose associated violations occurred after Nov. 2, 2015. Violations on or before Nov. 2, 2015, and assessments made prior to Aug. 1, 2016, would continue to be subject to the lower penalties. The rise stems from the federal Civil Monetary Penalties Inflation Adjustment Act , which provides for the regular evaluation and adjustment for inflation of civil monetary penalties to ensure they maintain a deterrent effect, according to a summary of the rule.
The FCA penalizes any person who knowingly submits a false claim to the government or causes another to submit a false claim to the government or who knowingly makes a false record or statement to get a false claim paid by the government. In 2015, the DOJ recovered more than $3.5 billion in FCA settlements and judgments.
Health law experts say the higher penalties may encourage more whistleblowers to file FCA claims against doctors since the potential recoveries would be higher.
“The new maximums may make things still more enticing for relators with visions of increasingly large relators’ shares on the table,” said William W. Horton , a Birmingham, Ala.-based health law attorney and chair of the American Bar Association Health Law Section.
However, Mr. Horton does not believe the rates will have much practical effect in terms of strategy or settlement rates. Right now, the hypothetical penalties in such cases are so enormous they are almost not meaningful, he said in an interview.
“In reality, cases settle based on the amount of actual damages – overpayments, etc. – and not on the penalties, because the penalties are so high,” he said. “I don’t think making them higher is going to change that, because it doesn’t increase the amount of money available for defendants to settle with.”
The ultimate question is whether the higher penalties will help deter health fraud, adds Houston health law attorney Michael E. Clark .
“I don’t see it making a difference,” he said in an interview. “The FCA penalties are particularly ruinous in the health care field since so many claims get made and courts have accepted broad theories of liability.”
The DOJ is accepting comments on the interim final rule until Aug. 29.
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