The Centers at St. Camillus
St. Camillus is a not-for-profit healthcare facility featuring comprehensive inpatient and outpatient services including subacute and brain injury rehabilitation programs; continuing care; outpatient rehabilitation, home healthcare; audiology/hearing aids; medical transport and a variety of other support services. Located in the Westvale area of Syracuse, New York, the integrated teams of healthcare professionals at St. Camillus are dedicated to caring for life.
Effective date:
September 18, 2007
FACILITY: St. Camillus Health and Rehabilitation Center
DEPARTMENT: Corporate Compliance
SUBJECT: Deficit Reduction Act of 2005
POLICY NUMBER: 10-3000-05
POLICY: As a health care provider that receives more than $5 million annually from the Medicaid program, St. Camillus shall maintain policies and procedures for preventing and detecting fraud, waste and abuse in federal health care programs, and shall disseminate those policies to all employees, and to contractors and agents who furnish or authorize the furnishing of Medicaid health care items or services, perform billing or coding functions, or are involved in the monitoring of health care provided by St. Camillus. The policies and procedures address the following:
The federal False Claims Act (FCA);
The New York State False Claims Act;
The specific statutory and regulatory provisions named in the Deficit Reduction Act of 2005 (section 1902(a)(68)(A) of the Social Security Act);
Any other applicable state civil or criminal laws and state and federal whistleblower protections; and
Information regarding St. Camillus’ policies and procedures for detecting and preventing waste, fraud, and abuse.
The employee handbook shall also contain a specific discussion of the laws referenced in this policy, the rights of employees to be protected as whistleblowers, and a specific discussion of St. Camillus’ policies and procedures for detecting and preventing fraud, waste, and abuse.
PURPOSE: The federal Deficit Reduction Act of 2005 (DRA) instituted a requirement for health care entities which receive or make $5 million or more in Medicaid payments during a federal fiscal year to establish written policies and procedures for preventing and detecting fraud, waste and abuse in federal health care programs. The DRA also requires such entities to inform their employees and certain contractors and agents about federal and state false claims acts and whistleblower protections. A summary of the pertinent federal and state statutes, as published by the New York State Office of the Medicaid Inspector General, is attached following the “Procedure” section of this policy, and is specifically incorporated into the policy.
PROCEDURE:
Corporate Compliance Program
1. Responsible Party - Board of Trustees; Senior Management; Action - St. Camillus’ Corporate Compliance Program implements policies and procedures for preventing and detecting fraud, waste and abuse in federal health care programs. Policy #10-3000-01 gives an overview of the Corporate Compliance Program while a number of other policies cover specific areas in greater detail.
2. Responsible Party - All employees; all vendors, contractors, subcontractors, and other agents who furnish, or otherwise authorize the furnishing of, Medicaid health care items or services, or perform billing or coding functions, or are involved in monitoring of health care provided by St. Camillus (collectively, “Employees and Covered Agents”); Action - In relation to all work performed for St. Camillus, employees and Covered Agents are required to comply with all applicable federal, state and local laws and regulations, both civil and criminal, including but not limited to: the Federal False Claims Act; all applicable regulations governing participation in the Medicare and Medicaid program; federal and state anti-kickback laws; and all federal and state laws that relate to detection and prevention of fraud, waste, and abuse in federal health care programs.
3. Responsible Party - Employees and Covered Agents; Corporate Compliance Officer (CCO); Corporate Compliance Committee; Action - Noncompliance Reporting Protocol (policy #10-3000-04) is maintained so that any person aware of, or who suspects, any violations of the law, Code of Conduct, or St. Camillus policies shall promptly report such knowledge or suspicion to an official of St. Camillus. All such reports are promptly forwarded to the Corporate Compliance Officer or a member of the Corporate Compliance Committee.
4. Responsible Party - Employees and Covered Agents; CCO; HIPAA Privacy Officer; senior managers; Action - An employee shall ordinarily report known or suspected noncompliance to his or her direct supervisor. If an employee feels that the direct supervisor is involved in a suspected violation, or if the employee prefers an alternative reporting route, he or she may use any of the other established options for reporting, including the anonymous hotline. Reports by Employees and Covered Agents may be made to the following: a. Any senior manager; b. Corporate Compliance Officer (315)-703-0661; c. HIPAA Privacy Officer (315)-703-0661; d. Compliance Hotline (315)-703-0777.
5. Responsible Party - CCO; Human Resources; Action - St. Camillus will not permit any reprisals or disciplinary action to be taken against anyone for good faith reporting of suspected noncompliance. An employee’s self-reporting of his or her own suspected noncompliance will be taken into consideration as a mitigating factor when considering disciplinary action.
6. Responsible Party - Senior managers; Department managers; Action - Specific policies are maintained by the various departments that deal with training of staff, medical record documentation, and compliance.
Education for Employees and Covered Agents
7. Responsible Party - Human Resources; CCO; Action - The St. Camillus employee handbook contains a specific discussion of the laws referenced at the end of this policy, the rights of employees to be protected as whistleblowers, and a discussion of St. Camillus’ policies and procedures for detecting and preventing fraud, waste, and abuse.
8. Responsible Party - Human Resources; Action - All employees are provided a copy of the employee handbook and this policy regarding the Deficit Reduction Act of 2005 (#10-3000-05) upon their initial employment by St. Camillus.
9. Responsible Party - All employees; Human Resources; Action - All employees must sign an acknowledgement of having received the employee handbook and of his/her agreement to be bound by the policies and procedures contained therein. Execution of this acknowledgement shall be a condition of employment or appointment to any position with St. Camillus, and the acknowledgement shall be re-executed upon request.
10. Responsible Party - All employees; Human Resources; Staff Education; Action - All employees are required to attend a facility-wide annual reorientation on a variety of topics. Included in this reorientation are the corporate compliance program and the Code of Conduct.
11. Responsible Party - CCO; Finance staff; Action - This policy is disseminated to all vendors, contractors, subcontractors, and other agents who furnish, or otherwise authorize the furnishing of, Medicaid health care items or services; perform billing or coding functions; or are involved in monitoring of health care provided by St. Camillus. All such Covered Agents are required to adopt and abide by this policy in relation to all work performed for St. Camillus; train their employees who are involved in performing work for St. Camillus to comply with applicable laws; and make this policy available to those employees.
12. Responsible Party - CCO; President; Action - On or before October 1, 2007 and on or before January 1, every year thereafter, a certification will be signed and sent into the New York State Office of the Medicaid Inspector General that: a. St. Camillus maintains this written policy; b. our employee handbook includes the required materials described in this policy; c. this information has been properly adopted and published by St. Camillus; and d. St. Camillus has disseminated such materials among its Employees and Agents.
SUMMARY OF FEDERAL AND STATE REGULATIONS
The summary below, published by the New York State Office of the Medicaid Inspector General, is an integral part of this policy.
FEDERAL & NEW YORK STATUTES RELATING TO FILING FALSE CLAIMS
I. FEDERAL LAWS
False Claims Act (31 USC §§3729-3733)
The False Claims Act ("FCA") provides, in pertinent part, that:
(a) Any person who (1) knowingly presents, or causes to be presented, to an officer or employee of the United States Government or a member of the Armed Forces of the United States a false or fraudulent claim for payment or approval; (2) knowingly makes, uses, or causes to be made or used, a false record or statement to get a false or fraudulent claim paid or approved by the Government; (3) conspires to defraud the Government by getting a false or fraudulent claim paid or approved by the Government;. . . or (7) knowingly makes, uses, or causes to be made or used, a false record or statement to conceal, avoid, or decrease an obligation to pay or transmit money or property to the Government, is liable to the United States Government for a civil penalty of not less than $5,000 and not more than $10,000, plus 3 times the amount of damages which the Government sustains because of the act of that person . . . .
(b) For purposes of this section, the terms "knowing" and "knowingly" mean that a person, with respect to information (1) has actual knowledge of the information; (2) acts in deliberate ignorance of the truth or falsity of the information; or (3) acts in reckless disregard of the truth or falsity of the information, and no proof of specific intent to defraud is required.
31 U.S.C. § 3729. While the False Claims Act imposes liability only when the claimant acts “knowingly,” it does not require that the person submitting the claim have actual knowledge that the claim is false. A person who acts in reckless disregard or in deliberate ignorance of the truth or falsity of the information, also can be found liable under the Act. 31 U.S.C. 3729(b).
In sum, the False Claims Act imposes liability on any person who submits a claim to the federal government that he or she knows (or should know) is false. An example may be a physician who submits a bill to Medicare for medical services she knows she has not provided. The False Claims Act also imposes liability on an individual who may knowingly submit a false record in order to obtain payment from the government. An example of this may include a government contractor who submits records that he knows, or should know, is false and that indicate compliance with certain contractual or regulatory requirements. The third area of liability includes those instances in which someone may obtain money from the federal government to which he may not be entitled, and then uses false statements or records in order to retain the money. An example of this so-called “reverse false claim” may include a hospital that obtains interim payments from Medicare throughout the year, and then knowingly files a false cost report at the end of the year in order to avoid making a refund to the Medicare program.
In addition to its substantive provisions, the FCA provides that private parties may bring an action on behalf of the United States. 31 U.S.C. 3730 (b). These private parties, known as “qui tam relaters,” may share in a percentage of the proceeds from an FCA action or settlement.
Section 3730(d)(1) of the FCA provides, with some exceptions, that a qui tam relater, when the Government has intervened in the lawsuit, shall receive at least 15 percent but not more than 25 percent of the proceeds of the FCA action depending upon the extent to which the relater substantially contributed to the prosecution of the action. When the Government does not intervene, section 3730(d) (2) provides that the relater shall receive an amount that the court decides is reasonable and shall be not less than 25 percent and not more than 30 percent.
Administrative Remedies for False Claims (31 USC Chapter 38. §§ 3801 – 3812)
This statute allows for administrative recoveries by federal agencies. If a person submits a claim that the person knows is false or contains false information, or omits material information, then the agency receiving the claim may impose a penalty of up to $5,000 for each claim. The agency may also recover twice the amount of the claim.
Unlike the False Claims Act, a violation of this law occurs when a false claim is submitted, not when it is paid. Also unlike the False Claims Act, the determination of whether a claim is false, and the imposition of fines and penalties is made by the administrative agency, not by prosecution in the federal court system.
II. NEW YORK STATE LAWS
New York’s false claims laws fall into two categories: civil and administrative; and criminal laws. Some apply to recipient false claims and some apply to provider false claims, and while most are specific to healthcare or Medicaid, some of the “common law” crimes apply to areas of interaction with the government.
A. CIVIL AND ADMINISTRATIVE LAWS
NY False Claims Act (State Finance Law, §§187-194)
The NY False Claims Act closely tracts the federal False Claims Act. It imposes penalties and fines on individuals and entities that file false or fraudulent claims for payment from any state or local government, including health care programs such as Medicaid. The penalty for filing a false claim is $6,000 - $12,000 per claim and the recoverable damages are between two and three times the value of the amount falsely received. In addition, the false claim filer may have to pay the government’s legal fees.
The Act allows private individuals to file lawsuits in state court, just as if they were state or local government parties. If the suit eventually concludes with payments back to the government, the person who started the case can recover 25-30% of the proceeds if the government did not participate in the suit or 15-25% if the government did participate in the suit.
Social Services Law §145-b False Statements
It is a violation to knowingly obtain or attempt to obtain payment for items or services furnished under any Social Services program, including Medicaid, by use of a false statement, deliberate concealment or other fraudulent scheme or device. The State or the local Social Services district may recover three times the amount incorrectly paid. In addition, the Department of Health may impose a civil penalty of up to $2,000 per violation. If repeat violations occur within 5 years, a penalty up to $7,500 per violation may be imposed if they involve more serious violations of Medicaid rules, billing for services not rendered or providing excessive services.
Social Services Law §145-c Sanctions
If any person applies for or receives public assistance, including Medicaid, by intentionally making a false or misleading statement, or intending to do so, the person’s, the person’s family’s needs are not taken into account for 6 months if a first offense, 12 months if a second (or once if benefits received are over $3,900) and live years for 4 or more offenses.
B. CRIMINAL LAWS
Social Services Law §145 Penalties
Any person, who submits false statements or deliberately conceals material information in order to receive public assistance, including Medicaid, is guilty of a misdemeanor.
Social Services Law § 366-b, Penalties for Fraudulent Practices
a. Any person who obtains or attempts to obtain, for himself or others, medical assistance by means of a false statement, concealment of material facts, impersonation or other fraudulent means is guilty of a Class A misdemeanor.
b. Any person who, with intent to defraud, presents for payment and false or fraudulent claim for furnishing services, knowingly submits false information to obtain greater Medicaid compensation or knowingly submits false information in order to obtain authorization to provide items or services is guilty of a Class A misdemeanor.
Penal Law Article 155, Larceny
The crime of larceny applies to a person who, with intent to deprive another of his property, obtains, takes or withholds the property by means of trick, embezzlement, false pretense, false promise, including a scheme to defraud, or other similar behavior. It has been applied to Medicaid fraud cases.
a. Fourth degree grand larceny involves property valued over $1,000. It is a Class E felony.
b. Third degree grand larceny involves property valued over $3,000. It is a Class D felony.
c. Second degree grand larceny involves property valued over $50,000. It is a Class C felony.
d. First degree grand larceny involves property valued over $1 million. It is a Class B felony.
Penal Law Article 175, False Written Statements
Four crimes in this Article relate to filing false information or claims and have been applied in Medicaid fraud prosecutions:
a. §175.05, Falsifying business records involves entering false information, omitting material information or altering an enterprise’s business records with the intent to defraud. It is a Class A misdemeanor.
b. § 175.10, Falsifying business records in the first degree includes the elements of the §175.05 offense and includes the intent to commit another crime or conceal its commission. It is a Class E felony.
c. §175.30, Offering a false instrument for filing in the second degree involves presenting a written instrument (including a claim for payment) to a public office knowing that it contains false information. It is a Class A misdemeanor.
d. §175.35, Offering a false instrument for filing in the first degree includes the elements of the second degree offense and must include an intent to defraud the state or a political subdivision. It is a Class E felony.
Penal Law Article 176, Insurance Fraud
Applies to claims for insurance payment, including Medicaid or other health insurance and contains six crimes.
a. Insurance Fraud in the 5th degree involves intentionally filing a health insurance claim knowing that it is false. It is a Class A misdemeanor.
b. Insurance fraud in the 4th degree is filing a false insurance claim for over $1,000. It is a Class E felony.
c. Insurance fraud in the 3rd degree is filing a false insurance claim for over $3,000. It is a Class D felony.
d. Insurance fraud in the 2nd degree is filing a false insurance claim for over $50,000. It is a Class C felony.
e. Insurance fraud in the 1st degree is filing a false insurance claim for over $1 million. It is a Class B felony.
f. Aggravated insurance fraud is committing insurance fraud more than once. It is a Class D felony.
Penal Law Article 177, Health Care Fraud
Applies to claims for health insurance payment, including Medicaid, and contains five crimes:
a. Health care fraud in the 5th degree is knowingly filing, with intent to defraud, a claim for payment that intentionally has false information or omissions. It is a Class A misdemeanor.
b. Health cam fraud in the 4th degree is filing false claims and annually receiving over $3,000 in aggregate. It is a Class E felony.
c. Health care fraud in the 3rd degree is filing false claims and annually receiving over $10,000 in the aggregate. It is a Class D felony.
d. Health care fraud in the 2nd degree is filing false claims and annually receiving over $50,000 in the aggregate. It is a Class C felony.
e. Health care fraud in the 1st degree is filing false claims and annually receiving over $1 million in the aggregate. It is a Class B felony.
III. WHISTLEBLOWER PROTECTION
Federal False Claims Act (31 U.S.C. §3730(h))
The FCA provides protection to qui tam relaters who are discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms and conditions of their employment as a result of their furtherance of an action under the FCA. 31 U.S.C. 3730(h). Remedies include reinstatement with comparable seniority as the qui tam relater would have had but for the discrimination, two times the amount of any back pay, interest on any back pay, and compensation for any special damages sustained as a result of the discrimination, including litigation costs and reasonable attorneys’ fees.
NY False Claim Act (State Finance Law §191)
The False Claim Act also provides protection to qui tam relaters, who are discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms and conditions of their employment as a result of their furtherance of an action under the Act. Remedies include reinstatement with comparable seniority as the qui tam relater would have had but for the discrimination, two times the amount of any back pay, interest on any back pay, and compensation for any special damages sustained as a result of the discrimination, including litigation costs and reasonable attorneys’ fees.
New York Labor Law §740
An employer may not take any retaliatory action against an employee if the employee discloses information about the employer’s policies, practices or activities to a regulatory, law enforcement or other similar agency or public official. Protected disclosures are those that assert that the employer is in violation of a law that creates a substantial and specific danger to the public health and safety or which constitutes health care fraud under Penal Law §177 (knowingly filing, with intent to defraud, a claim for payment that intentionally has false information or omissions). The employee’s disclosure is protected only if the employee first brought up the matter with a supervisor and gave the employer a reasonable opportunity to correct the alleged violation. If an employer takes a retaliatory action against the employee, the employee may sue in state court for reinstatement to the same, or an equivalent position, any lost back wages and benefits and attorneys’ fees. If the employer is a health provider and the court finds that the employer’s retaliatory action was in bad faith, it may impose a civil penalty of $10,000 on the employer.
New York Labor Law §741
A health care employer may not take any retaliatory action against an employee if the employee discloses certain information about the employer’s policies, practices or activities to a regulatory, law enforcement or other similar agency or public official. Protected disclosures are those that assert that, in good faith, the employee believes constitute improper quality of patient care. The employee’s disclosure is protected only if the employee first brought up the matter with a supervisor and gave the employer a reasonable opportunity to correct the alleged violation, unless the danger is imminent to the public or patient and the employee believes in good faith that reporting to a supervisor would not result in corrective action. If an employer takes a retaliatory action against the employee, the employee may sue in state court for reinstatement to the same, or an equivalent position, any lost back wages and benefits and attorneys’ fees. If the employer is a health provider and the court finds that the employer’s retaliatory action was in bad faith, it may impose a civil penalty of $10,000 on the employer.
Cross References to Statutes: Deficit Reduction Act of 2005, § 6032 [42 U.S.C. 1396a(68)]
FACILITY: St. Camillus Health and Rehabilitation Center
DEPARTMENT: Corporate Compliance
SUBJECT: Deficit Reduction Act of 2005
POLICY NUMBER: 10-3000-05
POLICY: As a health care provider that receives more than $5 million annually from the Medicaid program, St. Camillus shall maintain policies and procedures for preventing and detecting fraud, waste and abuse in federal health care programs, and shall disseminate those policies to all employees, and to contractors and agents who furnish or authorize the furnishing of Medicaid health care items or services, perform billing or coding functions, or are involved in the monitoring of health care provided by St. Camillus. The policies and procedures address the following:
The federal False Claims Act (FCA);
The New York State False Claims Act;
The specific statutory and regulatory provisions named in the Deficit Reduction Act of 2005 (section 1902(a)(68)(A) of the Social Security Act);
Any other applicable state civil or criminal laws and state and federal whistleblower protections; and
Information regarding St. Camillus’ policies and procedures for detecting and preventing waste, fraud, and abuse.
The employee handbook shall also contain a specific discussion of the laws referenced in this policy, the rights of employees to be protected as whistleblowers, and a specific discussion of St. Camillus’ policies and procedures for detecting and preventing fraud, waste, and abuse.
PURPOSE: The federal Deficit Reduction Act of 2005 (DRA) instituted a requirement for health care entities which receive or make $5 million or more in Medicaid payments during a federal fiscal year to establish written policies and procedures for preventing and detecting fraud, waste and abuse in federal health care programs. The DRA also requires such entities to inform their employees and certain contractors and agents about federal and state false claims acts and whistleblower protections. A summary of the pertinent federal and state statutes, as published by the New York State Office of the Medicaid Inspector General, is attached following the “Procedure” section of this policy, and is specifically incorporated into the policy.
PROCEDURE:
Corporate Compliance Program
1. Responsible Party - Board of Trustees; Senior Management; Action - St. Camillus’ Corporate Compliance Program implements policies and procedures for preventing and detecting fraud, waste and abuse in federal health care programs. Policy #10-3000-01 gives an overview of the Corporate Compliance Program while a number of other policies cover specific areas in greater detail.
2. Responsible Party - All employees; all vendors, contractors, subcontractors, and other agents who furnish, or otherwise authorize the furnishing of, Medicaid health care items or services, or perform billing or coding functions, or are involved in monitoring of health care provided by St. Camillus (collectively, “Employees and Covered Agents”); Action - In relation to all work performed for St. Camillus, employees and Covered Agents are required to comply with all applicable federal, state and local laws and regulations, both civil and criminal, including but not limited to: the Federal False Claims Act; all applicable regulations governing participation in the Medicare and Medicaid program; federal and state anti-kickback laws; and all federal and state laws that relate to detection and prevention of fraud, waste, and abuse in federal health care programs.
3. Responsible Party - Employees and Covered Agents; Corporate Compliance Officer (CCO); Corporate Compliance Committee; Action - Noncompliance Reporting Protocol (policy #10-3000-04) is maintained so that any person aware of, or who suspects, any violations of the law, Code of Conduct, or St. Camillus policies shall promptly report such knowledge or suspicion to an official of St. Camillus. All such reports are promptly forwarded to the Corporate Compliance Officer or a member of the Corporate Compliance Committee.
4. Responsible Party - Employees and Covered Agents; CCO; HIPAA Privacy Officer; senior managers; Action - An employee shall ordinarily report known or suspected noncompliance to his or her direct supervisor. If an employee feels that the direct supervisor is involved in a suspected violation, or if the employee prefers an alternative reporting route, he or she may use any of the other established options for reporting, including the anonymous hotline. Reports by Employees and Covered Agents may be made to the following: a. Any senior manager; b. Corporate Compliance Officer (315)-703-0661; c. HIPAA Privacy Officer (315)-703-0661; d. Compliance Hotline (315)-703-0777.
5. Responsible Party - CCO; Human Resources; Action - St. Camillus will not permit any reprisals or disciplinary action to be taken against anyone for good faith reporting of suspected noncompliance. An employee’s self-reporting of his or her own suspected noncompliance will be taken into consideration as a mitigating factor when considering disciplinary action.
6. Responsible Party - Senior managers; Department managers; Action - Specific policies are maintained by the various departments that deal with training of staff, medical record documentation, and compliance.
Education for Employees and Covered Agents
7. Responsible Party - Human Resources; CCO; Action - The St. Camillus employee handbook contains a specific discussion of the laws referenced at the end of this policy, the rights of employees to be protected as whistleblowers, and a discussion of St. Camillus’ policies and procedures for detecting and preventing fraud, waste, and abuse.
8. Responsible Party - Human Resources; Action - All employees are provided a copy of the employee handbook and this policy regarding the Deficit Reduction Act of 2005 (#10-3000-05) upon their initial employment by St. Camillus.
9. Responsible Party - All employees; Human Resources; Action - All employees must sign an acknowledgement of having received the employee handbook and of his/her agreement to be bound by the policies and procedures contained therein. Execution of this acknowledgement shall be a condition of employment or appointment to any position with St. Camillus, and the acknowledgement shall be re-executed upon request.
10. Responsible Party - All employees; Human Resources; Staff Education; Action - All employees are required to attend a facility-wide annual reorientation on a variety of topics. Included in this reorientation are the corporate compliance program and the Code of Conduct.
11. Responsible Party - CCO; Finance staff; Action - This policy is disseminated to all vendors, contractors, subcontractors, and other agents who furnish, or otherwise authorize the furnishing of, Medicaid health care items or services; perform billing or coding functions; or are involved in monitoring of health care provided by St. Camillus. All such Covered Agents are required to adopt and abide by this policy in relation to all work performed for St. Camillus; train their employees who are involved in performing work for St. Camillus to comply with applicable laws; and make this policy available to those employees.
12. Responsible Party - CCO; President; Action - On or before October 1, 2007 and on or before January 1, every year thereafter, a certification will be signed and sent into the New York State Office of the Medicaid Inspector General that: a. St. Camillus maintains this written policy; b. our employee handbook includes the required materials described in this policy; c. this information has been properly adopted and published by St. Camillus; and d. St. Camillus has disseminated such materials among its Employees and Agents.
SUMMARY OF FEDERAL AND STATE REGULATIONS
The summary below, published by the New York State Office of the Medicaid Inspector General, is an integral part of this policy.
FEDERAL & NEW YORK STATUTES RELATING TO FILING FALSE CLAIMS
I. FEDERAL LAWS
False Claims Act (31 USC §§3729-3733)
The False Claims Act ("FCA") provides, in pertinent part, that:
(a) Any person who (1) knowingly presents, or causes to be presented, to an officer or employee of the United States Government or a member of the Armed Forces of the United States a false or fraudulent claim for payment or approval; (2) knowingly makes, uses, or causes to be made or used, a false record or statement to get a false or fraudulent claim paid or approved by the Government; (3) conspires to defraud the Government by getting a false or fraudulent claim paid or approved by the Government;. . . or (7) knowingly makes, uses, or causes to be made or used, a false record or statement to conceal, avoid, or decrease an obligation to pay or transmit money or property to the Government, is liable to the United States Government for a civil penalty of not less than $5,000 and not more than $10,000, plus 3 times the amount of damages which the Government sustains because of the act of that person . . . .
(b) For purposes of this section, the terms "knowing" and "knowingly" mean that a person, with respect to information (1) has actual knowledge of the information; (2) acts in deliberate ignorance of the truth or falsity of the information; or (3) acts in reckless disregard of the truth or falsity of the information, and no proof of specific intent to defraud is required.
31 U.S.C. § 3729. While the False Claims Act imposes liability only when the claimant acts “knowingly,” it does not require that the person submitting the claim have actual knowledge that the claim is false. A person who acts in reckless disregard or in deliberate ignorance of the truth or falsity of the information, also can be found liable under the Act. 31 U.S.C. 3729(b).
In sum, the False Claims Act imposes liability on any person who submits a claim to the federal government that he or she knows (or should know) is false. An example may be a physician who submits a bill to Medicare for medical services she knows she has not provided. The False Claims Act also imposes liability on an individual who may knowingly submit a false record in order to obtain payment from the government. An example of this may include a government contractor who submits records that he knows, or should know, is false and that indicate compliance with certain contractual or regulatory requirements. The third area of liability includes those instances in which someone may obtain money from the federal government to which he may not be entitled, and then uses false statements or records in order to retain the money. An example of this so-called “reverse false claim” may include a hospital that obtains interim payments from Medicare throughout the year, and then knowingly files a false cost report at the end of the year in order to avoid making a refund to the Medicare program.
In addition to its substantive provisions, the FCA provides that private parties may bring an action on behalf of the United States. 31 U.S.C. 3730 (b). These private parties, known as “qui tam relaters,” may share in a percentage of the proceeds from an FCA action or settlement.
Section 3730(d)(1) of the FCA provides, with some exceptions, that a qui tam relater, when the Government has intervened in the lawsuit, shall receive at least 15 percent but not more than 25 percent of the proceeds of the FCA action depending upon the extent to which the relater substantially contributed to the prosecution of the action. When the Government does not intervene, section 3730(d) (2) provides that the relater shall receive an amount that the court decides is reasonable and shall be not less than 25 percent and not more than 30 percent.
Administrative Remedies for False Claims (31 USC Chapter 38. §§ 3801 – 3812)
This statute allows for administrative recoveries by federal agencies. If a person submits a claim that the person knows is false or contains false information, or omits material information, then the agency receiving the claim may impose a penalty of up to $5,000 for each claim. The agency may also recover twice the amount of the claim.
Unlike the False Claims Act, a violation of this law occurs when a false claim is submitted, not when it is paid. Also unlike the False Claims Act, the determination of whether a claim is false, and the imposition of fines and penalties is made by the administrative agency, not by prosecution in the federal court system.
II. NEW YORK STATE LAWS
New York’s false claims laws fall into two categories: civil and administrative; and criminal laws. Some apply to recipient false claims and some apply to provider false claims, and while most are specific to healthcare or Medicaid, some of the “common law” crimes apply to areas of interaction with the government.
A. CIVIL AND ADMINISTRATIVE LAWS
NY False Claims Act (State Finance Law, §§187-194)
The NY False Claims Act closely tracts the federal False Claims Act. It imposes penalties and fines on individuals and entities that file false or fraudulent claims for payment from any state or local government, including health care programs such as Medicaid. The penalty for filing a false claim is $6,000 - $12,000 per claim and the recoverable damages are between two and three times the value of the amount falsely received. In addition, the false claim filer may have to pay the government’s legal fees.
The Act allows private individuals to file lawsuits in state court, just as if they were state or local government parties. If the suit eventually concludes with payments back to the government, the person who started the case can recover 25-30% of the proceeds if the government did not participate in the suit or 15-25% if the government did participate in the suit.
Social Services Law §145-b False Statements
It is a violation to knowingly obtain or attempt to obtain payment for items or services furnished under any Social Services program, including Medicaid, by use of a false statement, deliberate concealment or other fraudulent scheme or device. The State or the local Social Services district may recover three times the amount incorrectly paid. In addition, the Department of Health may impose a civil penalty of up to $2,000 per violation. If repeat violations occur within 5 years, a penalty up to $7,500 per violation may be imposed if they involve more serious violations of Medicaid rules, billing for services not rendered or providing excessive services.
Social Services Law §145-c Sanctions
If any person applies for or receives public assistance, including Medicaid, by intentionally making a false or misleading statement, or intending to do so, the person’s, the person’s family’s needs are not taken into account for 6 months if a first offense, 12 months if a second (or once if benefits received are over $3,900) and live years for 4 or more offenses.
B. CRIMINAL LAWS
Social Services Law §145 Penalties
Any person, who submits false statements or deliberately conceals material information in order to receive public assistance, including Medicaid, is guilty of a misdemeanor.
Social Services Law § 366-b, Penalties for Fraudulent Practices
a. Any person who obtains or attempts to obtain, for himself or others, medical assistance by means of a false statement, concealment of material facts, impersonation or other fraudulent means is guilty of a Class A misdemeanor.
b. Any person who, with intent to defraud, presents for payment and false or fraudulent claim for furnishing services, knowingly submits false information to obtain greater Medicaid compensation or knowingly submits false information in order to obtain authorization to provide items or services is guilty of a Class A misdemeanor.
Penal Law Article 155, Larceny
The crime of larceny applies to a person who, with intent to deprive another of his property, obtains, takes or withholds the property by means of trick, embezzlement, false pretense, false promise, including a scheme to defraud, or other similar behavior. It has been applied to Medicaid fraud cases.
a. Fourth degree grand larceny involves property valued over $1,000. It is a Class E felony.
b. Third degree grand larceny involves property valued over $3,000. It is a Class D felony.
c. Second degree grand larceny involves property valued over $50,000. It is a Class C felony.
d. First degree grand larceny involves property valued over $1 million. It is a Class B felony.
Penal Law Article 175, False Written Statements
Four crimes in this Article relate to filing false information or claims and have been applied in Medicaid fraud prosecutions:
a. §175.05, Falsifying business records involves entering false information, omitting material information or altering an enterprise’s business records with the intent to defraud. It is a Class A misdemeanor.
b. § 175.10, Falsifying business records in the first degree includes the elements of the §175.05 offense and includes the intent to commit another crime or conceal its commission. It is a Class E felony.
c. §175.30, Offering a false instrument for filing in the second degree involves presenting a written instrument (including a claim for payment) to a public office knowing that it contains false information. It is a Class A misdemeanor.
d. §175.35, Offering a false instrument for filing in the first degree includes the elements of the second degree offense and must include an intent to defraud the state or a political subdivision. It is a Class E felony.
Penal Law Article 176, Insurance Fraud
Applies to claims for insurance payment, including Medicaid or other health insurance and contains six crimes.
a. Insurance Fraud in the 5th degree involves intentionally filing a health insurance claim knowing that it is false. It is a Class A misdemeanor.
b. Insurance fraud in the 4th degree is filing a false insurance claim for over $1,000. It is a Class E felony.
c. Insurance fraud in the 3rd degree is filing a false insurance claim for over $3,000. It is a Class D felony.
d. Insurance fraud in the 2nd degree is filing a false insurance claim for over $50,000. It is a Class C felony.
e. Insurance fraud in the 1st degree is filing a false insurance claim for over $1 million. It is a Class B felony.
f. Aggravated insurance fraud is committing insurance fraud more than once. It is a Class D felony.
Penal Law Article 177, Health Care Fraud
Applies to claims for health insurance payment, including Medicaid, and contains five crimes:
a. Health care fraud in the 5th degree is knowingly filing, with intent to defraud, a claim for payment that intentionally has false information or omissions. It is a Class A misdemeanor.
b. Health cam fraud in the 4th degree is filing false claims and annually receiving over $3,000 in aggregate. It is a Class E felony.
c. Health care fraud in the 3rd degree is filing false claims and annually receiving over $10,000 in the aggregate. It is a Class D felony.
d. Health care fraud in the 2nd degree is filing false claims and annually receiving over $50,000 in the aggregate. It is a Class C felony.
e. Health care fraud in the 1st degree is filing false claims and annually receiving over $1 million in the aggregate. It is a Class B felony.
III. WHISTLEBLOWER PROTECTION
Federal False Claims Act (31 U.S.C. §3730(h))
The FCA provides protection to qui tam relaters who are discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms and conditions of their employment as a result of their furtherance of an action under the FCA. 31 U.S.C. 3730(h). Remedies include reinstatement with comparable seniority as the qui tam relater would have had but for the discrimination, two times the amount of any back pay, interest on any back pay, and compensation for any special damages sustained as a result of the discrimination, including litigation costs and reasonable attorneys’ fees.
NY False Claim Act (State Finance Law §191)
The False Claim Act also provides protection to qui tam relaters, who are discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms and conditions of their employment as a result of their furtherance of an action under the Act. Remedies include reinstatement with comparable seniority as the qui tam relater would have had but for the discrimination, two times the amount of any back pay, interest on any back pay, and compensation for any special damages sustained as a result of the discrimination, including litigation costs and reasonable attorneys’ fees.
New York Labor Law §740
An employer may not take any retaliatory action against an employee if the employee discloses information about the employer’s policies, practices or activities to a regulatory, law enforcement or other similar agency or public official. Protected disclosures are those that assert that the employer is in violation of a law that creates a substantial and specific danger to the public health and safety or which constitutes health care fraud under Penal Law §177 (knowingly filing, with intent to defraud, a claim for payment that intentionally has false information or omissions). The employee’s disclosure is protected only if the employee first brought up the matter with a supervisor and gave the employer a reasonable opportunity to correct the alleged violation. If an employer takes a retaliatory action against the employee, the employee may sue in state court for reinstatement to the same, or an equivalent position, any lost back wages and benefits and attorneys’ fees. If the employer is a health provider and the court finds that the employer’s retaliatory action was in bad faith, it may impose a civil penalty of $10,000 on the employer.
New York Labor Law §741
A health care employer may not take any retaliatory action against an employee if the employee discloses certain information about the employer’s policies, practices or activities to a regulatory, law enforcement or other similar agency or public official. Protected disclosures are those that assert that, in good faith, the employee believes constitute improper quality of patient care. The employee’s disclosure is protected only if the employee first brought up the matter with a supervisor and gave the employer a reasonable opportunity to correct the alleged violation, unless the danger is imminent to the public or patient and the employee believes in good faith that reporting to a supervisor would not result in corrective action. If an employer takes a retaliatory action against the employee, the employee may sue in state court for reinstatement to the same, or an equivalent position, any lost back wages and benefits and attorneys’ fees. If the employer is a health provider and the court finds that the employer’s retaliatory action was in bad faith, it may impose a civil penalty of $10,000 on the employer.
Cross References to Statutes: Deficit Reduction Act of 2005, § 6032 [42 U.S.C. 1396a(68)]
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