Should False Claims Act go easier on providers?

A hearing held last week by a House judiciary subcommittee pitted a hospital CEO against an attorney on whether healthcare providers should be given greater protections against frivolous fraud lawsuits.

Dennis Burke, CEO of Good Shepherd Health Care System in Hermiston, Ore., said whistle-blowers should be required to bring their allegations directly to providers before filing False Claims Act lawsuits. The chairman of the subcommittee that held the hearing, Rep. Trent Franks (R-Ariz.), said companies should be incentivized to self-report false claims. Others, however, including another committee member and an attorney who supports whistle-blowers, said such proposals would serve only to weaken an already successful law.

Under the False Claims Act, whistleblowers may bring suits on behalf of the government alleging fraudulent billing to government programs. Providers found liable face penalties of up to $11,000 per false claim submitted plus triple damages, leading most cases to settle. In 2015, two-thirds of federal whistle-blower lawsuits targeted healthcare entities.

Last year, the government recovered more than $3.5 billion from False Claims Act cases, including $1.9 billion from healthcare fraud cases. Such cases often involve allegations of paying kickbacks to providers, providing unnecessary care, or overcharging for goods or services.

Burke, whose hospital was the target of a 2003 lawsuit, said the whistle-blower in that case alleged a wide variety of fraud to see what would stick. Good Shepherd refused to settle the case for $750,000, Burke said, wanting to prove its innocence. The government ultimately determined no fraud was committed. Burke said the case cost the hospital more than $1 million in attorney and consultant fees. But not all providers are in a position to turn down that kind of a settlement offer, he said.

Neil Getnick, a managing partner with Getnick & Getnick and board chairman of the Taxpayers Against Fraud Education Fund, a not-for-profit that supports whistle-blowers, said the False Claims Act already includes more protections to prevent frivolous lawsuits than almost any other statute in civil code. Corporations are also already allowed to reduce their liability by one-third if they self-report fraud within 30 days of becoming aware of it.