Viewpoint: Intent not part of healthcare fraud finding

February 19, 2010

With healthcare fraud now estimated to be a $100-billion-a-year enterprise, the federal government has developed new tools to aggressively pursue fraud.

Key Points

An allegation of fraud can significantly affect all aspects of a physician's practice. Not only will the physician risk loss of license if the allegation can be proven, but the allegation alone may be sufficient for a malpractice carrier to deny coverage renewal or impose a significant increase in premium. After all, if he or she is sued for malpractice, the physician's credibility almost always is at issue. If the physician is found to have committed fraud, a jury could well conclude that the physician could be dishonest in all aspects of practice.

In this column and three subsequent columns, I will highlight current laws and provide guidance on how best to avoid allegations of fraudulent practices. Before addressing any particular law, however, it is important to understand the meaning of healthcare fraud and its growing importance as a national issue.

The government need not prove that the physician intended to submit a false or misleading claim. Rather, the government only needs to demonstrate that a claim was submitted "knowingly" or with "reckless disregard" for the way in which claims are prepared or submitted, even if the physician is unaware of the fact that the claim was false. Alternatively, the government can show "deliberate ignorance" of billing practices. Given these reduced levels of culpability, the old excuse that "the billing department handles that" no longer is sufficient to avoid prosecution.

Although much of healthcare fraud may be intentional, a large percentage of it relates to miscoding of claims. Given the complexity of the CPT coding system, this fact is not surprising.

Until recently, the usual remedy for miscoding was little more than paying monies back, if audited, perhaps in recognition of the high error rate throughout the physician community. Now, however, miscoding can lead not only to reimbursement of overpayments but also to civil penalties, loss of license, and even criminal charges Last year alone, the federal government recovered $1.6 billion in healthcare fraud-related settlements and judgments through the False Claims Act (FCA), its most important weapon in such cases. With the recent enactment of the Fraud Enforcement Recovery Act of 2009, the federal government now has even greater tools to combat fraud, waste, and abuse.

A significant source of information concerning healthcare fraud comes from past or present employees who become "whistleblowers." By bringing a complaint of fraud on behalf of the government - called a Qui Tam action - a whistleblower can receive 15 to 30 percent of any recovery. In 1988, Qui Tam settlements and judgments constituted less than 2 percent of total FCA cases. By 2008, 63 percent of FCA recoveries resulted from Qui Tam actions. In a future column, I'll discuss methods to reduce the risk of an employee turning against you or your practice.

Medical Economics consultant Steven I. Kern, JD, is a health law attorney with Kern Augustine Conroy & Schoppmann in Bridgewater, New Jersey; Lake Success, New York; and Philadelphia. Malpractice Consult deals with questions on common professional liability issues. Unfortunately, we cannot offer specific legal advice. If you have a general question or a topic you'd like to see covered here, please send it to