A group of lawmakers claim “flawed court interpretations” have led to a loophole within the False Claims Act (FCA). In an effort to put an end to this loophole, these lawmakers have proposed the False Claims Amendments Act of 2023.
What is the loophole?
The lawmakers are referring to a U.S. Supreme Court ruling from 2016. In United Health Services v. United States ex rel. Escobar, the court ruled that ongoing government payments to alleged fraudsters could absolve them of liability by suggesting that the fraud was not “material” to the contract. The proposed amendment clarifies that the government’s continued payment on a fraudulent claim does not automatically negate materiality. Instead, the court must consider other reasons for payment decisions.
If passed, physicians should recognize that materiality in cases of alleged FCA violations would hinge on more than just payment continuation. Fraudulent practices may still be material even if payments persist.
What else will this proposal change?
The amendment also aims to extend whistleblower protections in these types of cases. The FCA already shields employees from retaliation (e.g., harassment, firing) when they report fraud. The 2023 FCA amendment would extend anti-retaliation safeguards to former employees as well by adding the language “current or former” after “any” in Section 3730(h)(1) of title 31, also known as the FCA. This would allow former staff members who witnessed fraud to disclose without fear of discrimination or harassment.
If passed, this amendment would allow for a wider pool of individuals to come forward. The law incentivizes whistleblowers to act on these concerns as they can recover 15% to 30% of successful settlements.
The impact on physicians if passed is two-fold:
- Reporting: Physicians who suspect fraud within their present or past organizations should feel empowered to report it, knowing they are legally shielded.
- Accountability: Physicians are also wise to remember that a disgruntled employee or co-worker could file a claim. Be sure to act within the bounds of the law and reach out for legal counsel if you have concerns about your practice. It is a good idea for physicians to be aware of the broader scope of potential violations. Even seemingly minor irregularities may fall under scrutiny.
The False Claims Amendments Act of 2023 aims to strengthen anti-fraud measures while safeguarding whistleblowers. Physicians are wise to stay informed of these potential changes to help better ensure their practices are ethical and help avoid allegations of a violation. We will provide updates on the progress of this proposal as they become available.
Attorney John Rivas is responsible for this communication.