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Filing False Claims
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Filing False Claims

Federal and New York Statutes
 Filing False Claims

Numerous federal and State laws prohibit health care providers from submitting "false" or "fraudulent" claims to Medicare and Medicaid and other federally-funded health care programs.  Presented below is a listing and description of various federal and State statutes related to the filing of false Medicare and Medicaid claims.

Federal Laws

1.          False Claims Act, 31 U.S.C. 3729-3733

The federal False Claims act imposes penalties and fines on individuals and entities that file false or fraudulent claims for payment from Medicare, Medicaid, or other federal health programs.  The penalty for filing a false claim is $5,500 - $11,000 per claim and the recoverable damages are between two and three times the value of the amount falsely received.  In addition, the false claims filer may have to pay the governments' legal fees.

The false claims act allows private individuals to file lawsuits in federal court, just as if they were federal prosecutors.  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.

2.         Administrative Remedies for False Claims, 31 U.S.C. 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.

New York State Laws

New York false claims laws fall into two categories:  administrative and civil laws; and criminal laws.  Many of the laws overlap.  Some apply to recipient false claims, and some apply to provider false claims.

A.        Administrative and Civil Laws

1.         Social Services Laws 145-c  If any person applies for or receives public assistance, including Medicaid, by intentionally making a false or misleading statement, or intending o do so, the person's needs, the person's family's needs are not taken into account for six months if a first offense, 12 months if a second (once if benefits received are $1,000 - $3,900), 18 months if a third (or once if benefits received are over $3,900) and five years for four or more offenses.

2.         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.

3.         State Finance Laws 187-194.  If a person knowingly submits a false or fraudulent claim for payment from any State of local government, including Medicaid, the penalty is $6,000 to $12,000 per claim, plus three times the amount of damages to the government. In addition, the filer may have to pay the government's costs and legal fees.

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 five 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.

B.        Criminal Laws

1.         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.

2.         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 any false or fraudulent claim for furnishing services, knowingly submits false information in order 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.

3.         Penal Law Article 155, Larceny.  The crime or 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.         Fifth degree petit larceny involves property of any amount. It is a Class A misdemeanor.

b.         Fourth degreee grand larceny involves property valued over $1,000. It is a Class E felony.

c.         Third degree grand larceny involves property valued over $3,000. It is a Class D felony.

d.         Second degree grand larceny involves property valued over $50,000. It is a Class C felony.

e.         First degree grand larceny involves property valued over $1 million. It is a class B felony.

4.         Penal Law Article 175, False Written Statements.  Four crimes in this Article relate to filing false information or claims that have been applied in Medicaid fraud prosecutions.

a.         175.05, Falsifying business records in the second degree 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 intent to defraud the State or a political subdivision.  It is a Class E felony.

5.         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 B felony.

6.         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 the intent to defraud, a claim for payment that intentionally has false information or omissions.  It is a Class A misdemeanor.

b.         Health care 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 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 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 aggregate.  It is a Class B felony.

Whistleblower Protection

1.         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 (1) is in violation of a law that creates a substantial and specific danger to the public heath and safety; or (2) has committed health care fraud (as defined in Penal Law Article 177).  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 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.

2.         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 (including those related to improper quality of patient care) to a regulatory, law enforcement or other similar agency or public official. 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 the State court for reinstatement to the same or 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. 

3.         Federal False Claims Act (31 U.S.C. 3730(h)) and New York False Claims Act (State Finance Law 191).  An employee who is "discharged, demoted, suspended, threatened, harassed or in any manner discriminated against" because of the employee's lawful acts under the False Claims Act is entitled to reinstatement, double back pay with interest special damages and litigation costs and attorneys' fees.

If you become aware of any compliance issues or have any questions regarding the information contained in this communication, please contact our Corporate Compliance Officer, at (315) 787-4023.

 

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