Earlier this month, a bill to amend the False Claims Act (“FCA”), the “Fairness in Health Care Claims, Guidance and Investigations Act,” was introduced in the House of Representatives.  According to one of the bill’s sponsors, Rep. Howard Coble (R-NC), the bill’s purpose is to ensure that unintentional billing disputes are not penalized as fraud.

Some parts of the bill are unlikely to gain wide support.  First, the bill requires that before the Department of Justice (“DOJ”) requests information from a health care provider as part of an investigation, it would have to certify that the responsible agency had examined all regulations, guidelines and billing instructions, all communications with the alleged perpetrator, and each of the allegedly false claims, and certify that the allegations are viable and that the regulations, guidelines and billing instructions were unambiguous at the time of the violation.  Without such a certification, the Court would be required to dismiss a qui tam complaint based on those allegations.

When DOJ receives a qui tam complaint, however, it is mandated by law to investigate, and the bill would seem to require that the government undertake a full investigation based on its own records alone, and on all of the involved claims, before seeking any information from a provider.  The bill would also apply to federal investigations that do not arise from qui tam complaints.  Legislators are unlikely to so severely restrict the ability of federal agencies to investigate health care fraud in light of the massive resources being poured into enforcement.  Similarly, passage of the provision to raise the FCA standard of proof from “preponderance of the evidence” to “clear and convincing evidence” is a long-shot.

Sections Likely to Gain Support

Nevertheless, some parts of the bill could garner support because they go directly to the concept of “fairness” in the bill’s title, and the widespread concern that billing errors or confusion about compliance are routinely characterized by investigators and qui tam relators as fraud.  The bill provides that an FCA case could not be brought based on a claim submitted in good faith reliance on: (1) erroneous information supplied by an agency; (2) written statements of Federal policy provided by an agency; or (3) an audit or review by the agency of the person submitting the claim where there was no finding that the claim was a violation.  The bill would also bar FCA cases where a claim was submitted in substantial compliance with a model compliance program issued by HHS.  Some form of these provisions would add a measure of fairness for providers who are attempting to comply in good faith but do not succeed in meeting all the requirements of extremely complex regulations, guidelines and billing instructions.  Another bill provision would limit FCA claims to those involving an amount of damages that is material to the government.

Providing a safe harbor for providers attempting good faith compliance would be a very appealing change to the FCA.  While the DOJ certification provision has a limited chance of success, a restriction on excessive or disproportionate use of subpoenas and civil investigative demands may have broader support.  In any event, this bill highlights the problems providers face when billing errors or confusion are treated as fraud, and they are subjected to the staggering costs of responding to a federal investigation and the crippling risks of fighting the treble damages and penalties of an FCA case.

Farrell Fritz health care attorneys know the False Claims Act, and can help health care providers deal with government investigations, audits, and compliance issues.