The False Claims Act: 162 Years Later.
Written by: Rachel V. Rose, JD, MBA
Understanding the False Claims Act (FCA)
Also known as the “Lincoln Law” – the False Claims Act, 31 U.S.C. §§ 3729-3733 (FCA) has been around since 1863 and its primary purpose remains the same – to root out fraud and return wrongfully obtained taxpayer dollars to the Federal Fisc.
The FCA Today
Its purpose remains the same today, as the U.S. Department of Justice announced that its FY 2024 recoveries totaled more than $2.9 billion, bringing total recoveries since 1986 to over $78 billion. Notably, the healthcare sector continues to top the list of fraud recoveries and the FCA’s qui tam provision, which enables private persons represented by attorneys to file lawsuits on behalf of the Government, plays a critical role in fighting fraud. Although its primary purpose is simple, the law itself is nuanced and highly specialized.
Fundamentals of FCA Liability
“The FCA provides that any person who knowingly submits, or causes to submit, false claims to the government is liable for three times the government’s damages plus a penalty that is linked to inflation. FCA liability can arise in other situations, such as when someone knowingly uses a false record material to a false claim or improperly avoids an obligation to pay the government. Conspiring to commit any of these acts also is a violation of the FCA.” Fundamentally, this sums up the FCA.
Civil vs. Criminal Aspects
While the FCA is civil in nature (after all, a private attorney cannot file a criminal action only the Government (federal is relevant to the FCA)) and is not intent based, the Government may open a parallel criminal investigation and ultimately prosecute a person pursuant to 18 USC § 287. This provision is commonly used in health care fraud cases, including those involving the Anti-Kickback Statute, 42 USC § 1320a-7b. Notably, both the AKS and the utilization of 18 USC § 287 both require proof of intent.
Recent Examples of Health Care FCA Cases
- March 26, 2025 – Medicare Advantage Provider: A Medicare Advantage Provider and several related parties settled an FCA case for $62 million. “Allegedly, from 2015 to 2021, Seoul Medical Group and Dr. Cha submitted diagnoses for two severe spinal conditions, spinal enthesopathy and sacroiliitis, for patients who did not suffer from either of these conditions. When Seoul Medical Group was questioned by an MA Plan about its use of spinal enthesopathy, Seoul Medical Group enlisted the assistance of Renaissance Imaging Medical Associates to create radiology reports that appeared to support the spinal enthesopathy diagnosis. Both diagnoses resulted in an increase in payment from CMS to the MA Plan, and the MA Plan then passed along a portion of the increased payment to Seoul Medical Group.”
- March 26, 2025 – Health Care Fraud Sentencing: An individual was sentenced to 3.5 months in prison followed by 1 year of supervised release and paid $561,141.89 after pleading guilty to 6 counts of health care fraud. “From approximately 2017 to 2022, Saravia directed a group of individuals with no billing or medical training to enter Current Procedural Terminology codes (CPT) for therapy services that were not provided and to upcode CPT codes used for psychotherapy visits. Saravia submitted, or directed the submission of, false claims for treatment that was not provided or for more complex and expensive treatment than was provided.”
- March 26, 2025 – Medical Device Manufacturer: In order to resolve FCA allegations, a medical device manufacturer and its owner agreed to pay $550,000. The lawsuit alleges that the defendants violated the False Claims Act by causing health care providers to bill Medicare for services in which the providers improperly re-used single-user rectal sensors and single-use catheters on multiple patients. The investigation and resolution of this matter illustrates the government’s emphasis on combating healthcare fraud.”
Importance of Compliance and Whistleblower Role
The sample of settlements underscores the Government’s commitment to uncovering fraud and holding bad actors accountable, as well as the fact that whistleblowers pay a critical role. It is well known that upcoding, paying kickbacks in violation of the Stark Law and AKS, and reusing single-use medical devices are areas of liability under the FCA.
The best way for healthcare entities to mitigate risk is by implementing an effective compliance program pursuant to 42 CFR 483.85, as well as cultivating a culture of compliance and establishing genuine anti-retaliation policies and procedures to protect employees who bring forward good faith based concerns of potential fraud, waste and abuse, as well as privacy and security violations. In sum, the FCA remains a powerful tool and failing to be proactive can be costly.
References
- U.S. Dep’t of Justice, The False Claims Act (last visited Mar. 29, 2025).
- U.S. Dep’t of Justice, Press Release, False Claims Act Settlements and Judgments Exceed $2.9B in Fiscal Year 2024 (Jan. 15, 2025).
- Medicare Advantage Provider Seoul Medical Group and Related Parties Pay Over $62M to Settle (Mar. 26, 2025).
- Behavioral Healthcare Company Executive Sentenced for Healthcare Fraud (Mar. 26, 2025).
- Prometheus Settlement (Mar. 26, 2025).
Stay Proactive, Stay Protected
Ready to strengthen your organization’s compliance approach? Don’t wait until it’s too late—take action now to cultivate a robust compliance culture and safeguard your practice against FCA risks. Connect with us today to explore customized compliance solutions that meet your needs and ensure peace of mind.
About the Author:
Rachel V. Rose, JD, MBA
Rachel V. Rose, JD, MBA is a disciplined, empathetic, & tenacious attorney advocating for & winning desired legal outcomes for national & international clients. Ms. Rose’s practice includes compliance, transactional, & litigation matters primarily related to healthcare, cybersecurity, securities, the False Claims Act, and Dodd-Frank. She is also affiliated with Baylor College of Medicine where she teaches bioethics.
