The Punishment of "Health Care Fraud"

Article excerpt

I. INTRODUCTION

Skyrocketing health care costs have remained an issue of national concern for most of this decade. (2) Many Americans have come to believe that one of the primary causes for the substantial increase in the cost of health care is fraud and abuse within the health care industry. (3) The United States government reports that federally funded programs, such as Medicare, (4) are fraught with fraud and abuse. (5) The facts presented by the federal government seem to support this public belief. The federal government estimates that seven percent of all billings submitted by the country's Medicare providers are fraudulent. (6) As a result, the government believes that the Medicare program lost an estimated $12.6 billion in 1998 due to fraudulent and improper billing. (7)

In 1995, public outcry for reform and cost-cutting measures in the federal budget led the federal government to declare "war" on "health care fraud;" Janet Reno, the Attorney General of the United States at the time, announced that the prosecution of "health care fraud" would be the number one priority of the Department of Justice [hereinafter "DOJ"] after the prosecution of violent crimes. (8) Soon after the DOJ's declaration, in August of 1996, Congress passed the Health Insurance Portability and Accountability Act of 1996 [hereinafter "HIPAA"], which significantly strengthened enforcement efforts. (9)

The government has made a mark in its campaign against "health care fraud." In the last two years, the federal government has dramatically increased the number of health care fraud investigations initiated. (10) Thus, the number of criminal prosecutions has more than tripled since the government declared "war" on "health care fraud" with health care providers going to prison in record numbers. (11) Additionally, federal prosecutors opened 4010 civil health care fraud matters in 1997, (12) which represented the majority of the DOJ's civil fraud workload for the first time in history. (13) By the end of 1998, the government reported that there were 3471 civil "health care fraud" matters pending. (14) Finally, more than 2700 health care providers were excluded from participation in the Medicare program in 1997, (15) almost double the number of providers excluded in 1996. (16) The number of exclusions continued to rise in 1998 with the government reporting that it excluded 3021 health care providers. (17) These governmental efforts netted a record $1.087 billion in judgments, settlements and fines in 1997 (18) and the collection of $480 million in 1998. (19) The government states that it will maintain this return on its actions as settlements and fines are collected in future years. (20)

Clearly, the government's "war" on "health care fraud" continues to rage. (21) But what is "health care fraud?" How should it be defined? How "health care fraud" is defined is especially significant to health law practitioners in light of a recent case in which two Kansas lawyers were indicted in a Medicare kickback case. (22) Although the federal government asserts that billions of dollars are lost to "health care fraud," these numbers include situations that result from honest mistakes. (23) The government has admitted that in its reporting of "health care fraud," it is unable to distinguish situations where honest mistakes were made from acts of intentional fraud. (24) In fact, the False Claims Act [hereinafter "FCA"], the most commonly utilized civil statute under which health care providers are sued for "health care fraud" includes health care providers that have merely made mistakes. (25)

The FCA requires that the act be committed "knowingly." (26) However, proof of intentional wrongdoing is not required to successfully bring a civil action under the FCA. (27) As a result, a health care provider can be found strictly liable for an act of "health care fraud." (28) The government's failure to distinguish between intentional acts and mistakes in its war against "health care fraud" allows health care providers who have made mistakes to be accused of committing "health care fraud" and sanctioned when in reality their conduct does not represent an act of fraud. …