HCA Holdings 2012 Annual Report Download - page 27

unnecessary goods and services and cost report fraud. Federal enforcement officials have the ability to exclude
from Medicare and Medicaid any investors, officers and managing employees associated with business entities
that have committed health care fraud, even if the officer or managing employee had no knowledge of the fraud.
Criminal and civil penalties may be imposed for a number of other prohibited activities, including failure to
return known overpayments, certain gainsharing arrangements, billing Medicare amounts that are substantially in
excess of a provider’s usual charges, offering remuneration to influence a Medicare or Medicaid beneficiary’s
selection of a health care provider, contracting with an individual or entity known to be excluded from a federal
health care program, making or accepting a payment to induce a physician to reduce or limit services, and
soliciting or receiving any remuneration in return for referring an individual for an item or service payable by a
federal health care program. Like the Anti-kickback Statute, these provisions are very broad. Under the Health
Reform Law, civil penalties may be imposed for the failure to report and return an overpayment within 60 days
of identifying the overpayment or by the date a corresponding cost report is due, whichever is later. To avoid
liability, providers must, among other things, carefully and accurately code claims for reimbursement, promptly
return overpayments and accurately prepare cost reports.
Some of these provisions, including the federal Civil Monetary Penalty Law, require a lower burden of
proof than other fraud and abuse laws, including the Anti-kickback Statute. Civil monetary penalties that may be
imposed under the federal Civil Monetary Penalty Law range from $10,000 to $50,000 per act, and in some cases
may result in penalties of up to three times the remuneration offered, paid, solicited or received. In addition, a
violator may be subject to exclusion from federal and state health care programs. Federal and state governments
increasingly use the federal Civil Monetary Penalty Law, especially where they believe they cannot meet the
higher burden of proof requirements under the Anti-kickback Statute. Further, individuals can receive up to
$1,000 for providing information on Medicare fraud and abuse that leads to the recovery of at least $100 of
Medicare funds under the Medicare Integrity Program.
The Federal False Claims Act and Similar State Laws
The qui tam, or whistleblower, provisions of the FCA allow private individuals to bring actions on behalf of
the government alleging that the defendant has defrauded the federal government. Further, the government may
use the FCA to prosecute Medicare and other government program fraud in areas such as coding errors, billing
for services not provided and submitting false cost reports. When a private party brings a qui tam action under
the FCA, the defendant is not made aware of the lawsuit until the government commences its own investigation
or makes a determination whether it will intervene. If a defendant is determined by a court of law to be liable
under the FCA, the defendant may be required to pay three times the actual damages sustained by the
government, plus mandatory civil penalties of between $5,500 and $11,000 for each separate false claim. There
are many potential bases for liability under the FCA. Liability often arises when an entity knowingly submits a
false claim for reimbursement to the federal government. The FCA defines the term “knowingly” broadly.
Though simple negligence will not give rise to liability under the FCA, submitting a claim with reckless
disregard to its truth or falsity constitutes a “knowing” submission under the FCA and, therefore, may create
liability. The Fraud Enforcement and Recovery Act of 2009 expanded the scope of the FCA by, among other
things, creating liability for knowingly and improperly avoiding repayment of an overpayment received from the
government and broadening protections for whistleblowers. Under the Health Reform Law, the FCA is
implicated by the knowing failure to report and return an overpayment within 60 days of identifying the
overpayment or by the date a corresponding cost report is due, whichever is later. Further, the Health Reform
Law expands the scope of the FCA to cover payments in connection with the Exchanges to be created by the
Health Reform Law, if those payments include any federal funds.
In some cases, whistleblowers and the federal government have taken the position, and some courts have
held, that providers who allegedly have violated other statutes, such as the Anti-kickback Statute and the Stark
Law, have thereby submitted false claims under the FCA. The Health Reform Law clarifies this issue with
respect to the Anti-kickback Statute by providing that submission of claims for services or items generated in
violation of the Anti-kickback Statute constitutes a false or fraudulent claim under the FCA. Every entity that
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