What Else is in Health Care Law: False Claims, Whistleblower

A good summary from O’Melveny & Myers LLP, “United States: The Health Care Reform Legislation and its Impact on the Health Care and Life Sciences Industries,” notes inclusion of many changes in the health care law that open employers to more litigation.

The Act also modifies several key substantive laws, thereby removing a number of substantive obstacles in the path of these enforcement agencies and private plaintiffs, including whistleblowers under the False Claims Act. For example, the Act modifies the False Claims Act’s “original source rule,” which historically has served a gate-keeping function against whistleblowers that have sought to bring cases based upon publicly disclosed information. The question of whether such a whistleblower’s case should proceed is now vested in the Department of Justice, which may well expand the number and types of cases brought by whistleblowers. The Act also requires the report and return of Medicare and Medicaid overpayments within 60 days of identification. With these changes, a knowing failure to report and return an overpayment can now lead to liability under the False Claims Act.

The Act also modifies the Anti-Kickback Statute. It clarifies that a showing of specific intent is not necessary under the statute, thereby attempting to eliminate the heightened scienter requirement imposed by at least one Federal Circuit. The Act also codifies several federal judicial opinions that held that claims resulting from kickback arrangements constitute “false or fraudulent claims” under the False Claims Act. These changes to the False Claims Act and the Anti-Kickback Statute are but two examples of the changes the Act brings to federal anti-fraud laws.

Taken together, the Act and other recent legislative changes (including changes to the Medicare secondary payor laws) leave the government and the plaintiff’s bar well-poised to levy a broad, renewed attack on the health care and life sciences industries. These changes likely will meaningfully alter the health care fraud enforcement landscape as the government seeks to pay for the hefty price tag associated with implementing the Act’s reforms.

No wonder the trial lawyers are giddily boastful.

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