Why You Must Understand False Claims Act Math

November 22, 2021

The federal False Claims Act (“FCA”) traces its history back to the Civil War, a time at which unscrupulous vendors sold defective goods such as blankets and boots to the Union army. The result was to adopt legislation both penalizing the filing of false claims and incentivizing private citizens to alert the government by paying them a bounty.

As the law’s developed over time, it now impacts a wide range of equally unscrupulous behavior in a wide range of government contracting, including the filing of fictitious and overstated claims for health care services under federal health care programs.

You’re probably familiar with the fact that damages under the FCA are trebled. In other words, $1,000 worth of actual damages becomes $3,000. And, you might be familiar with the fact that, in addition to damages, penalties apply.

Here’s where a recent judgment demonstrates the importance of understanding FCA math, especially the fact that added penalties, which exceed $11,000 per claim, can be, and actually are, assessed against each and every claim.

What began with a whistleblower lawsuit under the FCA by a physician employee followed by the entry of the U.S. government into the case, resulted last week in a judgment against two ophthalmologists, Emelike Agomo M.D. and Mustapha Kibirige M.D., as well as Outreach Diagnostic Clinic and Outreach Eyecare, as a result of 14,450 false claims to Medicare.

As alleged by the government in their complaint: The defendants performed standard eye pressure tests on Medicare patients for which they received reimbursement. Simultaneously, they falsely charged Medicare for a special eye pressure test claiming it was performed separately on the same day.

On November 18, 2021, the U.S. District Court for the Southern District of Texas determined that damages total $2,422,350. And, key to the math lesson of this post, the Court also assessed the maximum penalty of $11,803 against the defendants on each of the 14,450 false claims, for an additional $170,553,350.

FCA penalties are not assessed per scheme. Per claim actually means for each and every claim. 14,450 false claims means 14,450 penalties.

The result can be, and is, as I am sure Drs. Agomo and Kibirige would attest, astronomical. As in $170,553,350.

Cooking up a scheme to add a fake charge onto a few thousand patient encounters isn’t a single scheme in terms of penalties; it’s a few thousand of them. All you have to do next is multiply by $11,803 . . . plus three times the amount of the claims themselves. That’s why you learned multiplication and addition when you were in elementary school.

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