Qui Tam Suits on the Rise

The False Claims Act provides that any person who knowingly submits a false claim for payment to the federal government is liable for a criminal or civil penalty and treble damages. In 1986, Congress amended the law to add a qui tam provision. The term “qui tam” comes from the Latin phrase “qui tam pro domino rege quam pro se ipso in hac parte sequiter,” or “he who sues on behalf of the king as well as himself.”

The qui tam provisions of the False Claims Act enable a private party to bring suit against a provider who has submitted false claims. If the lawsuit is taken over by the government, the instigator (called a relator) will be entitled to a percentage of the recovery (usually 5 to 20 percent).

The number of qui tam lawsuits has increased tremendously. Fifteen years ago, fewer than 10 percent of qui tam recoveries related to health care actions. Today, about half of all qui tam recoveries spring from the health care industry. The number of whistleblower filings has increased from approximately 50 to more than 500 filings annually.

HIPAA amended this rule dramatically, effective Jan. 1, 1997. One amendment prohibits submitting a claim for an item or service based on incorrect coding, where the person knows — or should know — the claim will result in greater payment than is proper. Another amendment expressly characterizes claims submitted for service that were not medically necessary as false.

Perhaps the most important amendment clarified CMS' longstanding position that a provider may not claim ignorance as a defense against the “knowledge” requirement of the false claims law. If a provider demonstrates a “reckless disregard” of the accuracy of the submission or acted in “deliberate ignorance” of the truth or falsity of the claim, then the provider may not claim ignorance as a defense. In other words, proof of actual intent to defraud is no longer necessary under the civil provisions of the False Claims Act.

A provider who puts forth insufficient effort to ensure accurate billing, or who allows patterns of mistakes to continue because of lax supervision or inattention to the rules, may be held accountable for submitting false claims.

Another trend that generates whistleblowers is the government's contention that claims submitted for services rendered poorly also constitute false claims. So far, the government has only used this theory to pursue egregious examples of poor quality service.