Posted by: Robert Markette
February 27, 2007

I read an interesting article over the weekend on False Claims Act Liability. It discussed a number of new theories under which an entity that receives government funds can be found liable under the False Claims Act. The main point of the article was that the potential for liability under the False Claims Act is expanding and entities involved in government contracting need to be more careful than ever. For home care, given the limited financial rewards of participating in Medicare and Medicaid, it makes fraud prevention even more important.

The article discussed potential theories of liability beyond the traditional false claims theories including worthless services; inadequate quality of care and others. The article pointed out that only one court had allowed an inadequate quality of care claim to proceed past dismissal, but that still means there is a possibility to raise some of these claims.

This trend is more troubling if considered in light of state false claims acts. Many states have modeled their false claims act on the federal False Claims Act. Often, when a state models legislation on federal legislation, state courts will look to federal courts interpretations of the federal law. (As will Plaintiffs and Defendants attorneys.) This means that as the federal statute expands, the state false claims act statutes may expand as well.

One example would be in the realm of inadequate quality of care claims. The federal courts have been reluctant to recognize this type of claim, for fear of federalizing medical malpractice. State courts, which are the traditional medical malpractice forum, might not have the same reservation. (Of course, for states like Indiana with comprehensive medical malpractice statutes, there may be a similar hesitation to allow an FCA end run around Medical Malpractice acts.) The real point here is that potential liability under the federal False Claims Act continues to expand and home health agencies should be aware that a similar trajectory is likely under state false claims acts.

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