By Jacklyn DeMar

Law360 (April 30, 2020, 6:02 PM EDT )

Jacklyn DeMar

The False Claims Act is the government's number one civil enforcement tool for fighting fraud and recovering the billions of dollars lost each year to unscrupulous actors looking to bilk the taxpayers.

At a time when the government is infusing the health care industry with billions in new funds, strong anti-fraud laws are the only way to ensure that patients and taxpayers are protected.

In a recent Law360 guest article, some members of the defense bar argued that liability be disclaimed for violations of the Anti-Kickback Statute and the Stark Law, and resultant violations of the FCA, during the COVID-19 crisis.[1] In fact, in an emergency such as this, it is more important than ever to protect funds that are flowing into the health care industry.

While most providers are law-abiding, those looking to game the system are chomping at the bit, hoping the government will look the other way so that they can take advantage of the system. We should not be so short-sighted as to let this happen.

Any attempts to gut the protections afforded by the AKS and the Stark Law, and to prevent the government from holding bad actors liable under the FCA, create a serious risk of fraudulent diversion of taxpayer funds intended for the support of the health care industry during this time of crisis.

The Centers for Medicare and Medicaid Services, or CMS, issued blanket waivers to the Stark Law on March 30.[2] The waivers protect physicians and entities from Stark liability with respect to eleven specific types of financial relationships, including remuneration from an entity to a physician that is above or below fair market value, and payments from physicians to entities at less than fair market value for services, space, and equipment.

While some concessions are necessary during a crisis, these waivers go too far toward allowing financial relationships that can lead to fraud and abuse.

Last week's article asserts that the government should go even further and extend protection from liability to similar violations of the AKS (and resulting violations of the FCA) stemming from improper payments.

The article suggests that Congress should amend the AKS to preclude liability with respect to payment practices subject to the recent Stark Law waivers and further recommends that:

(1) the U.S. Department of Justice issue a memorandum to all U.S. attorneys providing guidance as to AKS enforcement during the pandemic-related emergency, and (2) CMS issue a policy statement regarding the materiality of any AKS violation associated with a financial arrangement that satisfies the Stark Law waivers as to the payment of claims by CMS.

These actions would prevent the government from ensuring that taxpayer funds are not misspent and would leave patients vulnerable.

Let us not forget the purpose of the AKS and the Stark Law: to protect patients and guarantee that any treatment, service or drug they receive is recommended and provided because it is medically necessary, and not because a physician or health care entity has a financial motive.[3]

Congressional findings supporting the amendments to the Social Security Act adding anti-kickback provisions explained that the purpose of the amendments was to address the "disturbing degree [of] fraudulent and abusive practices associated with the provision of health services financed by the [M]edicare and [M]edicaid programs."[4]

The findings further noted that fraud in government health care programs negatively impacted all Americans by "cheat[ing] taxpayers who must ultimately bear the financial burden of misuse of funds in any government-sponsored program" and "divert[ing] from those most in need, the nation's elderly and poor, scarce program dollars that were intended to provide vitally needed quality health services."[5]

The purpose of the FCA is to recover those taxpayer funds that are paid out as a result of improper financial motives. In congressional hearings on the amendments to the FCA in 1986, which served to modernize the FCA and make it the effective tool it is today, Sen. Charles Grassley, R-Iowa, observed:

In the face of our current Federal debt crisis, it is more important than ever that we maintain an efficient, fair and most of all, effective enforcement system to protect our Federal dollars from fraud and abuse."[6]

In our current public health and financial crisis, the protection of taxpayer dollars is as essential now as it was then.

In 2010, recognizing the prevalence of fraud in the health care system, Congress amended the AKS to clarify that a claim to the government that includes items or services resulting from a violation of the AKS "constitutes a false or fraudulent claim" for the purposes of the FCA.[7]

The government has made enforcement of the AKS the priority it should be in an effort to protect patients and taxpayer funds. Gutting these important laws at a time when so many are at risk would be detrimental to our efforts as a nation to get patients the treatment they need.

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Jacklyn DeMar is director of legal education at Taxpayers Against Fraud Education Fund.

The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm, its clients, or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.

[1] https://www.law360.com/health/articles/1265212/health-providers-still-need-help-fighting-virus-kickback-risk

[2] https://www.cms.gov/files/document/covid-19-blanket-waivers-section-1877g.pdf

[3] H.R.Rep. No. 95–393, pt. 2, at 44 (1977),reprinted in1977 U.S.C.C.A.N. 3039, 3047.

[4] Id.

[5] Id.

[6] https://www.justice.gov/sites/default/files/jmd/legacy/2014/07/11/hear-j-99-112-1986.pdf.

[7] 42 U.S.C. § 1320a-7b(g).

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