The False Claims Act (“FCA”), which is mainly used to litigate fraudulent Medicare claims, is being challenged in the Supreme Court. In U.S. ex. Rel. Polansky v. Executive Health Resources, Inc., Polansky argues that in granting the Department of Justice (“DOJ”) the ability to move to dismiss the realtor’s FCA complaint, the FCA deprives realtors of their status and rights. Oral arguments commenced in January 2023, and a decision is expected this Summer regarding the future of the FCA.
The FCA was enacted in 1863 during President Lincoln’s tenure. The FCA allows individuals (“whistleblowers”) to pursue litigation against those the whistleblower believes have fraudulently billed the federal government. In 2022, 90% of all FCA settlements and judgments were related to healthcare fraud. Healthcare fraud may be billing for medical services not rendered, misrepresentation of covered medical procedures as non-covered medical procedures, altering patient’s diagnoses to receive a higher payment, billing for services not performed, accepting kickbacks for referrals, or unbundling procedures and billing a single procedure at every stage of the interaction to receive a higher payment.
The consequence of Medicare fraud is higher insurance premiums for Medicare Advantage policyholders. To make up for Medicare’s payments to fraudulent claims, Medicare Advantage plans adjust premium prices for the coming year to make up for fraudulent claims . Thus, policyholders pay more monthly to mitigate the Medicare Advantage plans’ payments toward fraudulent claims.
The FCA provides a pathway for whistleblowers who have experienced Medicare fraud. The DOJ has intervened in 261 cases this past year, the highest amount since 1993. However, in 2022, for the first time in history, the recovered amount for cases where the DOJ has not intervened surpassed the amount recovered in DOJ-intervened cases. Additionally, in that same year, about half of all awards for claims under the FCA were from cases where the DOJ declined to intervene.
In Polansky, the DOJ declined to intervene after investigating the claim for two years but maintained the right to move to dismiss. About seven years after the case’s inception, the DOJ then moved to dismiss the lawsuit, citing that the cost of litigating the claim did not outweigh the benefit of an award. Polansky is claiming the DOJ’s dismissal of the claim, stopping litigation in its tracks, is a deprivation of the whistleblower’s rights. Currently, the DOJ has broad discretion in dismissing claims under the FCA. If the Supreme Court finds Polansky’s arguments convincing, then the ability of whistleblowers to sue medical care providers for fraudulent billing would increase, as the DOJ would be barred from dismissing claims freely. However, the DOJ states that its broad discretion, which allows the DOJ to dismiss claims where the cost of litigating will not benefit the government or whistleblower, should be maintained.
Today, committing Medicare fraud is less of a challenge than one would assume. A fake company was set up in Florida as a Medicare fraud front. All that was required was setting up a P.O. box for the fake company. The fake company billed Medicare over $500,000 for patients that did not exist. On average, taxpayers lose more than $100 billion annually to Medicare and Medicaid fraud.
Furthermore, Medicare fraud creates expensive repercussions for policyholders. Although the FCA creates an avenue for individuals to sue billers who have engaged in fraudulent practices, if the Supreme Court agrees with the government, the decision may result in a chilling effect among policyholders, reducing FCA litigation and compounding the damaging impacts for individuals.