Intent and the law: A look at health care fraud and abuse

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In the world of health care, there are three significant federal laws that all health care providers and practices must understand and follow: The Physician Self-Referral Law, which commonly is known as the Stark Law; the Anti-Kickback Statute (AKS); and the False Claims Act (FCA). Often referred to collectively as the “three-headed monster,” these laws form a rubric of health care regulations that, if violated, can result in significant financial and, in some instances, even criminal penalties. Although commonly cited collectively, each of these laws provides a different threshold of “intent” necessary to be deemed a violation. It is critical that health care providers understand the various intent requirements when assessing compliance with these laws.

Stark Law

The Stark law prohibits physicians from referring patients for the furnishing of specific “designated health services” to an entity which the physician (or an immediate family member of the physician) has a financial relationship with if the services will be covered, in whole or in part, by Medicare and do not otherwise qualify for a Stark exception. Unlike the AKS and FCA, Stark is a “strict liability” statute. This means that a physician’s intent to violate Stark or knowledge of Stark’s prohibitions is not required to violate the law. All the government has to show is that the referral violated Stark’s prohibitions, whether it was intentional, mistaken, or otherwise. Penalties for violating Stark include financial penalties, potential FCA liability, return of amounts paid by Medicare, and exclusion from participation in Federal health care programs.

Stark also allows for the imposition of civil monetary penalties (CMPLs) that are assessed on a per-referral basis. For example, if a physician enters into a Stark non-compliant space lease arrangement with another physician for a period of one year, and such physician-lessee refers Medicare patients to the lessor-physician for designated health services, CMPLs can be assessed for each such referral that was made during that period. Despite the fact that Stark is a strict liability statute with no specific intent requirement, the government must show that a provider acted “knowingly” to impose CMPLs for a Stark violation, “meaning that a person, with respect to an act, has actual knowledge of the act, acts in deliberate ignorance of the act, or acts in reckless disregard of the act, and no proof of specific intent to defraud is required.”

Anti-Kickback Statute

In brief, the AKS is a law that prohibits the knowing and willful giving or receiving of any “remuneration” in exchange for referrals or other business generated between parties and payable by a Federal health care program, unless the arrangement meets a specific “safe harbor” provision.

Penalties for violating the AKS include fines, CMPLs, return of amounts paid by the Federal health care program, potential FCA liability, and exclusion from participation in Federal health care programs. In addition, violations of the AKS can lead to criminal penalties, including jail time.

Interpretation of the intent standard for violating the AKS has varied historically in the Federal circuit courts. The government resolved some of these differences through an amendment to the AKS via the Patient Protection and Affordable Care Act. The amended AKS provides that an individual need not have actual knowledge of the AKS prohibitions or a specific intent to violate the AKS in order for there to be an AKS violation. Many courts also follow a “one purpose” test, finding that if one purpose of an arrangement is to give or receive remuneration in exchange for referrals, then the AKS is implicated even if the services or items at issue otherwise were medically necessary and appropriately provided.

False Claims Act

Violations of both Stark and the AKS also can lead to penalties and prosecution under the FCA. The FCA makes it unlawful for a person to knowingly submit, or cause to submit, false claims to the government. The FCA defines “knowingly” to mean that a person “(i) has actual knowledge of the information; (ii) acts in deliberate ignorance of the truth or falsity of the information; or (iii) acts in reckless disregard of the truth or falsity of the information[.]” Violations of the FCA can lead to significant civil financial penalties and exclusion from participation in Federal health care programs, as well as criminal penalties to include jail time and criminal fines.

Recently, the United States Supreme Court addressed the FCA’s “knowingly” requirement. Settling split decisions among lower Federal courts, the Court held that whether an FCA violation occurs depends on whether the accused subjectively knew or believed that its submissions to the government were false. In order to meet the “knowing” component, the court further enumerated the following standards to show that the accused: (i) actually knew that claims were not accurate when presented; (ii) was aware of a risk that its claims were not accurate and intentionally avoided learning whether the claims were accurate; or (iii) was aware of a substantial and unjustifiable risk that the claims were not accurate, but submitted the claims for payment anyway.

Conclusion

All health care providers should understand the scope of these statutes and the necessary intent standards for violations. While many ascribe a general requirement and understanding of “knowing” and “willful” to these laws, the same is not necessarily even required or defined universally among each statute. Failing to understand the subtle nuances and keep abreast of ongoing interpretations and opinions can lead to financial loss, future inability to participate in Federal health care programs, and even the loss of one’s liberty.

Christina M. Kuta, MSW, JD, LLM, is of counsel in the Chicago office of Roetzel & Andress, LPA. She concentrates her practice in the areas of regulatory and transactional health care.She can be reached at ckuta@ralaw.com.