• There are 5 federal fraud and abuse laws that are important for physical therapists to know:

    They include:

    • the False Claims Act (FCA),
    • the Anti-Kickback Statute (AKS),
    • the Physician Self-Referral Law (Stark Law),
    • the Exclusion Authorities, and
    • the Civil Monetary Penalties Law.

    In addition to the federal fraud and abuse laws, many states have established their own fraud and abuse laws, which govern billing relationships with private payers.

    False Claims Act (31 U.S.C. Sections 3729-3733)

    The civil False Claims Act imposes liability on any person who submits a claim to the federal government (eg, Medicare or Medicaid) that he or she knows (or should know) is false. An example may be a health care provider who submits a bill to Medicare for medical services she knows she has not provided. This could also include falsifying medical records or documentation to obtain or retain money from the federal government. No specific intent to defraud is required, because the FCA defines “knowing" as not only actual knowledge but also acting in deliberate ignorance or reckless disregard of the truth or falsity of information, such as repeatedly ignoring government bulletins and transmittals regarding billing and coverage for physical therapist services.

    Under the FCA, filing false claims can result in fines of up to 3 times the programs' loss plus $22,000 per claim filed, so the fines can be very high. The FCA includes a whistleblower provision that allows a private individual (eg, office staff, patients, other providers) to file a lawsuit on behalf of the United States and share a percentage of the proceeds from the FCA action. The FCA provides protection to whistleblowers who are discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms and conditions of their employment as a result of their furtherance of an action under the FCA.

    In addition, there is a criminal FCA (18 U.S.C. section 278) that imposes criminal penalties, including imprisonment and fines, for submitting false claims.

    Anti-Kickback Statute (42 U.S.C. Section 1320a-7b(b)

    Kickbacks can distort medical decision-making, cause overutilization, increase costs, and result in unfair competition by freezing out competitors who are unwilling to pay kickbacks. Kickbacks can also adversely affect the quality of patient care by encouraging physicians to order services or recommend supplies based on profit rather than the patients' best medical interests.

    The Anti-Kickback Statute (AKS) was created to counter these potential abuses in the health care system. The AKS is a criminal law that prohibits anyone from “knowingly and willfully" receiving a form of payment in return for referring a patient to another provider for services or items covered by Medicare or Medicaid. It also forbids payment in return for purchasing, leasing, or ordering any good, facility, service, or item that would be paid for by Medicare or Medicaid. Payment, referred to under the statute as “remuneration," can include anything of value, such as cash for referrals, free rent for medical offices, expensive meals, tickets to shows, and excessive compensation for medical directors. The statute covers those who offer to pay the remuneration and those who receive it. Because this is a criminal statute, each party's intent is a key element of their liability.

    Criminal penalties and administrative sanctions for violating the AKS include fines, imprisonment, and exclusion from participation in federal health care programs. Civil penalties can be up to $50,000 per kickback plus 3 times the amount of remuneration.

    Safe harbors exist that protect certain payment and business practices that would otherwise implicate the AKS statute. An arrangement must satisfy all of the requirements of the safe harbor to be legal.

    Physician Self-Referral Law (42 U.S.C. Section 1395nn)

    The Physician Self-Referral Law, also called the Stark Law, prohibits physician referrals of designated health services (DHS) for Medicare and Medicaid patients if the physician (or an immediate family member) has a financial relationship with that entity, unless an exception applies. A financial relationship includes ownership, investment interest, and compensation arrangements. The law has a list of 12 “designated health services," including physical therapy services. For example, if a physician provides physical therapy services in his office, he may not refer patients to that facility unless the facility meets certain criteria to qualify for an exception to the Stark Law. The most commonly used exception involving the provision of physical therapy in physician offices is the “in office ancillary services" exception.

    There is no need to prove specific intent for this law to be violated. Penalties for physicians who violate the law include fines and exclusion from participation in federal health care programs. More information is available at the CMS website.

    Exclusion Statute (42 U.S.C. Section 1320a-7)

    Under the Exclusion Statute, the Department of Health and Human Services is required to exclude health care providers and suppliers who have been convicted of certain crimes from participation in all federal health care programs. These programs, such as Medicare, Medicaid, TRICARE, and the Veterans Health Administration, will not pay for items or services that these excluded providers furnish, order, or prescribe. The crimes include:

    • Medicare fraud
    • Patient abuse or neglect
    • Felony convictions for other health care-related fraud, theft, or other financial misconduct
    • Felony convictions for unlawful manufacture, distribution, prescription, or dispensing of controlled substances

    Civil Monetary Penalties Law (42 U.S.C. Section 1320a-7a)

    The OIG may seek civil monetary penalties (CMPs) for a variety of conduct, and different amounts of penalties and assessments may be authorized based on the type of violation at issue, with penalties ranging from $10,000 to $50,000 per violation. CMPs can also include an assessment of up to 3 times the amount claimed for each item or service, or up to 3 times the amount of remuneration offered, paid, solicited, or received. Examples of CMP violations include:

    • Presenting a claim that the person knows or should know is for an item or service that was not provided as claimed or is false and fraudulent
    • Presenting a claim that the person knows or should know is for an item or service not eligible for payment
    • Violating the Anti-Kickback Statute
  • Last Updated: 4/3/2019
    Contact: advocacy@apta.org