Health Care Organizations Frauds in Relation to False Claims Act

  1. The False Claims Act (31 U.S.C. §§ 3729–3733)

The False Claims Act (31 U.S.C. §§ 3729–3733) is also known as the “Lincoln Law.” It refers to the American federal law, which inflicts legal responsibilities of the individuals or organizations, mainly the federal contractors who swindle governmental programs. It is, therefore, the primary litigation tool utilized by the federal government to combat fraud against the government. This law comprises of Qui Tam stipulation, which permits individuals who are not associated with the government or “relators” to file actions in place of the government, the act known as “whistleblowing” mostly when the person is employed by the company that is accused in the lawsuit (Engstrom, 2013). However, the law is also adapted to District of Columbia and 15 states in the United States of America and serve the same purpose just like in the federal False Claims Act Moreover; the whistleblowers have an opportunity to receive 15-25% of the recovered amount or damages. Therefore, the paper investigates the relationship between the False Claim Act and financial management in healthcare centers or organizations (Engstrom, 2013).

  1. Management’s Financial Responsibilities

Since the government emphasizes on the enforcement of the False Claims Act in health care organizations, the management should always take practical steps to come up with their enterprise risk control systems to solve the issue and evolving exposure to such healthcare organization. The following are some of the responsibilities that the managements of the healthcare organizations have in preventing and fighting the frauds related to the statute.

An Environment of Growing Scrutiny

As the healthcare reform is a top priority for the present administration, the government keeps on executing the active strategy introduced some years ago to fight health care fraud. Therefore, the health care organization management has the responsibility for ensuring that the health care environment has a very tight and severe scrutiny of the employee and the patients to ensure that there are no instances of frauds (Outterson, 2012). For example, the Institute of Medicine approximates that the USA healthcare sector can waste up to $750 billion per year on unnecessarily costly treatments, medical tests, and administrative fees. Hence, the government and organizations’ managements should adopt strict scrutiny to ensure that false claims are prevented (Salcido & Rubin, 2016).

Whistleblowers Encouraged Under the FCA

The whistleblowers are also very encouraged under the False Claim Act. Under the qui tam stipulations, the exposure of a company’s fraudulent actions is very much encouraged, and this helps in curbing frauds in the health care sector. Therefore, under the qui tam, the management should encourage other workers as well as private parties to expose frauds by rewarding such acts as the federal government does by rewarding the whistleblower with between 15-25% of the recovered damages (Outterson, 2012).

The High Price of an FCA Action

The False Claims Act has led to the collection of billions of dollars since its introduction. This is made possible because the persons they are caught violating the Act are strictly dealt with and the fines imposed are very high. Hence, the management should ensure that the employees in the health care organizations are aware of the fines and the penalties involved when an individual has been found to have violated the FCA. With this knowledge, the individual would avoid committing frauds in the health care sectors (Engstrom, 2013).

  1. Consequences of Ethical or Legal Breach

In general, and individually found to have violated this Act is punished through various means. First the damages found must be compensated and then he or she is fined heavily. Moreover, the individual can also be terminated from his or her workplace (Outterson, 2012). In case the overall organization is detected to have been involved in a fraud against the law, the organization is fined to recover the damage and can also be suspended.

Examples of FCA cases

The unbundling case, United States ex rel. Merena v. Smithkline Beecham Clinical Labs that led to the recovery of $328 million for federal taxpayers. The judgment was okay since the medical tests and bills were over-charged.

Inflating Cost Reports case regarding the United States ex rel. Monahan v. St. Barnabas Health Care System, Inc., (D. N.J) where it led to the recovery of $265 million for federal taxpayers. The health care costs reports were inflated, and hence, I agree with the decision by the court.

  1. HCO Management’s remedial steps to reverse the non-compliance organizations

The first step to ensuring that there is a good financial management in a health care organization would be to ensure that record keeping is improved. Every record regarding the patients and the bill charged as well as the expenditures are very significant and when properly done will prevent fraud (Salcido & Rubin, 2016).

Moreover, putting forward strict measures to the individuals found to have violated the Act is significant. Thorough punishments including fines, lawsuits, suspension, and termination can work well.

Finally, putting down the rule of the organization on notice boards and in areas where they are easily visible by the staff members as well as patients will also help. Moreover, regular meetings with the employees to remind them that they have to observe them without exception are also essential.

  1. Conclusion

In summary, the introduction and implementation of the False Claims Act in the health care organization have been a positive move since it has led to the recovery of many damages. In areas like these, it is very easy to commit frauds that result in losses regarding government revenue and over-charged patients. Hence, FCA has been a remedy for this and the HCO management, and the government should ensure its total observation.

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