What is Cost Report Fraud
If you have ever heard someone say, “Oh, I will just expense it!” then you may have some idea of what a cost report entails. A cost report is a report listing of all expenses and charges related to health care expenses. Fraud relating to cost reports takes many forms.
- Cost report fraud may involve writing off non-medical, personal expenses on the healthcare cost report. For example, if a doctor writes off the purchase of a new car as a necessary medical expense, that may be considered cost report fraud. However, if a doctor writes off airline tickets he purchased to attend a medical conference, that may not be considered cost report fraud.
- Cost report fraud could also involve writing off costs that were not actually incurred in order to receive more money than you are entitled to.
- Finally, cost report fraud involves submitting ineligible expenses for reimbursement by Medicare or Medicaid under their individual regulations. The law is heavily dependant on the circumstances of the situation.
If charged with cost report fraud, or you are under investigation for possible cost report fraud, it is in your best interest to consult with an attorney about your individual case as soon as possible. While this charge is not frequently handed down, it does carry with it some hefty penalties if you are found guilty. And thus, it demands some discussion.
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What Statutes Make Cost Report Fraud Illegal?
Cost report fraud is illegal in the United States under the False Claims Act, 31 U.S.C, Chap. 37, Subchap. III. And liability under the False Claims Act, specifically 31 U.S.C. §3729, arises when a defendant, to the detriment to the United States Government,
- knowingly presents, or causes to be presented, a false or fraudulent claim for payment;
- knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or fraudulent claim;
- conspires with others to commit a violation of the False Claims Act ;
- knowingly makes, uses, or causes to be made or used, a false record or statement to conceal, avoid, or decrease an obligation to pay money or transmit property to the Federal Government.
A defendant who is found guilty of a violation of the false claims act may be liable to the U.S. Government for a civil penalty of between a minimum of $5,000 and a maximum of $10,000, plus 3 times the amount of damages which the Government sustains because of the act of that person. All of the amounts above may be adjusted for inflation.
These damages may be reduced to no less than 2 times the amount of damages for several reasons, including,
- The defendant fully cooperated with the government throughout the investigation; or
- The defendant furnished the government with information about the violation prior to there being any prosecution or legal action.
Private Citizen Actions
In addition to the action brought against you by the government, if you have been accused of falsely reporting a diagnosis, you may also be subject to civil actions by a private person; though as subject to the False Claims Act, there is statute of limitations of ten years for which might file such a claim.
Under 31 U.S.C. §3730, a private citizen may bring an action on behalf of both themselves and the U.S. Government. The government may move to have the case dismissed, may intervene in the case, or may move for extensions of time as is appropriate under U.S. federal civil procedure.
If the government does proceed with the action, they take over the primary responsibility for prosecuting the case. The private citizen may continue to be a part of the case, creating a Qui Tam Action. A Qui Tam Action means that the private citizen that is a party, and that assists the prosecution, will be able to receive all, or part, of any penalty imposed by the court in the case.
Cost Report Schemes in Practice
Manhattan US Attorney Settles Civil Fraud Claims Against Westchester Medical Center Arising From Its Violations Of The Anti-Kickback Statute and The Stark Law
In May 2015, Westchester Medical Center agreed to an $18.8 million settlement in order to resolve claims against it of cost report fraud and violations of both the Stark Law and the Anti-Kickback Statute.
As a part of a larger scheme, Westchester Medical Center was submitting costs reports seeking reimbursements for charges that they had not actually incurred. From about 2000 to 2007 Westchester Medical Center submitting cost reports seeking reimbursement for costs they did not incur and that were not actually reimbursable under the relevant cost-reporting rules.
The agent in charge of the case stated that cost report fraud could cost taxpayers millions of dollars and undermines the people’s trust in the medical system.
For more information or for the full Department of Justice (DOJ) press release, click this link or copy and paste the URL below:
The United States Intervenes in False Claims Act Lawsuit Against Mississippi Hospital, Two Individuals and Management Company for Overcharging Medicare Program
In September 2015, the United States government stepped into a Qui Tam lawsuit against H. Ted Cain, Julie Cain, Corporate Management Inc., and Stone County Hospital Inc. for, among other things, charging ineligible expenses on their cost reports. The alleged illegal conduct began in 2002 and purportedly continued until the lawsuit was filed.
Among claims of mismanagement of the hospital and double payments to benefit the Cains, the suit also alleges that Tim claim was improperly claiming expenses for his personal luxury vehicles and other luxury items on the hospital’s cost reports. The hospital run by the Cain’s management company is essential to the rural Mississippi area that is located in.
The government agent in charge of the case purported that the alleged broad mismanagement of the hospital may have cost the taxpayers hundreds of thousands of dollars and may have even cost some their lives or the lives of their loved ones.
For more information or for the full DOJ press release, click this link or copy and paste the URL below:
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Potential Defenses to Charges of Cost Report Fraud
There are several defenses that may be used if you have been officially charged with cost report fraud.
Just like with any other charge of an illegal activity, though, each case has individual details and key facts that separate it from even the most similar cases.
There is no one size fits all defense for charges of cost report fraud. The following are rough examples of an individualized defense that an experienced and knowledgeable attorney will be able to craft for you.
In order for a guilty verdict to be found against you, the prosecution must be able to show that you knowingly and willingly were submitting fraudulent cost reports for reimbursement.
If the fraudulent information on a cost report comes from a mistake of where an item belongs, a mistype, or some other simple error you may have a valid defense to the charges. It is important, though, that if you find this mistake before charges are brought against you that you take the necessary steps to fix the error.
These steps would include reporting the error to whichever authority the report was sent to.
This would act as further proof that the fraudulent information on the cost report was simply the result of some confusion rather than a willful act.
Claim Submitted is Not for Payment
If, on a cost report, you put information that is false or fraudulent but did not intend for it to result in an overpayment than that may be a valid defense against charges of cost report fraud.
Under the False Claims Act, in order to be in violation, the fraudulent information presented must be done in order to receive some kind of property in return, whether it be money or other physical property like medical equipment.
Keeping a detailed list of all the outstanding payments, or things that you are waiting on reimbursement for would be most helpful in this situation. And being prepared by keeping full and updated reports may make a potential investigation into you or your business end before it has even truly begun.
Call a Health Care Attorney You Can Trust
If you have been accused of, or are under investigation for, false reporting of a diagnosis contact an experienced health care attorney as soon as possible.
An attorney will be able to guide and advise you through every step of an investigation and trial. In addition, a knowledgeable attorney will also ensure that your right and interests, as well as the rights and interests of your patients, are protected at every stage of the proceedings.
You work hard to help your patients when they are in medical need, let an attorney help you when you are in legal need.