Deterring Health Care Fraud and Abuse

By Douglas T. Manning, D.D.S., J.D., LL.M Candidate

Stories abound in the news of health care providers who have allegedly bilked the Medicare and Medicaid programs out of money with false claims. Recently, the Houston Chronicle ran a story relating how certain Texas dentists have incorporated the extensive use of stainless steel crowns on childrenís "baby" or primary teeth, not only where decay occurs and simple fillings would be appropriate, but also on healthy teeth as a preventative measure to prevent future decay. The article correctly pointed out that determining fraud or abuse in relation to treatment decisions can be difficult. What one practitioner may call unnecessary treatment that would therefore be categorized as fraudulent or abusive behavior, another may consider appropriate. In many cases, reasonable opinions may differ as to what is appropriate treatment. (As a former practicing dentist, however, I believe that capping the entire complement of a childís primary teeth as a preventative measure would be never be appropriate professionally or ethically).

Opinions also vary on what is the most effective way to deter fraud and abuse, while maintaining the integrity of the medical professions and the Medicare and Medicaid programs. The federal Office of Inspector General (OIG) and state attorneys general believe incarceration and extensive fines work best. However, administrators in the federal and state departments that regulate Medicare and Medicare have concerns that stiff penalties may alienate heath care providers to the point that they may cut back or altogether curtail their participation in these government programs, reducing access and quality of services further.

Currently, federal and state governments can seek three remedies when faced with heath care fraud and abuse. The government can pursue criminal sanctions usually under sections 287 and 1001 of Title 18, which can include up to 5 years in prison and a maximum fine of $500,000. Civil sanctions are also available, either independent of, or in addition to, criminal sanctions. The government can raise these claims under the False Claims Act, the Civil Money Penalties Law of the Social Security Act, the Federal Program Fraud Civil Remedies Act, or various similar state statutes, which mandate up to treble damages, fines up to $10,000 for each false claim, and recovery of the costs of litigation. Lastly, mandatory or permissive exclusion from the Medicare and Medicaid programs is also available, again independent of, or in addition to, other remedies.

However, the use of these various sanctions, especially when used together, has been controversial. Opponents have raised claims of governmental abuse of power and violations of constitutional rights and protections. Critics accuse government enforcement agencies of being heavy handed by threatening actions under these statues to force, and some would say extort, health care providers into settlements. Moreover, constitutional questions under the Double Jeopardy Clause of the Fifth Amendment, the Due Process Clause of the Fourteenth Amendment, and the Excessive Fines Clause of the Eighth Amendment can arise when the government invokes these sanctions.

Due Process challenges have arisen in response to government action seeking civil sanctions. It is argued that if the penalty of a civil sanction goes beyond remedial goals and is punitive in nature, criminal or at least more than ordinary civil due process protections are necessary. However, the courts have not afforded these claims much merit.

Double Jeopardy challenges have arisen when the government has pursued both a criminal and civil action against a provider for the same fraudulent or abusive behavior. The Double Jeopardy Clause protects against being punished twice for the same offense. In Hudson v. United States, the Supreme Court noted that all civil penalties have some deterrent effect and thus act as punishment. Therefore, the Court held that the Double Jeopardy Clause was not a bar to successive civil or criminal penalties, but the Court noted that some ills are addressed by other constitutional provisions, including the Eighth Amendment which protects against excessive fines. However, at this time no Excessive Fines challenges have made to the Supreme Court.

Still, the problem of how best to punish and deter the fraudulent behavior of health care providers must be addressed. The federal government appears to be reluctant to impose program exclusion, yet this punishment may affect the best results with the least likelihood of controversy. Exclusion prevents further fraud on the Medicare or Medicaid programs and protects the Medicare and Medicaid patients by removing providers who practice unnecessary services, while not imposing disproportionate punishment and not totally denying the practitioner a livelihood. Of course, criminal sanctions should still be available for excessive provider misconduct and civil sanctions should be imposed to the extent they compensate the government for the fraudulent behavior and punish providers in proportion to their sins, but no more. The governmentís wielding of these statutes as a club to exact excessive retribution should no more be tolerated than a providerís fraudulent acts.