FERA: How and Why Congress Linked the FCA and Medicaid


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How a qui tam case involving generators for Navy destroyers ended up going all the way to the Supreme Court — & why that means more whistleblower risk to YOU.

Following several federal court cases that limited the reach of the False Claims Act, some providers argued that Medicaid claims could not qualify as false claims because providers submit claims to government contractors and not the government itself.

It was a nice try. Congress took care of that possible loophole — and then some — in the Fraud Enforcement and Recovery Act (FERA), which was signed into law in May 2009. FERA makes it much more clear that the FCA should apply to Medicaid claims, said Robert W. Markette Jr., a partner with Gilliland & Markette LLP, in a recent presentation, “Prepare for Unseen Liabilities: FCA, FERA, and Their Impact on Health Care.”

This article explores the second area of the three that Markette identified as compliance hot spots for providers under FERA — Medicaid. Last week, we addressed subcontractors’ liability under the FCA and FERA. (Next week, we’ll focus on overpayments, so stay tuned.)

The Cases Behind the Concern

The cases that got the Senate’s goat include a 2008 U.S. Supreme Court case, Allison Engine Co. v. United States ex rel. Sanders, and a 2004 case out of the D.C. Circuit, United States ex. rel. Totten v. Bombardier Corp. They both involved subcontractors.

“In Allison Engine, the U.S. Supreme Court ruled that to be liable under the False Claims Act, the entity had to intend that the government pay the false claim,” said Markette. “It was not enough that the defendant was simply paid with funds received from the government.”

And in Totten, the court ruled that phrase “presented to an officer or employee of the United States government” meant a claim actually had to be presented to an officer of employee of the federal government. “Presenting a claim to a government contractor did not meet this requirement,” he pointed out.

So in FERA, Congress specifically defined “claim” to include any request or demand for money or property, whether under a contract or otherwise, even money or property that is not the property of the United States, said Markette. “The definition specifically states that a claim can be a request or demand to a government contractor,” he added.

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