Greatest Weapon in Battle Against Medicare Fraud Turns 150

This month the most effective tool to catch Medicare fraud turns 150 years old.

Signed into law in midst of the U.S. Civil War by none other than Abraham Lincoln, the False Claims Act — known as “Lincoln’s Law” or “The Whistleblower Act” — gives private citizens the legal authority to expose government waste and corruption and, in the process, collect a recovery fee (10 percent to 25 percent) for their troubles.

The law was enacted to root out military contractors who engaged in illegal kickbacks or price gouging. Today it is one of the leading tools employed by the U.S. Justice Department to root out Medicare and Medicaid fraud. In the past year alone the False Claims Act has been instrumental in finding more than $11 billion in Medicare Fraud, of which well more than half came from private citizens and other whistle blowers. Among some of the most recent cases:

• Steven J. Wasserman, M.D., a dermatologist practicing in Venice, Fla., agreed to pay $26.1 million allegedly for  accepting kickbacks from a pathology laboratory and by billing the Medicare program for medically unnecessary services.  The settlement was one of the largest ever against an individual under the False Claims Act.
• Williston Rescue Squad Inc. of Barnwell, S.C., agreed to pay $800,000 for allegedly billing Medicare for ambulance runs that were not medically necessary. The charges against the company originated from a private citizen, social worker Sandra McKee, who will receive $160,000.
• Momence Meadows Nursing Center Inc. has been ordered to pay $19 million after a federal jury trial found it had provided “inadequate care” for elderly and disabled patients and “that it filed multiple false or fraudulent claims” to Medicare and other governmental agencies. The case was brought by two former employees, who will share more than $400,000.

The most famous healthcare related case (albeit only remotely so) in recent weeks has been the charges brought against cyclist Lance Armstrong after he revealed that he had taken performance enhancing drugs during his days as a world-class cyclist. Armstrong’s former teammate Floyd Landis is suing him under the False Claims Act claiming that Armstrong’s sponsor, the U.S. Postal Service, allegedly had been defrauded to the tune of $40 million because of Armstrong’s repeated denials during his career that he used banned substances.

The False Claims Act has been strengthened in recent years, most recently by President Barack Obama in 2009, and as a result more suits have been filed under its aegis than ever before.