Federal Fraud, Waste, and Abuse Laws

Introduction - The federal government has adopted several laws to prevent fraud, waste, and abuse within the healthcare system. Although there may be certain exceptions, generally federal healthcare laws apply to Medicare, Medicaid, and other government sponsored health insurance plans.⁸ Five of the most important federal fraud, waste, and abuse laws are the False Claims Act;⁹ the Anti-Kickback Statute;¹⁰ the Physician Self-Referral Law, also known as the Stark Law;¹¹ the Exclusion Statute;¹² and the Civil Monetary Penalties Law.¹³

1. False Claims Act (“FCA”) - This is the law most often used to bring a case against a health care provider for the submission of false claims to a Federal health care program. The FCA prohibits knowingly presenting (or causing to be presented) to the Federal Government, or its agents, a false or fraudulent claim for payment or approval.¹⁴ This can include submitting claims to Medicare or Medicaid for procedures that were not medically necessary or for which the individual who performed the procedure was not properly licensed.¹⁵

a. Case Study: In 2021, a Connecticut Oral Surgeon settled a matter with the government for $300,000 for violating the FCA, for billing Medicaid for dental restoration services that were not provided or were not medically necessary, and x-ray services that were performed by dental assistants who had not been certified to take x-rays.¹⁶

2. The Anti-Kickback Statute (“AKS”) - The AKS is a law that prohibits the knowing and willful payment of "remuneration" to induce or reward patient referrals or the generation of business involving any item or service payable by the Federal health care programs (e.g., drugs, supplies, or health care services for Medicare or Medicaid patients). Remuneration includes anything of value and can take many forms besides cash, such as free rent, expensive hotel stays and meals, and excessive compensation for medical directorships or consultancies. In the context of Federal health care programs, paying for referrals is illegal. The AKS covers the payers of kickbacks-those who offer or pay remuneration - as well as the recipients of kickbacks - those who solicit or receive remuneration. However, certain safe harbors protect certain payment and business practices that could otherwise implicate the AKS.¹⁷

a. Case Study: In 2024, a Connecticut Dentist pleaded guilty to a violation of the AKS for billing Medicaid after paying kickbacks to patient-recruiters, who then passed on a portion of the kickbacks to the patients as an incentive to attend dental appointments.¹⁸

3. Physician Self-Referral Law (the “Stark Law”) - The Stark Law prohibits physicians (a term that includes dentists) from referring patients to receive "designated health services" payable by Medicare or Medicaid from entities with which the physician or an immediate family member has a financial relationship, unless an exception applies. Financial relationships include both ownership/investment interests and compensation arrangements. Designated health services include clinical laboratories, certain prosthetics and durable medical equipment, and outpatient prescription drugs.¹⁹ Under the Stark Law, “clinical laboratory services” refer to entities furnishing biological, chemical, or pathological examination of materials derived from the human body, for the purpose of diagnosis, prevention or treatment information, rather than collecting or preparing specimens.²⁰ For example, oral appliances used to treat obstructive sleep apnea may be considered durable medical equipment under the Stark Law.²¹

4. Exclusion Statute - The Federal Government is legally required to exclude from participation in all Federal health care programs individuals and entities convicted of certain criminal offenses, including convictions for health-care-related fraud, theft, or other financial misconduct. The Government has discretion to exclude individuals and entities on other grounds. Dentists are responsible for ensuring that they do not employ or contract with excluded individuals or entities in any capacity or setting in which Federal health care programs may reimburse for the items or services furnished by those employees or contractors. This responsibility requires screening all current and prospective employees and contractors against the online U.S. Department of Health and Human Services, Office of Inspector General ("OIG") "List of Excluded Individuals and Entities." If a Dentist's employs or contracts with an excluded individual or entity and Federal health care program payment is made for items or services that person or entity furnishes, whether directly or indirectly, the Dentist may be subject to a civil monetary penalty and/or an obligation to repay any amounts attributable to the services of the excluded individual or entity.²²

a. Case Study: In 2014, a group pf Montana dental practices agreed to pay the Federal Government $24,579.93 for employing an individual that the practice knew or should have known was excluded from Federal health programs.²³

5. Civil Monetary Penalties Law – may seek civil monetary penalties and exclusion for a wide variety of conduct, including presenting a claim that a provider knows or should have known is for a service that was not provided as claimed or is false or fraudulent.²⁴

a. Case Study: An Indiana dental practice agreed to pay $125,446 for violations of the Civil Monetary Penalties Law for submitting claims to Indiana Medicaid for dental services provided by non-credentialed dentists under the names of credentialed dentists.²⁵