False Claims Act

On February 8, 2006, President George W. Bush signed the Deficit Reduction Act of 2005 into law. The Deficit Reduction Act contains many provisions reforming Medicare and Medicaid that are designed to reduce program spending. As an entity that offers Medicaid and Medicare coverage, CareSource® is required to comply with certain provisions of the Deficit Reduction Act. One such provision requires us to provide you with information about the Federal False Claims Act, state False Claims Acts and other state laws regarding Medicare and Medicaid Fraud. In addition, the law requires you and your contractors and agents to adopt our policy on fraud, waste and abuse when handling CareSource business.

The Federal False Claims Act 

Using the False Claims Act (the Act), you can help reduce fraud against the federal government. The Act allows everyday people to bring “whistleblower” lawsuits on behalf of the government, known as “qui tam” suits, against groups or other individuals that are defrauding the government through programs, agencies or contracts.

The False Claims Act applies when a company or person:

  • Knowingly presents a false or fraudulent claim for payment, 
  • Knowingly uses a false record or statement to get a claim paid,
  • Conspires with others to get a false or fraudulent claim paid, or
  • Knowingly uses a false record or statement to conceal, avoid or decrease an obligation to pay or transmit money or property.

“Knowingly” means acting with actual knowledge or with reckless disregard or deliberate indifference to the truth or falsity of information.

An example would be if a health care provider, such as a hospital or a physician, knowingly “upcodes” or overbills; resulting in overpayment of the claim using Medicaid or Medicare dollars.

The time period for a claim to be brought under the False Claims Act is the later of:

  • Within six years from the date of the illegal conduct, or 
  • Within three years after the date the government knows or should have known about the illegal conduct, but in no event later than ten years after the illegal activity.

Kentucky State Law

Kentucky has not enacted a false claims statute with a qui tam provision comparable to the federal False Claims Act. However, Kentucky law does permit the Kentucky Attorney General to prosecute any individual or entity that:

  • Knowingly or wantonly devises a scheme or plans a scheme or artifice, or enters into an agreement, combination or conspiracy to obtain or aid another in obtaining payments from any medical assistance program by means of any fictitious, false or fraudulent application, claim, report or document submitted to the Cabinet for Health and Family Services, or intentionally engages in conduct which advances the scheme or artifice;
  • Intentionally, knowingly or wantonly makes, presents or causes to be made or presented to an employee or officer of the Cabinet for Health and Family Services any false, fictitious or fraudulent statement, representation or entry in any application, claim, report or document used in determining rights to any benefit or payment;
  • With intent to defraud, knowingly makes, or induces, or seeks to induce the making of a false statement or false representation of a material fact with respect to the conditions or operations of an institution or facility in order that the institution or facility may qualify, upon initial certification or upon recertification, as a hospital, skilled-nursing facility, intermediate-care facility, home-health agency or other provider of services to the Medical Assistance Program; or
  • Knowingly falsifies, conceals or covers up by any trick, scheme or device a material fact, or makes any false, fictitious or fraudulent statement or representation, or makes or uses any false writing or document knowing the same to contain any false, fictitious or fraudulent statement or entry.
  • The complete set of Kentucky laws governing Medicaid fraud and abuse may be found at Kentucky Revised Statutes §205.8451-205.8483.

CareSource Policy

It is the policy of CareSource to detect and prevent any activity that may violate the federal False Claims Act or the state Medicaid fraud laws cited in this policy. If any employee, provider, delegated entity, subcontractor or agent has knowledge or information that any such activity may have taken place, he or she should contact the Special Investigations Unit. Information may be reported anonymously.

In addition, federal and state law and CareSource policy prohibits any retaliation or retribution against persons who report suspected violations of these laws to law enforcement officials or who file “whistleblower” lawsuits on behalf of the government. Anyone who believes that he or she has been subject to any such retribution or retaliation should also report this to the Special Investigations Unit.