Obscure rule could double fraud penalties for healthcare providers, experts say

A rule recently released by a little-known federal agency could set the stage for fraud penalties against healthcare providers to rise dramatically, according to some law experts.

The U.S. Railroad Retirement Board's rule, published last week in the Federal Register, raises the minimum fraud penalty from $5,500 to $10,781 for each false claims submitted to a government program. The maximum penalties were also increased, from $11,000 per claim to $21,563.

The board's adjustments were mandated for all federal agencies, according to the National Law Review, so providers can expect rules for the healthcare industry to follow suit by August 2016 — the date by which the Bipartisan Budget Act of 2015 requires all agencies to raise their penalty levels to account for inflation. That includes penalties under the False Claims Act, which haven't seen an increase in 20 years, according to Modern Healthcare.

“The statute that made the Railroad Retirement Board run that calculation applies to all civil penalties,” Jonathan Diesenhaus, a partner at law firm Hogan Lovells, told Modern Healthcare.  “It does not apply to healthcare False Claims Act cases generally, but it suggests that's where they're going to end up.”

The oncoming increase for False Claims Act penalties may push more providers to settle claims-related cases, some experts suggest. But others are skeptical of the influence the increased penalties may have on providers' pressure to settle.

The U.S. Railroad Retirement Board administers retirement, unemployment and sickness benefit programs for railroad workers and their families.