Understanding the False Claims Act and Its Role in Healthcare Compliance

26 December, 2025

Ensuring compliance with legal standards is fundamental for professionals working within the healthcare sector and is essential for the overall effectiveness of health organizations. Failing to adhere to regulations can result in serious consequences, including legal actions, substantial financial penalties, damage to reputation, and jeopardized patient safety. A pivotal law that supports this compliance effort […]

This article delves into the specifics of the FCA, highlighting strategies that healthcare compliance officers can adopt to prevent violations and uphold integrity within their organizations.

What is the False Claims Act?

The False Claims Act, initially enacted in 1863 during the tumult of the American Civil War, is a federal statute established to combat fraud against government programs. Originally aimed at addressing fraudulent claims by suppliers to the Union Army, the scope of the FCA has expanded significantly over time. Today, it applies broadly to any industry that submits claims for reimbursement from the government. In the fiscal year ending September 30, 2022, the Department of Justice secured over $2.2 billion in judgments and settlements related to false claims, with more than $1.7 billion attributable specifically to the healthcare sector.

The FCA is designed not only to punish fraudulent behavior but also to serve as a deterrent against submitting false or misleading claims. Importantly, the law does not require proof of malicious intent; instead, it addresses claims made with knowledge or reckless disregard for their truthfulness. Violators can face penalties including tripling the damages caused to the government and per-claim fines, which, as of July 2023, can be as high as $27,018 for each false claim. This creates a significant financial risk for organizations and individuals engaging in fraudulent billing practices.

Qui Tam Lawsuits

A notable feature of the FCA is its provision for “qui tam” lawsuits, which empower private citizens—whistleblowers—to file claims on behalf of the government. These individuals are incentivized through potential rewards, often comprising a percentage of the recovered damages, to report suspected fraud. This whistleblower mechanism is a critical component in uncovering and addressing healthcare fraud, as it encourages insiders to come forward with evidence of violations.

Statute of Limitations on FCA Cases

Timeliness is crucial when it comes to FCA-related litigation. The law stipulates specific time frames for filing suit, balancing the need for prompt action with fairness to defendants. An action must generally be initiated within six years of the alleged violation or within three years of when the responsible person should have become aware of the fraud, whichever comes first. However, the total window cannot exceed ten years from the date of the violation. Staying aware of these limitations helps organizations and individuals ensure that claims are filed within the appropriate period.

Why Is the False Claims Act Critical in Healthcare?

In healthcare, the FCA plays an essential role in safeguarding public funds and ensuring the integrity of health programs. Healthcare providers—including hospitals, physicians, drug manufacturers, and medical device companies—must operate under strict compliance standards to maintain trust and adhere to federal regulations.

Examples of FCA Violations in Healthcare

Understanding what constitutes a violation helps organizations prevent breaches. False claims involve knowingly submitting or causing the submission of claims that are false or fraudulent. This includes actions such as:

Billing for services that were never provided
Submitting claims for procedures deemed medically unnecessary
Submitting claims that violate other laws, like the Anti-Kickback Statute or Stark Law
Upcoding, or exaggerating the severity of services for higher reimbursement
Unbundling, or breaking down procedures into multiple claims for higher total reimbursement
Failing to return overpayments within the required timeframe
Billing for substandard or non-compliant care

Consequences of FCA Violations

Violations can lead to substantial penalties, including hefty fines, exclusion from federal healthcare programs, and reputational harm that diminishes patient trust. Financial penalties are particularly severe because each claim submitted to programs like Medicare or Medicaid counts as a separate violation. For example, a healthcare group settled a case for $24.5 million after ordering tests without confirming their medical necessity. Since each test could be considered a separate claim, damages and penalties quickly escalate, especially given the maximum per-claim penalty of $27,018.

Beyond financial consequences, FCA violations drain public resources and taxpayer dollars. When false claims are paid, they divert funds from legitimate healthcare needs, potentially compromising the quality and availability of care. This is especially critical as programs such as Medicare serve an increasing number of beneficiaries. Enforcing the FCA helps preserve the integrity of these programs and ensures that public funds are used appropriately.

Healthcare Compliance Professionals and the False Claims Act

Healthcare compliance officers are vital in preventing FCA violations through proactive measures. Their responsibilities include establishing and maintaining effective compliance programs that promote ethical conduct and adherence to legal standards. To do this effectively, professionals should:

Develop comprehensive compliance policies: These should include clear procedures and ongoing training to ensure staff understand their responsibilities under the FCA and related laws.
Perform regular audits and monitoring: Routine reviews help identify potential issues early, allowing organizations to intervene before violations occur.
Encourage whistleblower reporting: Creating a culture where employees can report concerns anonymously without fear of retaliation fosters transparency and accountability.
Stay informed on regulatory changes: Keeping up with updates in FCA enforcement, guidance, and case law ensures organizations remain compliant.
Promote a culture of integrity: Ethical leadership and consistent reinforcement of compliance standards help embed compliance into everyday operations.

For organizations interested in delving deeper into the legal aspects of healthcare compliance, pursuing advanced education such as a Master of Studies in Law (MSL) with a specialization in healthcare law from Pitt Law can significantly enhance your expertise. Such programs prepare compliance professionals to navigate complex regulations and potentially qualify for industry certifications like the Certified in Healthcare Compliance (CHC)® or the Certified Compliance & Ethics Professional (CCEP)®.

Become a Leader in Healthcare Compliance

Strong compliance frameworks are crucial for protecting healthcare organizations from liability, maintaining program integrity, and safeguarding public funds. Compliance professionals are at the forefront of this effort, implementing policies that prevent FCA violations and promote a culture of ethical responsibility.

Advancing your knowledge through programs like Pitt Law’s Health Care Compliance Certificate or MSL can empower you to take on leadership roles. Graduates may be eligible to sit for industry-recognized exams, such as the training the surgeons of tomorrow with virtual reality or explore how innovations like AI are transforming healthcare practices, including fraud detection and compliance monitoring via the industry’s current AI applications.

Step into a leadership position by strengthening your expertise in healthcare law and compliance standards, ensuring your organization remains compliant and ethically sound.

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