Physicians, Changes to DOJ Penalties are Coming

July 28, 2016

Why Aug. 1 is an important for physicians to know, with regards to Civil Monetary Penalties (CMPs) and the False Claims Act (FCA).

Aug. 1, 2016 is a date that needs to be circled on one's calendar. It's the date that the Department of Justice's interim final rule, which substantially increases both Civil Monetary Penalties (CMPs) and False Claims Act (FCA) penalties, becomes effective.

Recently, I was in Nashville dining with friends, when one of them introduced the concepts of the "meat sweats" to the others. We were all perplexed. Upon further research, we discovered that the "meat sweats" do in fact exist and it is a phenomenon whereby an individual consumes an obscene amount of meat, which induces perfuse sweating.

What do the "meat sweats" and the increase in penalties have in common? If you could envision the graphic, "[b]race yourself, the meat sweats are coming" the correlation becomes readily apparent. Effective Aug. 1 and raises the per claim penalties under the False Claims Act (FCA) from $5,500-$11,000 to a new range of $10,781-$21,563 and $11,000 to $21,563 for Anti-kickback Statute violations.  Now, the range per violation goes from $10,781 to $21,563 plus treble damages for violations occurring after Nov. 2, 2015. The increase in penalties, which begins with the "catch up adjustment" as set forth in the June 30, 2016 Federal Register, should induce profuse sweating.

The interim final rule was disseminated per the Bipartisan Budget Act of 2015. Specifically, Section 701(a) - "Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015" (the "Improvements Act") - which provides authority for the heads of various agencies to increase penalties to keep pace with the rate of inflation.

Physicians and other entities involved in healthcare should make sure that there are robust compliance programs in place and that risk and reserves have been assessed in terms of enterprise risk management. With greater incentives for both the government and whistleblowers, it is prudent advice to have one's business and compliance in order.