Financial Exploitation of Elderly Residents Through Fraudulent Billing

Financial Exploitation of Elderly Residents Through Fraudulent Billing at a Glance

Financial exploitation of elderly residents through fraudulent billing involves the improper billing of federal health care programs for services not rendered or for services that are unnecessary, often in long-term care facilities. These practices may constitute violations of the Anti-Kickback Statute (AKS) and lead to exposure under the False Claims Act (FCA), which imposes significant penalties and provides mechanisms for whistleblowers to pursue legal action.

The Legal Framework

The Anti-Kickback Statute, 42 U.S.C. § 1320a-7b(b), prohibits the knowing and willful offering, paying, soliciting, or receiving of remuneration to induce or reward referrals of items or services payable by a federal health care program. Violations of this statute can result in criminal penalties, including fines of not more than $100,000 or imprisonment of not more than 10 years, or both.

Under 42 U.S.C. § 1320a-7b(g), since 2010, any claim that includes items or services resulting from an AKS violation is considered a false or fraudulent claim for purposes of the False Claims Act. This provision significantly expands the liability of entities involved in fraudulent billing practices, as it transforms AKS violations into FCA violations, which carry even greater penalties and enforcement potential.

The False Claims Act, codified at 31 U.S.C. §§ 3729–3733, provides a legal mechanism for whistleblowers, or qui tam relators, to bring actions on behalf of the government. A relator who assists the government in pursuing an action may receive between 15% and 25% of the proceeds, while a relator whose case is pursued independently by the government may receive between 25% and 30%. In cases where the action is based primarily on public disclosures, the relator's share is limited to no more than 10%.

Enforcement and Cases

Phantom charges—unauthorized or fictitious billing against elderly residents’ benefits—can lead to exposure under the False Claims Act through 42 U.S.C. § 1320a-7b(g). These practices not only violate the Anti-Kickback Statute but also create a direct link to FCA liability, as the statute explicitly designates such claims as false or fraudulent. This legal connection underscores the importance of rigorous compliance and the potential for significant legal consequences in cases of financial exploitation.

The Federal Overlay

The federal Anti-Kickback Statute, 42 U.S.C. § 1320a-7b(b), makes it a felony to knowingly and willfully offer, pay, solicit, or receive remuneration to induce or reward referrals of items or services payable by a federal health care program. The Stark Law, 42 U.S.C. § 1395nn, separately prohibits physician self-referrals for designated health services payable by Medicare or Medicaid, on strict-liability terms. Both regimes carry safe harbors and exceptions published at 42 C.F.R. § 1001.952. State referral and fee-splitting statutes operate alongside these federal prohibitions and can apply even where no federal program payment is involved.

Reading the Research Desk

For further reading, explore related topics and analyses on our research pages, including practice areas, explanations of the Anti-Kickback Statute, safe harbors, AKS and Stark Law overlap, recent decisions, and FAQ.