POLICY # 1001232
TITLE:  Education: Fraud and Abuse                                                       

SECTION:  Organization-wideAPPROVED BY:DATE:
AUTHOR:   Karen Theriault, BSHCACompliance Committee06/19/07
REVIEWED DATE: 06/11, 12/12
Board of Trustees06/27/07
REVISED DATE: 06/10, 05/19  
NEXT REVIEW DATE: 06/08, 06/11, 06/12, 12/13, 10/19  
REFERENCES/RATIONALE:  Deficit Reduction Act of 2005 Section 6032, 22 MRSA § 15.


To ensure that Down East Community Hospital’s management, employees, agents and contractors are provided detailed information regarding (i) state and federal fraud and abuse laws, and (ii) the Down East Community Hospital’s Compliance Program policies and procedures aimed to prevent and detect healthcare waste, fraud and abuse, in accordance with the requirements of the federal Deficit Reduction Act of 2005.


It is the policy of Down East Community Hospital to ensure that its employees and business practices conform to the highest standards of ethical conduct and comply with applicable laws and regulations governing the prevention and detection of healthcare fraud and abuse.

I.  The False Claim Act is a federal statute enacted to prevent waste, fraud, and abuse of federally funded governmental programs, including Medicare and MaineCare. 

The False Claims Act provides, in pertinent part, that:

(a) Any person who (1) knowingly presents, or causes to be presented, to an officer or employee of the United States Government or a member of the Armed Forces of the United States a false or fraudulent claim for payment or approval; (2) knowingly makes, uses, or causes to be made or used, a false record or statement to get a false or fraudulent claim paid or approved by the Government; (3) conspires to defraud the Government by getting a false or fraudulent claim paid or approved by the Government;. . . or (7) knowingly makes, uses, or causes to be made or used, a false record or statement to conceal, avoid, or decrease an obligation to pay or transmit money or property to the Government, is liable to the United States Government for a civil penalty of not less than $5,000 and not more than $10,000, plus 3 times the amount of damages which the Government sustains because of the act of that person.

(b) For purposes of this section, the terms “knowing” and “knowingly” mean that a person, with respect to information (1) has actual knowledge of the information; (2) acts in deliberate ignorance of the truth or falsity of the information; or (3) acts in reckless disregard of the truth or falsity of the information, and no proof of specific intent to defraud is required.

31 U.S.C. § 3729. While the False Claims Act imposes liability only when the claimant acts “knowingly,” it does not require that the person submitting the claim have actual knowledge that the claim is false. A person who acts in reckless disregard or in deliberate ignorance of the truth or falsity of the information, also can be found liable under the Act. 31 U.S.C. 3729(b).

Examples of a false claim under the False Claims Act:

·         The False Claims Act imposes liability on any person who submits a claim to the federal government that he or she knows (or should know) is false.  Example: A physician who submits a bill to Medicare for medical services she knows she has not provided.
·         The False Claims Act also imposes liability on an individual who may knowingly submit a false record in order to obtain payment from the government. An example of this may include a government contractor who submits records that he knows (or should know) are false and that indicate compliance with certain contractual or regulatory requirements.
·         The third area of liability includes those instances in which someone may obtain money from the federal government to which he may not be entitled, and then uses false statements or records in order to retain the money. An example of this so-called “reverse false claim” may include a hospital that obtains interim payments from Medicare throughout the year, and then knowingly files a false cost report at the end of the year in order to avoid making a refund to the Medicare program.

In addition to its substantive provisions, the FCA provides that private parties may bring an action on behalf of the United States. 31 U.S.C. 3730 (b). These private parties, known as “qui tam relators,” may share in a percentage of the proceeds from an FCA action or settlement. See “Whistleblower Protection” below.

II.  The Maine False Claims Civil Liability statute provides for civil penalties for any persons or entities who:

(a) Knowingly make a false, fictitious or fraudulent claim against the Maine Department of Health and Human Services (DHHS) or upon any funds administered by DHHS.

(b) Knowingly make false or written statements or submits any false document for the purpose of obtaining or aiding another to obtain the payment or approval of a false claim.

(c) Knowingly enter into any agreement or conspiracy to defraud DHHS by obtaining payment or approval of a false, fictitious or fraudulent claim.

Examples of a false claim under Maine law:

·         Billing for services or products not provided
·         Billing for unsuitable supplies or equipment
·         Flagrant and persistent over utilization of services
·         Claiming of costs for non-covered items or services
·         Material misrepresentations of dates and descriptions of services rendered
·         Material misrepresentations of identities of recipients of services
·         Deliberate duplicate billing
·         Arrangements designed to overcharge MaineCare
·         Falsifying provider records to meet conditions of participation
·         Failure to report overpayments or credit balances

III . In addition to this Policy, the Down East Community Hospital has established a Compliance Program and appointed a Compliance Officer to ensure compliance with state and federal fraud and abuse laws and to prevent and detect healthcare waste, fraud and abuse.  Other Down East Community Hospital policies and procedures that have been established to assure compliance with state and federal fraud and abuse laws include:

a.       Policy # 1019: Coding and Reimbursement Compliance
b.      Policy # 1100: Assignment and Alteration of …Codes to Patient Accounts
c.       Policy # 1015: Charge Sheets for Patient Charges
d.      Policy # 1081: Physician Orders for Outpatient Services
e.       Policy # 1005: Advanced Beneficiary Notice
f.        Policy # 1301: Charging for Observation Services


Employees, agents and contractors who believe that an erroneous or fraudulent billing of a federal or state healthcare program may have occurred should immediately call the Compliance Hotline at 1-800-273-8452 or notify the Compliance Officer at 255-0272.

Employees who report suspected billing errors or fraudulent conduct shall not be discriminated or retaliated against or suffer any form of disciplinary or other adverse employment action for making such reports in good faith.

(See Policy # 1039: Employee Compliance and Reporting and Other Communication).

Federal and State Penalties

The Office of Inspector General (OIG) is the Department of Health and Human Services agency charged with investigating fraud and abuse.

The OIG may impose civil monetary penalties ($5,500 to $11,000) for each substantiated false claim plus damages up to three times the amount of the government’s actual damages. 

The OIG may refer cases of fraud to the U.S Department of Justice and other federal agencies for criminal or other civil action.  Additional fines, up to $10,000 per false claim plus triple damages may be imposed.   Entities and providers may also by subject to suspension and exclusion from participation in Medicare and MaineCare.

The Office of the Attorney General is charged with investigating fraud and abuse cases for the State of Maine.

The State may impose civil penalties including up to three times the amount of the excess benefits or payments but not less than $2,000 for each false claim or false document submitted, restitution for excess benefit or payments made, interest on restitution amounts rewarded, plus investigation and litigation costs. 

Other Maine laws including those that prohibit unsworn falsification, theft by deception and criminal conspiracy may be used by the State to impose criminal penalties for fraud and abuse.

Whistleblower Protection

The Federal False Claims Act contains protections for whistleblowers by (i) prohibiting employers from discharging, demoting, suspending, threatening, harassing or taking any other adverse employment action against an employee for initiating, participating, or cooperating in a qui tam action brought under the Federal False Claims Act, and (ii) providing to employees who are retaliated against for their involvement in a qui tam action a separate cause of action for obtaining reinstatement, two times the amount of back pay necessary to make the employee whole, interest on back pay owed, and compensation for special damages resulting from the unlawful discrimination such as litigation costs and attorneys fees.  Qui tam is a unique mechanism in the law that allows a private citizen with evidence that a fraud has been perpetrated against a federal governmental program to commence a civil action on behalf of the government in order to recover funds that have been misappropriated from the government as result of the fraud.  In compensation for the risk and effort of filing a qui tam action, a citizen whistleblower or “relator” may be awarded a percentage of any funds recovered as a result of the action.  If the government intervenes in the lawsuit, the relator can receive between 15%-25% of the proceeds recovered in the lawsuit, depending on the significance of the relator’s contribution to the prosecution of the litigation.  If the government does not intervene, the relator can receive between 25%-30% of any amounts recovered.

Maine’s Human Rights Act also contains whistleblower protection provisions that prohibit any person from (i) discriminating against a person because that person has opposed any act or practice that is unlawful under the Maine Human Rights Act or because that person has made a charge, testified, assisted or participated in any manner in an investigation, proceeding or hearing under the Maine Human Rights Act; and (ii) coercing, intimidating, threatening or interfering with any individual in the exercise or enjoyment of the rights granted or protected by the Maine Human Rights Act, or because that individual has exercised or enjoyed, or has aided or encouraged another individual in the exercise or enjoyment of, those rights.”

Information Dissemination

Employee Handbook:  Down East Community’s Employee Handbook will include the text of this Policy, and be distributed to all current employees, all new employees, members of management, and members of the Medical Staff.

New Employee Education:  All new employees will participate in the New Employee Education Day and receive information regarding this policy, state and federal fraud and abuse laws, whistleblower protections laws and the Down East Community Hospital Compliance Program.

Annual Employee Education:  Each employee will receive information about this policy, the Down East Community Hospital’s Compliance Program, Down East Community Hospital’s established policies and procedures to prevent and detect fraud and abuse, state and federal fraud and abuse laws, and whistleblower protection laws.

 Contractors and Agents: This policy also applies to any contractor, subcontractor, agent or other person which, on behalf of Down East Community Hospital, furnishes or authorizes the furnishing of Medicaid health care items or services, performs bill or coding functions, or is involved in the monitoring of health care provided by Down East Community Hospital.  Down East Community Hospital will make each contractor, subcontractors and agents aware of their responsibilities under this Policy and shall disseminate and make available this policy.