How To Write A Qui Tam Complaint: A Tutorial Series

How Medicare Civil False Claims For Payment Turn Into Federal Criminal Violations

Posted on Sunday, March 16, 2014, 01:42:28 PM Eastern Time USA by JOSEPH J. PAPPACODA, ESQ..

In order for one to become a Medicare Provider of services one must apply and be approved by Medicare. Thereafter, one must maintain eligible status into the future.

CMS Form 855A is a Medicare Enrollment Application for, inter alia, Hospitals, Community Mental Health Centers, Home Health Agencies, etc.. This Medicare application can be made on paper via Form 855A, or via the Internet based Provider Enrollment, Chain and Ownership System (“PECOS”). For Physicians and Non Physician Assistants the CMS Form is CMS Form 855i, which contains the same sections referenced below.

Medicare Enrollment Applications require initial informational disclosures, state criminal and civil penalties for falsifying information, and require Certification Statements [“I swear to do this and not to do that”], in order to both obtain and maintain Medicare Enrollee status.

When one lies later on, these Certifications become false, and then one has exposure to the gambit of penalties listed on the form itself.

For purposes of argument, lets say that everyone that initially applies to Medicare is pure of heart, with no intent to steal from Medicare. The real issue becomes whether that person, years later, can lawfully maintain Medicare Enrollee status in good stead.

42 CFR 424.516 (e) makes all initial informational requirements, and Certifications, a permanent requirement, by mandating that any changes, additions, deletions, or corrections from the original CMS Form 855A application must be reported to Medicare within 90 days, as a condition precedent to maintaining Medicare Enrollee status and the ability to lawfully bill Medicare. Any amendments are reported on a new CMS Form 855A with more penalties listed and more Certification Statements cited. It’s a never ending process.

That is the hook right there. One cannot maintain eligible Medicare Enrollee status, while simultaneously reporting ongoing fraud in their organization, and while maintaining compliance with all Certification Statement requirements, as a prerequisite to billing Medicare into the future. It’s impossible.

For instance CMS Form 855A provides that changes, additions, or deletions of billing agency information must be reported to Medicare within 90 days, pursuant to 42 C.F.R. 424.516 (e). A simple failure to report billing agency changes following an initial application would result in a violation of federal law and a reason why that provider could lose active Medicare enrollee status, making all future claims false claims for payment.

For reasons that are described below, when one engages in Medicare Fraud on any level, it also violates Form 855A active Medicare Enrollee status, due to the fact that failure to comply with Medicare rules, regulations and guidelines, is not reported to Medicare on an amended Form 855A. The failure to report the actual Medicare fraud itself to Medicare becomes an active Medicare Enrollee status violation, in and of itself, which in turn makes any and all future claims for payment null and void.

CMS Form 855A, Section 14: Penalties For Falsifying Information:

This section explains the penalties for deliberately furnishing false information in this application to gain or maintain enrollment in the Medicare program. [emphasis added-there is that ‘maintain’ word again]

1. 18 U.S.C. § 1001 authorizes criminal penalties against an individual who, in any matter within the jurisdiction of any department or agency of the United States, knowingly and willfully falsifies, conceals or covers up by any trick, scheme or device a material fact, or makes any false, fictitious, or fraudulent statements or representations, or makes any false writing or document knowing the same to contain any false, fictitious or fraudulent statement or entry. Individual offenders are subject to fines of up to $250,000 and imprisonment for up to five years. Offenders that are organizations are subject to fines of up to $500,000 (18 U.S.C. § 3571). Section 3571(d) also authorizes fines of up to twice the gross gain derived by the offender if it is greater than the amount specifically authorized by the sentencing statute.

2. Section 1128B(a)(1) of the Social Security Act authorizes criminal penalties against any individual who, “knowingly and willfully,” makes or causes to be made any false statement or representation of a material fact in any application for any benefit or payment under a Federal health care program. The offender is subject to fines of up to $25,000 and/or imprisonment for up to five years.

3. The Civil False Claims Act, 31 U.S.C. § 3729, imposes civil liability, in part, on any person who: a) knowingly presents, or causes to be presented, to an officer or any employee of the United States Government a false or fraudulent claim for payment or approval; b) 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; or c) conspires to defraud the Government by getting a false or fraudulent claim allowed or paid. The Act imposes a civil penalty of $5,000 to $10,000 per violation, plus three times the amount of damages sustained by the Government

4. Section 1128A(a)(1) of the Social Security Act imposes civil liability, in part, on any person (including an organization, agency or other entity) that knowingly presents or causes to be presented to an officer, employee, or agent of the United States, or of any department or agency thereof, or of any State agency…a claim…that the Secretary determines is for a medical or other item or service that the person knows or should know: a) was not provided as claimed; and/or
b) the claim is false or fraudulent. This provision authorizes a civil monetary penalty of up to $10,000 for each item or service, an assessment of up to three times the amount claimed, and exclusion from participation in the Medicare program and State health care programs.

5. 18 U.S.C. 1035 authorizes criminal penalties against individuals in any matter involving a health care benefit program who knowingly and willfully falsifies, conceals or covers up by any trick, scheme, or device a material fact; or makes any materially false, fictitious, or fraudulent statements or representations, or makes or uses any materially false fictitious, or fraudulent statement or entry, in connection with the delivery of or payment for health care benefits, items or services. The individual shall be fined or imprisoned up to 5 years or both.

6. 18 U.S.C. 1347 authorizes criminal penalties against individuals who knowing and willfully execute, or attempt, to executive a scheme or artifice to defraud any health care benefit program, or to obtain, by means of false or fraudulent pretenses, representations, or promises, any of the money or property owned by or under the control of any, health care benefit program in connection with the delivery of or payment for health care benefits, items, or services. Individuals shall be fined or imprisoned up to 10 years or both. If the violation results in serious bodily injury, an individual will be fined or imprisoned up to 20 years, or both. If the violation results in death, the individual shall be fined or imprisoned for any term of years or for life, or both.

7. The government may assert common law claims such as “common law fraud,” “money paid by mistake,” and “unjust enrichment.” Remedies include compensatory and punitive damages, restitution, and recovery of the amount of the unjust profit.

So those are the possible penalties, but for what? Those penalties are for violating one or more of these Certification Statements [“I agree to do this and not to do that”] made in the initial Medicare Enrollee Application, which also becomes a continuing Medicare requirement, forever, pursuant to 42 CFR 424.516(e), in order to maintain continued Medicare Enrollee status. Those penalties are for presenting the same false claims for payment or approval that are the basis of a federal False Claims Act case. Those penalties are for putting false and fraudulent paperwork in the Medicare payment system knowing they are false and fraudulent.

For starters, those signing the Certification statements for Medicare Enrollee status, who are also bosses of the affected agencies, would have primary criminal responsibility due to the False Certification Statements on top of everything else.

Certification Statements put those in charge on notice that violations of Medicare rules, regulations, and guidelines will result in the penalties listed in the same Medicare Enrollee Applications that they sign. To the extent those same people have actual knowledge of the ongoing Medicare frauds being perpetrated, criminal violations result. To the extent those in charge give direction to others to commit fraud, the criminal violations flow downward in the organization to others.


A. Additional Requirements for Medicare Enrollment
These are additional requirements that the provider must meet and maintain in order to bill the Medicare program. Read these requirements carefully. By signing, the provider is attesting to having read the requirements and understanding them.

By his/her signature(s), the authorized official(s) named below and the delegated official(s) named in Section 16 agree to adhere to the following requirements stated in this Certification Statement:

1. I agree to notify the Medicare contractor of any future changes to the information contained in this application in accordance with the time frames established in 42 C.F.R. § 424.516(e). I understand that any change in the business structure of this provider may require the submission of a new application.

2. I have read and understand the Penalties for Falsifying Information, as printed in this application. I understand that any deliberate omission, misrepresentation, or falsification of any information contained in this application or contained in any communication supplying information to Medicare, or any deliberate alteration of any text on this application form, may be punished by criminal, civil, or administrative penalties including, but not limited to, the denial or revocation of Medicare billing privileges, and/or the imposition of fines, civil damages, and/or imprisonment.

3. I agree to abide by the Medicare laws, regulations and program instructions that apply to this provider. The Medicare laws, regulations, and program instructions are available through the Medicare contractor. I understand that payment of a claim by Medicare is conditioned upon the claim and the underlying transaction complying with such laws, regulations, and program instructions (including, but not limited to, the Federal anti-kickback statute and the Stark law), and on the provider’s compliance with all applicable conditions of participation in Medicare.

4. Neither this provider, nor any physician owner or investor or any other owner, partner, officer, director, managing employee, authorized official, or delegated official thereof is currently sanctioned, suspended, debarred, or excluded by the Medicare or State Health Care Program, e.g., Medicaid program, or any other Federal program, or is otherwise prohibited from supplying services to Medicare or other Federal program beneficiaries.

5. I agree that any existing or future overpayment made to the provider by the Medicare program may be recouped by Medicare through the withholding of future payments.

6. I will not knowingly present or cause to be presented a false or fraudulent claim for payment by Medicare, and I will not submit claims with deliberate ignorance or reckless disregard of their truth or falsity.

7. I authorize any national accrediting body whose standards are recognized by the Secretary as meeting the Medicare program participation requirements, to release to any authorized representative, employee, or agent of the Centers for Medicare & Medicaid Services (CMS), a copy of my most recent accreditation survey, together with any information related to the survey that CMS may require (including corrective action plans).

Certification Signature Block :

I have read the contents of this application. My signature legally and financially binds this provider to the laws, regulations, and program instructions of the Medicare program. By my signature, I certify that the information contained herein is true, correct, and complete, and I authorize the Medicare fee-for-service contractor to verify this information. If I become aware that any information in this application is not true, correct, or complete, I agree to notify the Medicare fee-for-service contractor of this fact in accordance with the time frames established in 42 CFR § 424.516(e).

So to recap, any material Provider informational changes, including those in charge of Provider’s organization, must be reported within at least 90 days on an amended Form 855A to CMS/Medicare. Any Medicare Fraud violation automatically becomes a Certification Statement violation which can be prosecuted criminally, civilly, or both, under any of the U.S.C.’s cited in the Medicare Enrollee Application. It is not necessary for one to have signed a Certification Statement to be prosecuted for health care fraud, it just makes it easier for the Federal government to prosecute those people over others, because of the Certification Statement.

Federal Prosecutors should take a hard look at the Medicare Enrollment Forms, initial Certification Statements made, and all Amended Certification Statements filed by any Provider who is alleged to have engaged in activities that implicate The False Claims Act civilly.

In the writer’s opinion, healthcare fraud is gaining speed in the United States, because Providers look at CMS and the fact they may have to pay back money if caught, as a cost of doing business. Civil monetary penalties do not present any deterrent to a multi million dollar conglomerate. None. Having been a financial fraud special agent, and prosecutor for many years with the Florida Department Of Law Enforcement and Florida Office Of Statewide Prosecution, prosecuting Medicaid Fraud cases, the writer can tell you that the real deterrent is from people getting arrested and prosecuted for fraud. It doesn’t need to be many people and it doesn’t need to be for many charges...the message gets out quickly, and the aberrant behaviors lessen, at least for a time. In the writer’s opinion from past experience, people engaged in fraud only get arrested about 10% of the time and are only charged with about 10-15% or less of what they actually stole in the process.

Joe Pappacoda, Esquire
Copyright 2014

The blog material on this page is provided for reference only, and it is not to be construed as legal advice in any fashion. For more information, please see the written DISCLAIMER.








Deposition papers





Consultation Form





Joseph J. Pappacoda




Visit Rodan Media Group U.S. Fraud Cases Home Page