Protecting Your Healthcare Practice from Misrepresentation Claims and Suits Under the False Claims Act

In the healthcare industry, maintaining trust and integrity is paramount. However, accusations of misrepresentation or claims under the False Claims Act can severely damage a healthcare practices' reputation and financial stability. Misrepresentation claims can arise from various situations, such as billing errors, false advertising, or miscommunication about services and qualifications. To safeguard your practice from these claims, it is crucial to implement robust risk management strategies and legal precautions. Here, we provide practical advice for healthcare providers to protect their practices from misrepresentation claims.

Understanding Misrepresentation

Misrepresentation occurs when false or misleading information is presented, leading another party to make decisions based on that inaccurate information. In the healthcare context, misrepresentation can involve:

• Billing and coding errors
• False claims about the effectiveness of treatments
• Misleading information about a provider's qualifications
• Inaccurate descriptions of services offered

Understanding False Claims Act

The False Claim Act (FCA) is the primary tool used by the government to prosecute fraud, waste, and abuse in federal health care programs (31 U.S.C. §§ 3729 to 3733). Private plaintiffs and the government use the FCA to prosecute health care providers that submitted false or fraudulent claims for payment to a federally funded health care program like Medicare or Medicaid.

Of the $2.68 billion in settlements and judgments under the False Claims in the fiscal year ending Sept. 30, 2023, more than $1.8 billion related to matters that involved the healthcare industry – including managed care providers, hospitals, pharmacies, laboratories, long-term acute care facilities and physicians.

Risk Management Strategies

1. Implement Comprehensive Training and Compliance Programs

Ensure that all staff members, from administrative personnel to healthcare providers, are thoroughly trained on accurate billing practices, ethical standards, and clear communication protocols. Regular training sessions can help prevent errors and miscommunications that may lead to misrepresentation claims. Health care providers should train their employees on the FCA and how it relates to the Anti-Kickback Statute (AKS) and Stark Law. Health care providers that bill Medicare or Medicaid must also have a compliance program in place to prevent violations of the FCA (42 U.S.C. § 1395cc(j)(9)(A)). Health care providers should also have a whistleblower protection program preventing retaliation for reporting violations.

2. Develop Clear and Transparent Policies

Establish clear policies regarding billing, advertising, and patient communication. Ensure that these policies are well-documented and accessible to all staff members. Transparency in operations can significantly reduce the risk of unintentional misrepresentation. Also, if possible, have staff members sign and acknowledge review of the handbook, policies, and all annual updates. 

3. Regularly Review and Update Marketing Materials

Regularly review all marketing and promotional materials that are being used to ensure they accurately represent your services, treatments, and qualifications. Avoid making exaggerated claims or promises that cannot be substantiated.

4. Use Accurate and Detailed Documentation

Maintain detailed and accurate records of all patient interactions, treatments, and billing transactions. Proper documentation can serve as a critical defense if a misrepresentation claim arises. Ensure that electronic health records (EHR) systems are up-to-date and secure.

5. Monitor Billing Practices Closely

Implement strict oversight of billing and coding practices to prevent errors and fraudulent claims. Conduct regular audits to identify and rectify any discrepancies. Accurate billing practices are essential to avoid accusations of financial misrepresentation.

6. Foster Open Communication with Patients & Staff 

Encourage open and honest communication with patients regarding their treatments, costs, and the expected outcomes. Provide written information whenever possible and ensure that patients have a clear understanding of their care plans.

Also encourage open and honest communication with staff regarding policies, procedures, and practices. Provide representatives from HR, ombudspeople, or others where staff can raise their concerns.

Legal Precautions

1. Consult with Legal Experts

Engage with legal counsel who specializes in healthcare law to review your practice's policies, procedures, and contracts. Legal experts can identify potential areas of vulnerability and provide guidance on mitigating risks.

2. Draft Clear and Comprehensive Contracts

Ensure that all contracts, including those with patients, suppliers, and third-party providers, are clear and comprehensive. Contracts should outline the scope of services, fees, and responsibilities of each party to prevent misunderstandings and disputes.

3. Obtain Appropriate Insurance Coverage

Secure comprehensive professional liability insurance that covers misrepresentation claims. Review your insurance policy regularly to ensure it provides adequate protection for your practice's specific needs.

4. Implement Compliance, Training, and Whistleblower Protection Programs

Establish compliance programs to ensure adherence to relevant laws and regulations. Regularly review and update these programs to reflect changes in healthcare laws and industry standards.

5. Address Complaints Promptly and Professionally

Take all patient complaints seriously and address them promptly and professionally. Investigate any allegations of misrepresentation thoroughly and take corrective action if necessary. Demonstrating a commitment to resolving issues can help mitigate the impact of claims.

So, protecting your healthcare practice from misrepresentation claims requires a proactive approach that combines robust risk management strategies and legal precautions. By implementing comprehensive training programs, maintaining clear and transparent policies, and seeking legal guidance, healthcare providers can safeguard their practices against the damaging effects of misrepresentation claims.