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False Claims Action

May 1, 2001
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Dealing With this 140-Year-Old Federal Law By now everyone has heard the bad news: Skilled nursing facilities are yielding to legal settlements totaling hundreds of thousands of dollars, plus having federal government monitors planted for years in their buildings watching everything they do. These are the results of actions brought under a nearly 140-year-old federal law-the False Claims Act of 1865. The expenses of defending against them are so onerous that not one has yet gone to trial. The good news is that almost all of these actions thus far have been concentrated in the Philadelphia area, where U.S. Attorneys were the first to apply False Claims proceedings-originally designed for government military contractors- to Medicare/Medicaid transactions. Their theory is that any facility providing poor-quality care and applying for government reimbursement is making "false claims" that, under the law, are very heavily penalized. It's only a legal theory, but for the past five years it's worked, with a half-dozen Philadelphia facilities succumbing. More recently, a False Claims settlement in the Baltimore area indicated that the legal threat could spread to other areas of the country. What if it does? What if federal attorneys come knocking at your door? Better yet, how can you keep them away?
According to Mark H. Gallant, chair of the Health Law Department at the Philadelphia law firm of Cozen and O'Connor, there are ways to mitigate the disaster-and he knows whereof he speaks. A specialist in long-term care law, he defended a facility in which federal prosecutors, for the first time, voluntarily withdrew their monitors, at least somewhat easing the facility's pain. Gallant also comes from a background that includes service "on the other side" as a senior counsel with the U.S. Department of Justice (DOJ) and as deputy chief counsel with the Health Care Financing Administration (HCFA). Most recently, he has represented the American Association of Homes and Services for the Aging (AAHSA) in recent Michigan and Illinois cases involving the legality of the state OBRA survey system (the latter of which saw the U.S. Supreme Court overturn a circuit court victory he had achieved). Gallant offered his perspective on the False Claims threat and its implications in an interview with Nursing Homes/Long Term Care Management.

Editor Richard L. Peck.