June 30, 2011 Articles

Violations of Payment/Participation Conditions as Predicates for False Claims

The distinction between a condition of payment and a condition of participation should continue to be particularly significant in FCA actions.

By Katherine A. Lauer, Jason M. Ohta, and Amy E. Hargreaves

Health care providers are regulated by a complicated administrative framework that requires compliance with numerous federal laws and regulations. Many of these rules relate to quality of care and are considered conditions of participation. Failure to comply with a condition of participation can result in sanctions, increased reporting requirements, and eventually, exclusion from participation in the program.

Other rules regulating health care providers are deemed to be conditions of, or prerequisites to, payment for services rendered. Failure to comply with a condition of payment can result in the denial of the claim for payment or, if the payment has already been made, the amount paid on the claims is considered an overpayment that must be refunded under current law.

The distinction between a condition of payment and a condition of participation has been—and should continue to be—of particular significance in actions brought under the federal False Claims Act (FCA). Increasingly, relators have sought to expand the FCA to enforce violations of rules and regulations that are only tangentially related—if at all—to eligibility for payment. Rulings in those cases often hinge on the distinction between conditions of payment and conditions of participation. This article provides an introduction to the cases dealing with conditions of payment and participation with a focus on recent cases discussing the distinction between the two and the implications of that distinction under the FCA.

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