You suspect a colleague is committing health care fraud. What next?

By Christina L. Krysinski, JD, and Robert M. Portman, JD, May 1, 2019

Fraudulent billing practices cause tens of billions of dollars in financial losses each year for both federal health care programs and private insurance plans. In addition to these financial losses — and for government programs, a misuse of taxpayer funds — health care fraud undermines trust in the health care system, increases overall health care costs, and can be detrimental to patient care. Under the AAD Code of Ethics, it is unethical for dermatologists to engage in fraudulent billing or coding.

What can, or should, you do if you suspect that a colleague might be submitting fraudulent claims? This article covers how to report suspected fraud — with situations in which physicians are required to report fraudulent conduct by other physicians —  and protections for whistleblowers.

What kind of conduct constitutes fraudulent billing?

Common types of fraud include billing for services that were never rendered, billing for higher cost services than were actually performed (otherwise known as “upcoding”), and misrepresenting non-covered services for the purposes of obtaining payment. The AAD Code of Ethics provides several examples of potentially fraudulent billing activities. For example, it is unethical for dermatologists to bill individually for services that are properly considered a part of a “global service” package (i.e., services that are a necessary part of a surgical procedure). It is also unethical for dermatologists to submit billing codes that reflect higher levels of service or complexity than those that were actually required, or to charge for services not provided.

Am I required to report Medicare or Medicaid fraud under federal law?

It is illegal for a physician to submit claims for payment to Medicare or Medicaid that the physician knows or should know are false or fraudulent. Federal law does not explicitly require physicians to report suspected Medicare or Medicaid fraud committed by other physicians, but physicians are encouraged to report suspected fraudulent conduct to the U.S. Department of Health and Human Services Office of Inspector General (OIG). The OIG accepts complaints from all sources about potential fraud, waste, abuse, and mismanagement in federal health care programs through their tip hotline at 1-800-HHS-TIPS or online at https://oig.hhs.gov/fraud/report-fraud/index.asp. Medicaid fraud should also be reported to your state’s Medicaid agency and/or Medical Fraud Control Unit.

The False Claims Act (31 U.S.C. 3729-33) makes individuals who submit false or fraudulent claims to the government liable for between $5,000 and $10,000 per claim. The False Claims Act contains a whistleblower provision that allows a private individual to file a lawsuit on behalf of the United States and entitles that whistleblower to a percentage of any recoveries. These lawsuits are referred to as “qui tam” actions. A whistleblower can potentially receive between 15% and 25% of the money recovered by the government in the lawsuit. You should consult an attorney if you are thinking about filing a qui tam action.

Am I required to report suspected fraud by a colleague under state law?

Many states require physicians to report fraud committed by other physicians. However, these requirements may only apply when there has been a conviction or other finding of fraud. For example, in New York, physicians, hospital administrators, and health maintenance organizations have a legal obligation to report fraudulent practices to the state board for professional medical conduct, regardless of whether there has been judicial determination of unlawful activity. In Washington, health care providers are required to report fraud committed by other providers when there is a conviction, determination, or other finding that the provider has committed an act that constitutes “unprofessional conduct.” As discussed below, these state laws generally provide for exemptions from reporting requirements where the reporting provider is a member of a peer review organization conducting an investigation.

Am I required to report fraud under the ethics rules?

Under the AAD Code of Ethics, if a dermatologist reasonably believes that a physician or other health care provider has been involved in any unethical or illegal activity, the dermatologist is encouraged to talk to the physician or other provider to try to stop the activity and/or identify the provider to a duly-constituted peer review authority or the appropriate regulatory agency. The reporting dermatologist should cooperate with peer review and other authorities in their efforts to prevent the continuation of unethical or illegal conduct. Members of the AAD are also expected to report knowledge of violations of the AAD Code of Ethics through a confidential written communication to AAD’s Secretary-Treasurer or Executive Director. The information will then be further investigated and processed according to the provisions of the AAD Bylaws and Administrative Regulations. Finally, the AMA Code of Ethics states that grievances against another medical professional who you believe is acting unethically should be directed to your state medical licensing board. The AMA Code of Ethics is incorporated by reference in the AAD Code of Ethics.

What can I do if I am retaliated against for reporting a colleague’s fraudulent behavior?

The OIG accepts and investigates complaints from whistleblowers who believe they have been retaliated against by their employers because they reported suspected wrongdoing. Read more at https://tips.oig.hhs.gov/report-whistleblower-retaliation. In addition, under the False Claims Act, a whistleblower who has been retaliated against for trying to stop illegal conduct can seek remedies for the harm suffered as a result of the retaliation.

Many state laws also protect whistleblowers. For example, under the Maryland Health Care Worker Whistleblower Protection Act, employers are prohibited from taking any “personnel action” against an employee as retaliation for disclosing or threatening to disclose information regarding conduct that the employee believes is illegal to a supervisor or supervisory board, for providing information or testifying before any public body conducting an investigation, hearing, or inquiry, or for objecting or refusing to participate in practices that the whistleblower believes are illegal. Other states have similar whistleblower protection laws that allow physicians to bring claims for money damages against their employers.

What protections do I have if I report a colleague to a professional peer review body?

The Health Care Quality Improvement Act of 1986 (42 U.S.C. §§ 11101-52) (HCQIA) protects whistleblowers who provide information to a professional peer review body regarding the competence or professional conduct of a physician, unless the information is false, and the whistleblower knew that the information was false. Under the HCQIA, whistleblowers cannot be held liable for damages resulting from actions taken as a result of the information that they provided to the peer review body. The HCQIA also protects members, staff, and consultants of professional peer review bodies, as well as any other person who participates with or assists the body, from liability for actions taken by the body that meet the statutory standards for peer review.

Many states also have laws that seek to protect the integrity of peer review processes. For example, the Illinois Medical Studies Act protects information generated by peer review and hospital quality control committees as privileged. This means that information generated by these committees during their investigations generally cannot be used in litigation. In Washington, physicians participating in a professional review organization are exempt from the general requirement to report fraud committed by other health care providers referenced above during the investigative phase of a professional review organization’s activities, as long as the organization completes the investigation in a timely manner. 

Legally Speaking clarification

In the January 2019 Legally Speaking, we wrote about the requirement that recipients of federal financial assistance take reasonable steps to make their services available to individuals with limited English proficiency. We noted in the article that while Medicaid, CHIP, or Medicare Part A payments are all considered “federal financial assistance,” Medicare Part B payments are not. While this is true, we want to make sure to note that most physicians do receive some kind of federal financial assistance other than Medicare Part B payments — for example, federal grant funds for community health centers, the National Health Service Corps, or NIH research grants. Physicians may also have contractual requirements with private insurers or Medicare Advantage plans to provide language-assistance services. Therefore, CMS indicates that almost all physicians are subject to the interpretation/translation rules. As noted in the article, state law may also require you to provide interpretation services and/or translate documents.

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