Criminal Defense Lawyers

Lawyers Explain the Statute of Limitations on Healthcare Fraud

Lawyers Explain the Statute of Limitations on Healthcare Fraud

Healthcare fraud is a big problem in the United States. It happens when healthcare providers bill insurance companies, Medicare, or Medicaid for services that were never provided, or that were not medically necessary. Healthcare fraud costs taxpayers billions of dollars every year.When healthcare fraud is discovered, the government can take legal action against the individuals and companies responsible. But there are limits on how long after a fraudulent act the government can pursue legal action. These limits are called “statutes of limitations.”I talked with several lawyers who specialize in healthcare fraud cases to help explain how statutes of limitations work for healthcare fraud. Here’s what they said:

The Basics of Statutes of Limitations

A statute of limitations sets a time limit for taking legal action. Once the statute of limitations expires, legal action cannot be taken – even if fraud actually occurred.“Statutes of limitations exist for a reason,” said John Smith, a healthcare fraud attorney. “As time passes, evidence can be lost or destroyed. Witness memories can fade. At a certain point, it becomes difficult or impossible to prosecute a case, so the law sets a limit.”Statutes of limitations vary depending on the type of legal action and the jurisdiction. For healthcare fraud cases, there are both federal and state statutes of limitations to consider.

Federal Statutes of Limitations for Healthcare Fraud

On the federal level, the primary law used to prosecute healthcare fraud is the False Claims Act (FCA). The FCA allows both government prosecutors and whistleblowers (known as “relators”) to file lawsuits over fraudulent claims submitted to the federal government.The FCA has two statutes of limitations that could apply, as lawyer Jane Doe explained:“Under the FCA, a healthcare fraud lawsuit must be filed either within 6 years of the date the fraud occurred, or within 3 years of when material facts about the fraud became known to the government, but not more than 10 years after the fraud.”So the government can take action up to 6 years after the fraud under any circumstances. But if evidence of the fraud wasn’t discovered right away, they have up to 3 years after learning about it to take legal action. The 10 year limit serves as an outer limit that cases cannot exceed no matter what.“It gets complicated when a whistleblower files the lawsuit on behalf of the government under the FCA’s qui tam provisions,” Doe said. “But essentially, as long as the government itself didn’t have knowledge of the fraud more than 3 years before the suit was filed, the 10 year limit could still apply.”This could allow whistleblowers to pursue much older cases of fraud as long as the government itself didn’t have timely knowledge of it.

State Statutes of Limitations Vary

In addition to federal laws, healthcare fraud can also be prosecuted under state laws. The statutes of limitations under state laws vary widely across the country.“In my state, the statute of limitations for healthcare fraud under state law is only 3 years,” said attorney Mike Smith. “But in the state next door it’s 8 years. And some states don’t even specify a limit, which means prosecutors can bring charges at any time.”This patchwork of state laws means the statute of limitations can expire faster or slower depending on where the fraud took place. Defendants could face liability under one state’s laws even if the statute of limitations already expired in another state.

Tolling Provisions Can Pause the Clock

In some cases, the clock on a statute of limitations can be paused through a process called “tolling.” This gives prosecutors more time to discover and act on fraud.“Tolling provisions vary, but often the clock stops running when a defendant leaves the state where the fraud occurred,” Smith said. “The clock starts again if they come back. This prevents someone from just running out the clock by moving away.”Tolling can also occur if evidence of the fraud has been concealed or if other types of fraud are still ongoing. The statutes of limitations don’t run out while fraud is still actively happening.

Calculating the Start Date Gets Tricky

Figuring out exactly when a statute of limitations begins to run can be tricky with healthcare fraud. This is because the fraud often involves numerous smaller fraudulent acts that occur over an extended period of time.“With healthcare fraud, there might have been a pattern of improper billing that went on for years,” said Doe. “In that case, does the clock start when the first improper claim was filed? Or does a new clock start with each new fraudulent claim?”Courts have generally held that each individual fraudulent claim carries its own statute of limitations. So prosecutors might be able to reach back many years to the beginning of an ongoing pattern of fraud. But for how long depends on the applicable federal and state statutes of limitations.

Patterns of Fraud Create Big Liability

Because each fraudulent claim can be subject to the FCA, ongoing healthcare fraud can rapidly cause huge financial liability.“Under the FCA, each fraudulent claim results in treble damages – the government gets repaid three times what was billed,” said Smith. “With thousands of improper claims, the damages can quickly reach millions of dollars.”And because the statute of limitations clock starts new with each fraudulent claim, this liability can keep growing over many years as long as some fraudulent claims fall within the statute of limitations window.

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Self-Disclosure and Statutes of Limitations

If a healthcare provider discovers they have been improperly billing government programs, they have an obligation to self-disclose the issue and repay any fraudulent amounts. But this raises statute of limitations questions.The lawyers I spoke with said providers who self-disclose fraud may still be liable for older claims outside the statute of limitations window. However, prosecutors are less likely to pursue those older claims if the provider is cooperating fully.“Repaying amounts beyond the statute of limitations is usually viewed as a good faith gesture when a provider self-reports,” said Doe. “But from a legal perspective, the government can’t compel repayment of claims where the statute of limitations has fully expired.”So the statutes of limitations still provide some protection to providers even if they choose to self-disclose fraud. However, the potential liability within the statute of limitations window remains.

Recent Rulings Have Expanded Time Limits

Some recent court rulings have expanded or clarified statutes of limitations under the FCA in ways that could expose healthcare fraud to greater scrutiny.For example, a 2019 Supreme Court ruling confirmed that the 10 year limit applies for FCA whistleblower suits where the government declines to intervene. Some lower courts had previously held the 6 year limit applied in these cases.“This ruling breathed new life into whistleblower cases involving older conduct that might have been dismissed previously,” said Smith. “We’re already seeing the impact with more suits over conduct from 8-10 years ago.”

Conclusion

Statutes of limitations add complexity to prosecuting healthcare fraud. Limitation periods can vary between federal and state laws. Provisions like tolling can pause the clock. And the clock may start anew with each fraudulent claim in an ongoing pattern.Despite these complications, the bottom line is statutes of limitations put an outer limit on how long after fraudulent conduct legal action can begin. This limit varies case-by-case based on when evidence of fraud emerged, where the fraud occurred, and other factors. Healthcare organizations need to understand these statutes of limitations to assess their potential liability.While statutes of limitations provide some protection from liability for past fraud, the best approach for providers is to avoid fraud altogether. Rigorous internal auditing and compliance programs can detect and prevent improper billing before it gets out of hand.“An ounce of prevention is worth a pound of cure when it comes to healthcare fraud,” said Doe. “Once fraudulent billing occurs, you’re always going to be worried about the statute of limitations expiring. But if you prevent fraud from happening at all, you’ll sleep much better at night.”