Until the federal False Claims Act (FCA) was amended in 2009, there was a gaping liability loophole that fraudsters used and abused to keep overpayments of government healthcare dollars. This “finders’ keepers” loophole limited the reach of the FCA except in those rare instances where the healthcare provider submitted something back to the government concealing the overpayment. The 2009 FCA amendment explicitly made it an obligation for healthcare providers to report and repay any overpayment of government funds.

The underlying facts are usually the same—upon learning of an overpayment, the healthcare provider decides to pocket the funds that should have been returned to the government. These basic facts were alleged in a case, which recovered $2.5 million for government healthcare programs. In this case against Baptist Health Systems (BHS), of Jacksonville, Florida, the qui tam relator alleged that the hospital system allegedly suspended two of its admitting neurologists after it learned that the providers allegedly misdiagnosed patients with various neurological disorders, such as multiple sclerosis, which caused Baptist Health to bill for medically unnecessary services.

According to the qui tam complaint, BHS contacted several misdiagnosed patients and placed them under the appropriate care of other neurologists. However, BHS neither alerted the government nor returned the government healthcare dollars received for these supposedly misdiagnosed patients.