By: Christopher A. Parrella, Esq., CPC, CHC, CPCOc
Parrella Health Law, Boston, Ma.
A Health Law Defense and Compliance Firm

The False Claims Act (FCA) continues to be a powerful tool for combating fraud in the healthcare industry. A recent case in the U.S. District Court for the District of New Jersey underscores the extensive reach of the FCA and its implications for healthcare information companies and providers. The court allowed an FCA lawsuit to proceed against Homecare Homebase, LLC (HCHB), a health care information company, alleging that its Software-as-a-Service (SaaS) application led to the overbilling of Medicare and Medicaid.

The Case Overview
Relator Mark Schieber, a licensed physical therapist and former part-time employee at Holy Redeemer Home Care, Inc., brought forth allegations against HCHB. The complaint alleged that HCHB’s SaaS application was intentionally designed to inflate reimbursements from Medicare, Medicaid, and private health insurance by prompting providers to upcode services. For example, if a provider determined a patient required 12 home visits, the SaaS application would prompt the provider to consider increasing the number of visits to 14, thereby inflating the reimbursement amount. This practice was alleged to have caused the submission of false claims to federal healthcare programs.

Court’s Decision on Defendants and Claims
HCHB and its parent company, Hearst, filed a motion to dismiss the complaint. The court dismissed all claims against Hearst, finding insufficient allegations of direct involvement in the fraudulent activities. However, the court allowed the FCA claims against HCHB to proceed. The court noted that FCA liability could attach to a party that assists in filing a false claim, even if the party did not directly manipulate patient data or submit claims. The court found that Schieber’s allegations were sufficient to suggest that HCHB’s software prompts were a substantial factor in causing the submission of inflated claims. This decision highlights the broad scope of the FCA, allowing it to address fraudulent schemes involving sophisticated technologies and software applications.

Implications for Healthcare Providers and Software Companies
This case serves as a crucial reminder for healthcare providers and health information technology companies to ensure their systems and practices comply with federal regulations. The allegations against HCHB suggest that even indirect involvement in submitting false claims can result in significant legal consequences under the FCA. Healthcare providers should be vigilant in reviewing and auditing their billing practices and software systems to prevent potential FCA violations. Similarly, health IT companies must ensure that their applications and software do not inadvertently prompt or facilitate fraudulent billing practices.

How Parrella Health Law Can Assist
At Parrella Health Law, we are dedicated to helping healthcare providers navigate the complexities of the False Claims Act. Our team of experienced attorneys can provide comprehensive legal guidance to ensure compliance with federal regulations, conduct thorough audits of billing practices, and defend against FCA allegations. If you have any questions or need assistance with FCA issues, please contact us at 857.328.0382 or email me at cparrella@parrellahealthlaw.com. We’re here to protect your practice and help you maintain the highest standards of legal and ethical conduct.

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Christopher Parrella, ESQ, CPC, CHC, CPCO, is the founding partner of Parrella Health Law in Boston, Mass. The firm focuses exclusively on healthcare defense and compliance matters. Chris also travels the country on behalf of a wide range of healthcare organizations, lecturing on a variety of health care enforcement and compliance topics. Chris is one of a handful of health care attorney’s that are also Certified Professional Coders (CPC) and is a member of the AAPC’s National Legal Advisory Board and Ethics Committee.  He is also a Certified Professional Compliance Officer (CPCO) and Certified in Health Care Compliance (CHC.)