Health care industry's rising tide of risk: new threats require that you have a properly structured management liability insurance program.

• Author: Lavigne, Keith
• Position: RISK MATTERS

THE HEALTH CARE INDUSTRY is facing unprecedented scrutiny and exposure. Changes in legislation, enacted to aid against misconduct, have led to a dramatic increase in liability for health care organizations. From billions of dollars being returned to government coffers, to hospital mergers being blocked because of anticompetitive concerns, to expensive litigation involving medical staff and their former employers--recent increases in exposures require a detailed review of changing rules and regulations and a properly structured management liability insurance program to help combat these new threats.

False Claims Act: The False Claims Act (FCA) is the government's primary tool for combating waste, fraud and abuse by health care providers participating in federal health care programs and by other government contractors. The FCA imposes liability on anyone who knowingly submits or causes the submission of a false or fraudulent claim to the United States for payment. Damages and penalties under the FCA can be significant.

In recent years, there has been a significant upswing in the number of FCA cases filed and in the amount of recoveries in those cases. In 2012 alone the United States recovered close to $5 billion in civil actions alleging FCA violations.

The overwhelming majority of FCA actions are brought pursuant to the FCA's qui tam provisions, which permit private parties (referred to as relators) to file suits seeking recovery under the FCA on behalf of the United States. Relators are required to file qui tam actions under seal to allow the United States to investigate the allegations.

Health care providers should be mindful of the government's continued emphasis on FCA enforcement and proactively implement and review compliance measures designed to ensure accurate billing. Failure to do so could expose providers to the risk of significant FCA liability.

Antitrust Laws: Participants in the health care industry also face increased risk that their activities will run afoul of the federal antitrust laws. Over the past four years, federal and state enforcement agencies, along with the private bar, have significantly ramped up their efforts to police anticompetitive conduct. While price fixing, agreements to allocate markets, group boycotts, and monopolization remain staples of antitrust litigation, anything that unreasonably restrains competition can pose antitrust risk in most industries, including health care. Investigations, challenges and...