Fraud & Abuse

Take home message: There are unique fraud and abuse laws that apply to the health care industry, prohibiting certain activity and imposing detailed requirements around documentation and the submission of claims, especially claims under government funding programs. It is crucial for all those who interface with the UMHS clinical, billing and business functions to be aware of these laws and their requirements.

U-M Policy and helpful links

  • Federal and state fraud and abuse laws prohibit certain practices in the health care industry, even though the same practices might be acceptable in other sectors – for instance, offering gifts to reward past or potential new referrals is illegal in the health care sector. These laws also impose detailed requirements for documenting all health care services provided and claims submitted through government programs. Individuals responsible for the provision of health care, billing for health care, developing or participating in business arrangements on behalf of UMHS, and anyone with a financial interest in products or services purchased by UMHS (which could be a potential conflict of interest), must be aware of these laws.
  • The UMHS Compliance Office oversees U-M’s compliance with health sector fraud and abuse laws. For an overview of these laws, and U-M’s approach to meeting them (including UMHS Policies), see the Fraud & abuse page on the UMHS Compliance site and Health System Legal Office summary of fraud and abuse laws (U-M networks only).
  • The Deficit Reduction Act of 2005 requires entities that receive more that $5 million in Medicaid reimbursements to establish policies that provide information about fraud and abuse laws, and to educate their employees and contractors about these policies.
  • The Federal False Claims Act prohibits individuals and organizations from submitting false or fraudulent claims to the government for payment or reimbursement. Michigan also has false claims legislation, addressing both fraud against Medicaid and against private health insurers. See UMHS fraud & abuse page and the and the Health System Legal Office summary of false claims laws for details, including examples of what constitutes claims.
  • The anti-kickback statute makes it an offense to purposefully provide remuneration (anything of value, directly or indirectly transferred, including in kind support) to induce or reward referrals or induce business for which payment may be made under Medicare or other state health programs. Violation of the anti-kickback statute could result not only in nonpayment of claims, civil monetary penalties and exclusion from the Medicare program; it could also result in imprisonment and criminal fines. See the Health System Legal Office summary of fraud and abuse laws for more information and relevant UMHS policies.
  • The physician self-referral statute prohibits the referral of a patient, for certain health services, to an entity in which the referring physician OR their immediate family members have a financial interest (ownership, investment or compensation). For example, a physician can’t refer a patient to another clinic in which the physician (or his or her spouse) is a part owner. See the Health System Legal Office summary of fraud and abuse laws and Centers for Medicare and Medicaid site on physician self-referral for more information.
  • Forging prescriptions is a criminal offense under both Federal and Michigan laws. See the Health System Legal Office summary on forging prescriptions for more details.

Things to remember

  • Thoroughly documenting the clinical services UMHS provides, and funding claims that are submitted, is crucial – it enables us to demonstrate that we are complying with all the necessary laws, and to detect and take corrective action if any mistakes occur.
  • If you are a clinician who works for multiple health services or clinics, or owns a share in another health service entity, OR whose immediate family member also works or has an interest in another health service entity – make sure you talk to someone in the UMHS Compliance Office about the circumstances in which you can and cannot refer to those other entities. The self-referral prohibition is complex, and if you violate it then it could result in nonpayment of claims, civil monetary penalties, exclusion from the Medicare program, and liability for the submission of false claims to the government.
  • The rules and regulations around billing for clinical services are complex and change frequently – and are even more complex for clinical research. See the Billing & grant funding compliance page for further guidance.

People to talk to

For advice on fraud and abuse laws in the UMHS, or to report potential concerns, contact the UMHS Compliance Office [if you are outside the U-M network, go to their external page] by calling (734) 615-4400 or emailing them.

For legal assistance or advice relating to fraud and abuse, contact the Health System Legal Office (a part of the Office of the General Counsel).


Established 3/4/11, last updated 3/7/17 – Contact us if you believe any information is incorrect or outdated