What Is the False Claims Act? A Practical Guide for Wound Care Professionals

The False Claims Act (FCA) is one of the federal government’s most powerful tools for addressing improper Medicare billing. For wound care professionals—especially those using high-cost therapies like skin substitutes—understanding how the FCA works is essential to managing compliance and audit risk.

Key Takeaways

• The False Claims Act imposes liability for knowingly submitting false or unsupported claims to Medicare.
• Healthcare—especially high-cost, documentation-intensive services—is a major focus of FCA enforcement.
• Strong documentation, accurate billing, and timely overpayment reporting are essential to reduce risk.

What Is the False Claims Act?

The False Claims Act (FCA) is a federal law that imposes liability on individuals or entities that knowingly submit false or fraudulent claims for payment to the U.S. government, including Medicare and Medicaid. Originally enacted during the Civil War and now codified at 31 U.S.C. §§ 3729–3733, the FCA allows the government to recover damages and penalties when federal funds are improperly billed.¹

Under the statute, a claim may be considered “false” if it includes inaccurate information about the services provided, lacks required documentation, or misrepresents compliance with Medicare coverage or billing rules.² Importantly, liability does not require proof of specific intent to defraud; “knowledge” includes actual knowledge, deliberate ignorance, or reckless disregard of the truth.²

Key Provisions of the FCA

1. Liability for False or Fraudulent Claims

The FCA prohibits knowingly²:

• Submitting false claims for payment
• Using false records or statements material to a claim
• Retaining overpayments without proper reporting and return

These provisions apply broadly across healthcare billing, including physician services, outpatient care, and advanced wound therapies billed to Medicare.²

2. Qui Tam (Whistleblower) Actions

A defining feature of the FCA is its qui tam provision, which allows private individuals—known as “relators”—to file lawsuits on behalf of the government. Whistleblowers may receive a portion of any recovered funds if the case is successful.²

Healthcare is the leading sector for FCA recoveries. The U.S. Department of Justice (DOJ) reports that the majority of FCA settlements and judgments each year involve healthcare fraud allegations, particularly related to Medicare and Medicaid billing.³

3. Financial Penalties

Violations of the FCA can result in:

• Treble damages (three times the government’s losses)
• Civil penalties per claim, adjusted annually for inflation

These penalties can be substantial, especially in high-volume billing areas such as wound care services.¹

The FCA and Medicare Billing

The FCA is closely tied to Medicare’s statutory requirement that services be “reasonable and necessary” under §1862(a)(1)(A) of the Social Security Act.⁴ Claims submitted for services that do not meet coverage criteria may be considered false if the provider knowingly bills for non-covered or unsupported services.

In practice, FCA cases often involve allegations such as:

• Billing for medically unnecessary services
• Insufficient documentation to support claims
• Upcoding or miscoding services
• Violations of billing requirements tied to coverage policies

CMS data consistently show that insufficient documentation is a leading cause of improper payments in Medicare Fee-for-Service.⁵ While improper payment does not automatically equate to fraud, patterns of unsupported billing may increase legal risk under the FCA.

Why the FCA Matters in Wound Care

For wound care professionals, FCA risk is particularly relevant in the use of high-cost, documentation-intensive therapies, including skin substitutes (often referred to as cellular and tissue-based products).

Several factors elevate scrutiny:

• High reimbursement per application
• Strict documentation requirements tied to medical necessity
• Longitudinal treatment courses requiring repeated billing

Federal oversight bodies, including the Office of Inspector General (OIG), have identified spending growth and billing vulnerabilities in certain categories of advanced wound care products, signaling areas of potential enforcement focus.⁶

If documentation does not support key elements—such as wound characteristics, prior standard care, and response to treatment—claims may be vulnerable to denial, recoupment, or, in more serious cases, FCA allegations.

The Bottom Line

The False Claims Act is a central enforcement mechanism in federal healthcare oversight, targeting false or unsupported claims submitted to Medicare. For wound care professionals, especially those using advanced therapies, compliance hinges on accurate documentation, appropriate billing, and adherence to medical necessity standards.

Understanding the FCA is not just a legal exercise—it is a practical necessity for maintaining compliant, sustainable wound care practice.

References

1.         United States Department of Justice. Civil Division. The False Claims Act. Accessed April 24, 2026. https://www.justice.gov/civil/false-claims-act.

2.         United States Code. False Claims Act, 31 U.S.C. ¬ß¬ß 3729-3733. Accessed April 24, 2026. https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title31-section3729&num=0&edition=prelim.

3.         U.S. Department of Justice. Fraud Statistics - Overview. Accessed April 24, 2026. https://www.justice.gov/opa/media/1424121/dl.

4.         Social Security Administration. Social Security Act ¬ß1862(a)(1)(A), 42 U.S.C. ¬ß1395y(a)(1)(A). Accessed April 24, 2026. https://www.ssa.gov/OP_Home/ssact/title18/1862.htm.

5.         Centers for Medicare & Medicaid Services. 2025 Medicare Fee-for-Service Supplemental Improper Payment Data. Accessed April 24, 2026. https://www.cms.gov/data-research/monitoring-programs/improper-payment-measurement-programs/comprehensive-error-rate-testing-cert/cert-reports/2025-medicare-fee-service-supplemental-improper-payment-data-2.

6.         Office of Inspector General, U.S. Department of Health and Human Services. Work Plan and Reports. Accessed April 24, 2026. https://oig.hhs.gov/reports/work-plan/.