What is the False Claims Act, and why do NEMT providers face it?
The False Claims Act, 31 U.S.C. 3729 to 3733, is the federal law that holds anyone who knowingly submits or causes a false claim for government money liable for three times the loss plus a civil penalty on each claim, currently $14,308 to $28,619. Every Medicaid trip a NEMT company bills is a claim, so a habit of padded miles or rides that never happened multiplies fast.
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What the Act makes illegal
The core of the law is short. A person is liable for knowingly presenting a false or fraudulent claim for payment, for knowingly making a false record that matters to a claim, for conspiring to do either, and for knowingly hiding or dodging an obligation to pay money back. The Act defines that obligation to include keeping an overpayment, which is why a known billing error left unrefunded can turn into a violation. The 60-day overpayment rule sets the refund deadline.
Two definitions do most of the work:
- Knowingly means actual knowledge, deliberate ignorance, or reckless disregard of whether the information is true. No proof of a specific intent to defraud is required, so “the dispatcher entered it” is a weak defense for an owner who never looked.
- Material means capable of influencing whether money is paid. A trip date, a mileage count, or a service level on a claim all qualify.
Kickbacks connect in as well. Federal law treats a claim that includes services resulting from an Anti-Kickback Statute violation as a false claim, so paying riders or referral sources taints the trips that follow.
How NEMT billing turns into a false claim
Enforcement records show the same patterns again and again:
| Pattern | Real example |
|---|---|
| Rides that never happened | Trips billed with no ride given were among the schemes behind New York’s June 2025 actions against 25 transportation companies |
| Padded miles and tolls | The same New York cases included fake tolls and stretched mileage, with one driver claiming 96 trips and 2,158 miles in one day |
| A costlier ride than the rider needed | A Massachusetts wheelchair van company paid more than $700,000 in 2016 to settle allegations of medically unnecessary wheelchair van rides |
| Drivers or vehicles that were not allowed | New York cited unlicensed, suspended, and excluded drivers, and GAO reported fraud allegations involving unauthorized drivers or vehicles in the three states it reviewed |
| Weak checks by a broker | A MassHealth broker paid $300,000 in 2020 to resolve allegations that it billed for thousands of rides its contracted companies never gave from 2011 to 2015 |
New York’s cases were brought by its Medicaid Fraud Control Unit, and GAO counted nearly 200 convictions, settlements, and judgments against transportation companies across 25 states in fiscal years 2015 through 2020.
Why the numbers get large
Damages are tripled, and a civil penalty applies to every false claim. For penalties imposed after July 3, 2025, the Justice Department’s adjusted range runs from $14,308 to $28,619 per claim.
For example, suppose a company padded 500 trips by $20 each, and each trip went out as its own claim. The loss is $10,000, so triple damages come to $30,000. The minimum penalties alone reach 500 times $14,308, about $7.2 million. The per-claim penalty, not the dollars taken, is what ruins a small company.
A court may cut damages to double when the company reported everything it knew within 30 days, cooperated fully, and came forward before any action or known investigation began. Exclusion from Medicaid can follow as well.
Whistleblowers and state laws
Any person can file a case on the government’s behalf, known as a qui tam suit. The complaint stays sealed for at least 60 days while the government decides whether to take it over. Former drivers, dispatchers, and billers see the trip sheets every day, so they are well placed to notice a pattern and report it. The law protects employees, contractors, and agents from retaliation, with remedies such as reinstatement and double back pay.
Many states have their own version. OIG lists 24 state false claims laws that meet the federal standard, which earns those states 10 percentage points more of the Medicaid money they recover. The list runs from California and New York to Texas and, since February 2026, Louisiana.
Large Medicaid entities, those receiving or paying $5 million or more a year under the state plan, must put written policies on these laws and on whistleblower rights in front of employees and contractors, including in the employee handbook. Smaller companies may still be asked. North Dakota’s enrollment site visit checklist asks whether the handbook covers the False Claims Act and whistleblower protections. Our guide to NEMT fraud prevention covers the controls.
Records that hold up
A false claim case usually turns on whether the trip record matches the bill. In HealthRide, the driver app ties a signature captured on screen, GPS-recorded miles, and timestamps for pickup and drop-off to every trip. Every change is recorded too, so a billed mile can be traced back to the ride that produced it.
Frequently asked questions
- Can an honest billing mistake violate the False Claims Act?
- A true mistake is not a knowing violation. The Act covers actual knowledge, deliberate ignorance, and reckless disregard, and it needs no proof of intent to defraud. The risk comes after you find the error: keeping an overpayment is an obligation under the Act, and knowingly avoiding it is a violation. Refund it on time under the 60-day overpayment rule.
- Does it apply to trips billed through a broker?
- It can. The Act's definition of a claim includes a request for payment made to a contractor or other recipient when the federal government provides or reimburses any part of the money, which describes Medicaid funds passing through a broker. Brokers are exposed too: in 2020 a MassHealth broker paid $300,000 to resolve allegations that it claimed payment for rides its contracted companies never gave.
- How much does a whistleblower receive?
- When the government takes over the case, the person who filed it receives 15 to 25 percent of the recovery, depending on how much they contributed. When the government declines and the whistleblower wins or settles alone, the share is 25 to 30 percent. In both cases the defendant also pays the whistleblower's reasonable expenses and attorney fees.
- How far back can a case reach?
- Six years from the violation, or three years from when the responsible federal official knew or should have known the key facts, whichever ends later. The outer limit is 10 years after the violation. Keep trip records at least as long as your state and broker contracts require, since they are your defense.
