What Is the False Claims Act? How It Applies to NEMT Billing

What the False Claims Act covers

The False Claims Act, 31 U.S.C. 3729 to 3733, is a federal civil law against billing the government falsely. It makes a person or company liable for knowingly seeking government money it is not owed, or for knowingly keeping money it owes back.

A claim is any request for money. It counts when it goes straight to the government, and also when it goes to a contractor or other recipient that spends federal money to advance a government program (31 U.S.C. 3729(b)(2)). Medicaid is paid partly with federal money. So the Act can reach a claim you send to your state Medicaid program, to a Medicaid health plan, or to a broker paying you with Medicaid funds.

Claims add up fast. HHS OIG explains that each item or service billed to Medicare or Medicaid counts as a claim. For a NEMT company, that usually means each trip leg.

Part of 31 U.S.C. 3729(a)(1)	What it makes illegal	What it looks like in NEMT
(A)	Knowingly presenting a false claim for payment	Billing a ride that never happened, or a wheelchair rate for a rider approved for an ambulatory ride
(B)	Knowingly making a false record or statement that matters to a claim	A trip log with an invented pickup time, padded miles, or a signature the rider never gave
(C)	Conspiring to do any of these	An owner and a driver agreeing to bill trips for the driver’s own family
(G)	Knowingly hiding or avoiding an obligation to pay the government back	Keeping a payment for a trip billed twice after you find the duplicate

Two other federal laws feed into it. A claim that includes services resulting from a kickback is a false claim (42 U.S.C. 1320a-7b(g)). An overpayment kept past its 60-day deadline is an obligation under the Act (42 U.S.C. 1320a-7k(d)). See anti-kickback rules for NEMT and the Medicaid 60-day overpayment rule.

What “knowingly” means

The Act defines knowingly in three ways: actual knowledge, deliberate ignorance of whether the information is true, or reckless disregard of whether it is true. It requires no proof of a specific intent to defraud (31 U.S.C. 3729(b)(1)).

The Supreme Court made the test personal in United States ex rel. Schutte v. SuperValu Inc., decided June 1, 2023. The question is what the company itself knew and believed, not what an objectively reasonable person might have thought. A company that believed its claims were wrong and sent them anyway cannot hide behind a reading of the rules it did not hold.

The false statement must also be material, meaning it has a natural tendency to influence payment (31 U.S.C. 3729(b)(4)). The service level, the miles, and whether the ride happened all decide what a NEMT trip pays.

Honest mistakes compared with false claims

Federal Medicaid rules separate the two. Fraud is an intentional deception made knowing it could bring an unauthorized benefit. Abuse is a practice that is inconsistent with sound fiscal, business, or medical practice and causes unnecessary cost (42 CFR 455.2).

Situation	Example	Where it usually lands
A mistake you catch	A dispatcher keys 18 miles instead of 8, and you refund it	An overpayment you report and return with a written reason within 60 days
A mistake you learn about and keep	A broker’s remittance shows a duplicate payment, and nobody sends it back	After 60 days, a False Claims Act obligation under 3729(a)(1)(G)
Looking away	Nobody compares billed miles to trip logs, even after a billing clerk raises it	Can meet the reckless disregard standard
Knowing	Billing no-shows as completed trips, or faking signatures	False claims, plus possible criminal charges and exclusion

The difference is what you do once you know. Fix the claim, refund the money, and write down what happened. The NEMT fraud guide shows the schemes investigators find most often.

Penalties and how far back a case can reach

What you can owe	Amount or rule	Where it comes from
Damages	3 times the government’s loss	31 U.S.C. 3729(a)(1)
Civil penalty	$14,308 to $28,619 per claim, for penalties assessed after July 3, 2025 (in effect as of September 2026)	28 CFR 85.5
Reduced damages	At least 2 times the loss if you give investigators everything you know within 30 days of learning it, cooperate fully, no action had started, and you knew of no investigation	31 U.S.C. 3729(a)(2)
Costs	The government’s cost of the lawsuit	31 U.S.C. 3729(a)(3)
Time limit	6 years from the violation, or 3 years after the responsible official knew or should have known, whichever is later, never more than 10 years	31 U.S.C. 3731(b)
Criminal false claims	Up to 5 years in prison and a fine	18 U.S.C. 287

Here is how the math works. Say a company billed 100 trips at the wheelchair rate for riders approved for ambulatory rides, and each was overpaid by $30. The loss is $3,000, and triple damages make it $9,000. The penalty range for 100 claims starts at $1,430,800. In that example, the lowest possible penalties are more than 150 times the damages.

A case also reaches your cash flow. Civil false claims cases are one of the sources federal rules list for a credible allegation of fraud (42 CFR 455.2). Once a state finds a credible allegation and an investigation is pending, it must suspend Medicaid payments unless it has good cause not to (42 CFR 455.23). See payment suspension.

Whistleblower cases

Any person can file a False Claims Act case for the government, called a qui tam case. The complaint stays under seal for at least 60 days while the government investigates and decides whether to take it over (31 U.S.C. 3730). HHS OIG says whistleblowers can be current or former business partners, office staff, patients, or competitors. In a NEMT company, that means drivers, dispatchers, billers, riders, and rival companies.

• The filer’s share. 15 to 25 percent of the recovery when the government joins the case, 25 to 30 percent when it does not.
• Retaliation. An employee, contractor, or agent punished for trying to stop a violation can win reinstatement, double back pay with interest, and special damages, within 3 years of the retaliation.

Brokers answer for their networks too. On July 21, 2020, the U.S. Attorney in Massachusetts announced that a MassHealth transportation broker would pay $300,000 to resolve allegations that, from 2011 through 2015, it billed for thousands of trips its vendors never gave. Its state contract required procedures to verify that trips were performed as authorized and billed. Expect your broker to check your trips the same way.

State false claims laws and broker contracts

Many states have their own false claims acts. Under section 1909 of the Social Security Act, a state whose law is at least as strong as the federal Act keeps 10 more percentage points of what it recovers. As of September 2026, HHS OIG lists 24 states whose laws qualify, including California, Connecticut, New York, Texas, and Virginia, with Louisiana’s law approved on February 20, 2026. Your state’s Medicaid Fraud Control Unit investigates Medicaid provider fraud and usually sits in the attorney general’s office.

Larger companies carry an extra duty. Any entity paid at least $5,000,000 a year under a state Medicaid plan must give employees and contractors written policies on the False Claims Act, whistleblower protections, and how it prevents fraud, and must discuss them in any employee handbook (42 U.S.C. 1396a(a)(68)).

Broker contracts can make the Act part of your agreement no matter how small you are. MTM Health’s standard agreement, in the version Pennsylvania posts dated January 1, 2023, requires you to comply with the False Claims Act and the Deficit Reduction Act of 2005 (section 2.U), include fraud, waste, and abuse in driver training (section 5.B), and keep complete records for 10 years (section 2.S).

How to keep a mistake from becoming a false claim

1. Bill only from a complete trip record. Every claim should match a trip log with times, miles, and the rider’s signature where required. See NEMT trip documentation.
2. Bill the level the rider was approved for. Sending a wheelchair van does not make an ambulatory trip a wheelchair trip.
3. Check a sample every month. Compare billed miles, times, and service levels to trip logs and GPS records.
4. Act on every error you find. Work out the amount, refund it through the payer’s process, and write down the reason within 60 days.
5. Screen everyone. Check owners, drivers, and office staff against the OIG exclusion list before hire and monthly.
6. Listen to the person who raises it. Record the concern, look into it, and never punish the employee for it.
7. Call a health care attorney if it looks intentional. Ask about the OIG self-disclosure protocol, and keep every record.

A written compliance program puts these steps on a schedule so they happen even on your busiest weeks.