Johnston, Adam Comment on Effects of Tax Law Change on Health Fraud Settlement Costs

23 February 2018 BNA Health Care Daily News
Partners Pam Johnston and Fred Adam are quoted in a BNA Health Care Daily Report article, “Tax Law Change May Raise Health Fraud Settlement Costs,” about the possible effects of a change in the tax rules governing the deduction of health care fraud settlement amounts.

A provision of the new tax reform act, signed into law on Dec. 22, requires a settling agency, like the Department of Justice, to state what portion of a False Claim Act settlement can be deducted as a business expense because it qualifies as restitution. The tax provision also eliminates certain types of previously deductible expenses related to FCA settlements, like government investigation expenses and interest.

Johnston said the new deductibility rules will “materially affect negotiations with the DOJ” over FCA settlements because limiting the deduction of the settlement amount could make the settlement less attractive.

Adam said the new provision “increases costs for both sides, for taxpayers and for the government.”

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