On May 20, 2009, President Obama signed the Fraud Enforcement and Recovery Act (FERA) into law. The main policy reason behind FERA was to address fraud in the mortgage industry. The law, however, broadly expands the scope of the federal False Claims Act which is the primary tool used by the government to prosecute fraud and abuse activity in the health care industry. The use of the False Claims Act in health care is not without controversy. Due to the large volume of reimbursement claims processed by each health care provider, the penalties under the law multiply dramatically because they are assessed on a per claim basis. While prosecuting outright fraud by bad apple providers is necessary to protect the integrity of the federal programs, the actual effect of these changes on the majority of good apple providers is far from clear. If the risk of liability due to errors in claims processing outweighs the reimbursement received for services provided, good providers could be driven away from servicing Medicare and Medicaid patients. A practical response would be to keep medical trade associations informed of enforcement activity that attempts to recharacterize mere overpayments as false claims, or worse, fraud. There is a common misconception in health care that every mistake in billing, even a mistake caused by negligence, is fraud or a false claim. Mistakes happen given a complex coding and billing system, and without doubt, even negligence happens. Neither mistakes nor negligence are false claims or fraud. With the changes to the False Claims Act, however, there is heightened concern that unknowing or inadvertent retention of overpayments could be pushed into a false claims box. For most practices, the changes should mean that before you continue with business as usual for Medicare or other federal program patients, you must properly document medical necessity and document clearly that the billing codes are supported by the medical record based upon the most current guidance from the federal programs. If overpayments are detected, those should be verified first and generally should be refunded through the process recommended by the carrier or claims processing unit of the relevant agency. Again, some thought needs to be developed at the federal level about the wisdom of using the False Claims Act to recoup payments made to health care providers that did not exactly follow the billing rules. Fraud should be that, fraud, and handled through a different mechanism. Where services are legitimately provided, however, but the billing process is faulty, the provider should not have to fear a potentially drastic result under the False Claims Act. In other words, a clearer user-friendly mechanism should be established to not only to head off problems but also to handle mistakes and negligence in health care billing.