Providers, Medicare Advantage organizations, and others subject
to the Patient Protection and Affordable Care Act's (ACA)
60-day "report and return" provision beware – the
government has been persistent in using the False Claims Act (FCA)
to rectify alleged fraud, particularly in the healthcare context,
and now a recent decision from the Southern District of New York
may provide yet another theory of FCA liability for the government
to pursue.
In Kane v. Healthfirst, Inc. and United States v.
Continuum Health Partners, Inc., the district court
interpreted the ACA's 60-day rule to impose FCA liability on
those who fail to report and return identified overpayments to
Medicare or Medicaid within 60 days of being "put on notice of
a potential overpayment." Due to a software glitch, Continuum
Health Partners submitted improper claims seeking reimbursement for
services provided to Healthfirst enrollees.
After state auditors questioned Continuum about the incorrect
billing and the glitch was discovered, Continuum tasked its
employee (and eventual relator) with investigating the improper
claims. After investigating, the relator sent an email in February
2011 to management and attached a spreadsheet containing over 900
claims with an erroneous billing code. The email "indicated
that further analysis would be needed to confirm his findings and
stated that the spreadsheet gave 'some insight to the magnitude
of the issue.'" He was terminated soon thereafter. It was
not until the government issued a Civil Investigative Demand in
June 2012 that Continuum reimbursed more than 300 of the
claims.
The federal government and New York intervened in the relator's
qui tam action and sought treble damages plus penalties
for each overpayment. Ruling on the defendants' motion to
dismiss, the court held that the relator's email and
spreadsheet "identified" overpayments under the ACA even
though the email only provided "notice of a potential
overpayment" and did not "conclusively ascertain[]"
an overpayment or the "specific amount owed to the
Government." The overpayments became "obligations"
in violation of the FCA when they were not reported and returned
within 60 days.
The message is clear. When a provider or others subject to the
report and return provision are put on notice of a potential
overpayment, the problem cannot be ignored. Providers and others
should act diligently to conduct an investigation, report the
problem if there is one, and return the overpayment. Particularly
given that quantifying the amount of the overpayment can be complex
and time consuming, diligence is key and may temper the harsh
reality of this case. Although the court noted that an
"overpayment" occurs where a provider conducts an audit
and reports its efforts to the government within 60 days, yet does
not return the full overpayment within 60 days, it acknowledged
that a FCA case premised on such facts "would be unlikely to
succeed."
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
