Introduction
As part of the current administration's efforts to expand
the availability and decrease the costs of health care in the
United States, President Obama signed into law the Patient
Protection and Affordable Care Act ("PPACA") on March 23,
2010. In addition to expanding the scope of health care coverage,
the PPACA affects other statutory provisions designed to combat
fraud against the health care system, including changes to the
False Claims Act ("FCA").1
Retention of Overpayments
In 2009, President Obama signed into law the Fraud Enforcement
and Recovery Act ("FERA"). The FCA had a relatively
narrow "reverse false claims" provision prior to FERA,
but FERA expanded the potential for liability for reverse false
claims.2 It made liable a person who "knowingly
conceals or knowingly and improperly avoids or decreases an
obligation to pay or transmit money or property to the
Government."3 But, FERA was somewhat vague on what
constituted an "obligation."
PPACA provides some clarity. It explicitly states that "[a]ny
overpayment retained by a person after the deadline for reporting
and returning the overpayment [] is an obligation [under the
FCA]."4 An overpayment must be reported by the
later of sixty days after the date on which the overpayment was
identified or the date any corresponding cost report is
due.5 Thus, retention beyond this period may subject the
retaining person or entity to liability under the FCA. Considering
the steep penalties, up to $11,000 per claim plus treble damages,
and Congress' direct link from PPACA to the FCA, health care
providers and others receiving federal money must proceed with
caution and enhanced vigilance. Erring on the side of explanation
and disclosure will likely be in the provider's best
interest.
Changes to the FCA
PPACA made several critical changes to the FCA that will affect
qui tam lawsuits6 against those receiving
federal dollars, such as health care providers billing Medicaid and
Medicare. A person is able to bring such an action under the FCA
unless it is based on "publicly disclosed" allegations or
transactions. An exception exists to the public disclosure bar if
the person bringing the suit is the "original source" of
the publicly disclosed information. PPACA alters these dynamics by
narrowing the information that is considered "publicly
disclosed" and expanding the number of individuals who are
considered "original sources."
Prior to PPACA, allegations or transactions contained in criminal,
civil, or administrative hearings, whether state or federal;
congressional, administrative, or Government Accounting Office
reports, hearings, audits, or investigations; or the news media
were considered publicly disclosed. Hence, a qui tam suit
could not be based on this information. Under the new FCA as
amended by PPACA, allegations or transactions are "publicly
disclosed," thus barring suit, only if they are contained in a
federal criminal, civil, or administrative hearing in
which the government or its agent is a party; congressional,
Government Accountability Office, or other federal report,
hearing, audit, or investigation; or the news media. This
significantly narrows the public disclosure bar to FCA qui
tam suits, vitiating one of the major, effective defenses to
this type of suit.
Further increasing the viability of a qui tam suit, PPACA
expands the scope of the "original source" exception to
the public disclosure bar. The previous FCA made an original source
one who had "direct and independent knowledge" of the
information providing the basis of the complaint and who had
voluntarily provided the information to the government prior to the
qui tam suit. Now, an original source must merely have
"knowledge that is independent of and materially adds to"
the publicly disclosed information and must voluntarily provide
that information to the government prior to the qui tam
action. Consequently, the public disclosure bar does not preclude
someone from obtaining second hand, indirect knowledge from
bringing suit. Although it appears up the courts to interpret the
meaning of the language "materially adds to," Congress
seems to intend to broaden the scope and availability of qui
tam actions under the FCA.
Additionally, PPACA alters the nature of the public disclosure bar.
Under the previous FCA, no court had jurisdiction over an
action based on publicly disclosed information. This permitted
discovery early in the course of litigation to resolve the
jurisdictional issue. Upon a lack of jurisdiction, dismissal of the
action was proper under Rule 12(b)(1) of the Federal Rules of Civil
Procedure. Quite differently, the new FCA provides that "[t]he
court shall dismiss an action or claim [because of the public
disclosure bar], unless opposed by the
government."7 Thus, even if the claim falls
within the public disclosure bar, a court cannot dismiss the action
if the government opposes. It remains unclear what level of
opposition the government must impose or how this implication will
play out, but this language places some discretion in the
government regarding the stage at which these cases may be
dismissed. As a result, it seems likely that FCA qui tam
actions will not be as easily or as quickly dismissed, and the
frequency and duration of the suits will increase.
Conclusion
PPACA's changes to the FCA will likely increase the potency
and frequency of qui tam actions under the FCA. Health
care providers and other persons and entities contracting with the
government or receiving federal money must proceed with caution to
ensure compliance with the new law. Prudent providers should review
their compliance manuals, policies and procedures, and employee
familiarity in this area to ensure return of overpayments and
abidance with the law.
Footnotes
1. 31 U.S.C. § 3729-3733 (2010).
2. The reverse false claims provision essentially requires a person receiving overpayment from the government to return the overpayment.
3. 31 U.S.C. § 3729(a)(1)(G).
4. PPACA, Pub. L. No. 111-148, § 6402(d)(3).
5. Id. at § 6402(d)(2).
6. A qui tam lawsuit is an action brought under a statute that allows a private person to sue for a penalty, part of which the government will receive and part of which the person bringing the action will receive. Generally under the FCA, whistleblowers bring qui tam actions.
7. 31 U.S.C. § 3730(e)(4)(A) (emphasis added).
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