Previous False Claims Act (FCA) Fundamentals posts have examined how violations of certain federal laws can potentially expose entities to FCA liability when they receive money from the government. Continue Reading False Claims Act Fundamentals: Reverse False Claims
A common feature of False Claims Act (FCA) litigation is the pursuit of liability under the FCA’s so-called “reverse” false claims provision, 31 U.S.C. § 3729(a)(1)(G). Reverse false claims liability applies when a person or entity knowingly does either of the following:
- Makes, uses, or causes, to be made or used, a false record or statement material to an obligation to pay or transmit money or property to the government.
- Conceals or knowingly and improperly avoids or decreases an obligation to pay or transmit money or property to the government.
The reverse false claims provision of the FCA is especially significant for healthcare providers, in part because the 2010 Affordable Care Act (ACA) (as well as associated regulations) expressly linked the knowing retention of overpayments from federal healthcare programs to reverse false claims liability under the FCA. Specifically, the relevant statutory provision of the ACA defines the term “obligation,” as used in the FCA, to include any overpayment that is not “reported and returned” within 60 days after it is “identified,” a term courts and Centers for Medicare & Medicaid Services (CMS) have interpreted somewhat broadly. See 42 U.S.C. § 1320a-7k(d). Thus, by “improperly avoid[ing]” this “obligation”—i.e., knowingly or recklessly failing to return the overpayment within the ACA’s 60-day timeframe—a provider violates the FCA.
The upshot for providers is that a failure to diligently investigate and appropriately address a potential overpayment may lead to a host of problems, including whistleblower lawsuits, intrusive government scrutiny, and ultimately, FCA liability for treble damages and civil penalties. What’s more, this may be true even in cases where the receipt of the overpayment was not itself the result of any fraudulent conduct. Indeed, as the cases discussed below demonstrate, that risk is far from just hypothetical.Continue Reading Provider Beware: Recent FCA Cases Emphasize the Importance of Diligently Addressing Potential Overpayments
On May 6, the U.S. District Court for the District of South Carolina entered final judgment dismissing with prejudice a relator’s qui tam False Claims Act (FCA) suit against the defendant wholesale pharmacy. The relator, a former pharmacist who worked for the defendant, alleged that the defendant submitted false claims to government healthcare programs in connection with prescription medications dispensed for use at nursing homes and assisted living facilities. The relator alleged a scheme in which the defendant manually filled “thousands” of prescriptions with less-expensive generic medications while billing for more-expensive alternative medications stocked in its automated dispensing system.
A qui tam complaint containing similar allegations filed against Omnicare Inc. in the U.S. District Court for the District of New Jersey resulted in an $8 million settlement in 2017. In this lawsuit, however, the defendant, represented by Bass, Berry & Sims and others, obtained full dismissal with prejudice of the relator’s FCA and retaliation claims.Continue Reading Qui Tam Complaint Against Pharmacy Dismissed for Lack of Particularity
On July 5, 2019, the D.C. Circuit Court of Appeals affirmed dismissal of a qui tam lawsuit against several chemical manufacturers that set forth a unusual theory of liability: the relator alleged that the manufacturers violated the False Claims Act (FCA) by failing to self-report information about the dangers of their chemicals under the Environmental Protection Agency’s (EPA) voluntary Compliance Audit Program.
According to the relator, the manufacturers should have self-disclosed certain information to the EPA, who in turn would have assessed civil penalties under the Toxic Substances Control Act. By failing to do so, the relator alleged that the defendant manufacturers concealed their obligations to transfer property (the risk information) and money (the unassessed penalties) to the government.Continue Reading Failure to Voluntarily Self-Report is a “Non-starter” under the FCA
On August 24, 2016, DOJ announced a $2.95 million settlement with defendants facing FCA liability for allegedly delaying repayment of more than $800,000 in Medicaid overpayments. The settlement amounted to nearly 3.5 times the amount of the improper billings stipulated in the settlement documents.
This is the first FCA settlement involving the Affordable Care Act’s 60-day repayment provision and flows from allegations that the defendants violated the obligation to report and remit overpayments within 60 days of when such payments have been identified. The stipulation accompanying the parties’ settlement of the FCA claims at issue also included language that the defendants “admit[ted], acknowledge[d], and accept[ed] responsibility for” the conduct underlying the government’s allegations regarding the violation of this obligation.Continue Reading Settlement Reached in First Reverse FCA Case Based on 60-Day Repayment Provision
On February 11, 2016, the Centers for Medicare & Medicaid Services (CMS) published a final rule on the reporting and return of overpayments within 60 days, an obligation commonly known as the “60-day rule.” The final CMS rule, which relates to Medicare Part A and Part B only, eases some of the requirements for healthcare providers and suppliers compared to what CMS originally proposed four years ago. Given that the failure to timely report an overpayment can lead to False Claims Act (FCA) exposure, the final rule has significant FCA implications for healthcare providers.
Under the “reverse false claim” provision of the FCA, 31 U.S.C. § 3729(a)(1)(G), liability can exist when a provider or supplier “knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay or transmit money or property to the Government.” An “obligation” includes the retention of any overpayment. The Affordable Care Act explicitly states that the 60-day rule is an “obligation” for purposes of the FCA.Continue Reading FCA Implications of the CMS Final Rule on Overpayments