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:

  1. 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.
  2. 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

The Medicare Advantage program, which allows private insurance companies to offer and administer Medicare benefits, continues to be an area of sharp scrutiny for False Claims Act (FCA) enforcement despite some significant recent setbacks in pursuing FCA liability against Medicare Advantage Plans (MA Plans or Plans).  In 2018, several district court decisions raised obstacles to the pursuit of FCA liability against MA Plans, and those decisions have continued to affect FCA enforcement efforts in the first half of 2019.  Despite those setbacks, however, the prevalence of government enforcement actions involving Medicare Advantage illustrates that it remains an area of focus for the Department of Justice (DOJ).

The Focus on Medicare Advantage

Unlike traditional fee-for-service Medicare, MA Plans are compensated on a monthly basis through a fixed payment for each member.  The amount of the monthly payment – known as a capitation payment – is determined for each payment year through a process called “risk adjustment” and is based on each individual member’s demographic information and data reflecting the member’s medical condition, as documented during the 12 months preceding the payment year.  A member’s condition and medical diagnoses must be supported by a valid medical record.


Continue Reading Medicare Advantage: Recent Developments in FCA Enforcement

On December 11, 2018, the United States announced that it has elected to intervene in a False Claims Act (FCA) lawsuit filed against Sutter Health and its affiliated entity Palo Alto Medical Foundation (PAMF) alleging that the defendants defrauded the Medicare Advantage program by submitting false patient information to the government. The whistleblower, a former employee of PAMF, alleges that Sutter “has taken and continues to take hundreds of millions of dollars in inflated capitation payments” by submitting “risk adjustment data Sutter knows to be inaccurate, incomplete or false.”

Medicare Advantage Plans

Medicare Advantage, formally known as Medicare Part C, allows private insurance companies, acting as “Medicare Advantage Organizations (MAOs),” to offer insurance plans and administer Medicare benefits. MAOs contract with healthcare providers such as Sutter to provide Medicare services to the plans’ enrollees. Instead of receiving reimbursement on a traditional fee-for-service basis, MAOs provide benefits under a capitated payment system, whereby government reimbursement is based on each individual beneficiary’s risk adjustment data.


Continue Reading DOJ Intervenes in Another Medicare Advantage Risk Adjustment FCA Suit

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

Bass, Berry & Sims attorney Brian Roark was interviewed for an article in Becker’s Hospital Review and identified five trends that will impact False Claims Act (FCA) recoveries in 2016. Several case rulings from 2015 and a shift in government focus has the potential to allow for continued financial recoveries in the coming year, especially