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District Court Denies Motion to Dismiss in Government’s First Reverse False Claims Case

On August 3, 2015, the United States District Court for the Southern District of New York issued  an opinion interpreting the Affordable Care Act’s (ACA) so-called “60-day rule.”  In United States of America ex rel. Kane v. Continuum Health Partners, Inc., Case No. 11-2325.  The court denied the defendants’ motion to dismiss the government’s False Claims Act (FCA) complaint alleging failure to timely report and refund overpayments pursuant to the 60-day rule, in violation of the FCA’s “reverse false claims” provision.  In doing so, the district court provided the first guidance on what it means for an overpayment to be “identified” by a provider, thereby triggering the ACA’s 60-day repayment period under 42 U.S.C. § 1320a-7k(d).  The court held that the 60-day clock for an “identified overpayment” starts running “when a provider is put on notice of a potential overpayment, rather than the moment when an overpayment is conclusively ascertained.” Continuum...

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FCA Enforcement Action to Watch: Government Intervened in Reverse False Claims Case

With a motion to dismiss pending in the United States District Court for the Southern District of New York, United States of America ex rel. Kane v. Continuum Health Partners, Inc., Case No. 11-2325, is the False Claims Act (FCA) case to watch in 2015.  It is the first “reverse false claims” case where the United States intervened, and its only allegation involves a failure to timely report and refund overpayments to the government. In 2010, the Affordable Care Act (ACA) modified the FCA’s reverse false claims provision (31 U.S.C. § 3729(a)(1)(G)), making a party liable for failing to report and return an overpayment within 60 days of the date it is “identified.”  See 42 U.S.C. § 1320a−7k(d).  Five years after the passage of the ACA, however, it remains unclear what it means for an overpayment to be “identified,” thereby triggering the 60-day clock.  The Centers for Medicare and Medicaid Services (CMS) has not issued any guidance concerning refunding...

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CMS Delays Implementation of the 60-Day Overpayment Final Rule

On February 13, 2015, the Center for Medicare and Medicaid Services (CMS) announced a one-year extension to its normal three-year deadline to finalize the proposed rule explaining the Affordable Care Act’s “60-Day Rule” – leaving providers and their counsel with the same unanswered questions on how to comply and manage potential False Claims Act (FCA) risk. When Congress passed the Affordable Care Act in 2010, it amended the Social Security Act to add Section 1128J.  This section requires Medicare and Medicaid providers, suppliers and managed care contractors to report and return an overpayment by the later of “60 days after the date upon which the overpayment was identified or the date any corresponding cost report was due, if applicable.” CMS published a proposed rule applying this provision to Medicare Part A and B overpayments on February 16, 2012.  The proposed rule defines when an overpayment is “identified” as when the provider or supplier has “actual...

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FCA Whistleblower Litigation Remains a Potent Threat to Health Care Providers

With the Department of Justice’s recently announced 2014 statistics, the United States has recovered nearly $23 billion from False Claims Act (FCA”) litigation since 2009.  The overwhelming majority of these cases – 753 of 846 cases initiated in 2013 – are qui tam cases, filed by whistleblowers.  Health care providers, in particular, constitute a large proportion of the United States’ recoveries each year – of the $3.8 billion recovered in 2013, $2.6 billion came from health care providers and $1 billion of that came from hospitals.  While historically a government decision declining to intervene in a whistleblower’s case could be touted as a victory, whistleblowers are now increasingly pursuing their claims on their own with highly-motivated and well‑financed plaintiffs’ counsel.  They are more willing than ever to take their client’s claims to the mat to extract the best settlement possible, or if necessary, take the case to trial.  In today’s qui tam...

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