Deeper Than the Headlines: Reverse False Claims

We’ve highlighted the significance of this case in previous webinars and blog posts, but now we know that it’s at least $3 million dollars more significant than it was before.

The case is U.S. v. Continuum Health Partners, and the major reason we’ve highlighted it in the past is the enforcement of the so-called “reverse false claims,” or in other words, identified overpayments which were not returned within 60 days. Such non-returned overpayments can become false claims and subject to the financial penalties of the False Claims Act.

On August 24, 2016, the Department of Justice announced a settlement of close to $3 million because Continuum, as well as a group of hospitals (Mount Sinai Beth Israel, Mount Sinai St. Luke’s and Mount Sinai Roosevelt) didn’t promptly return the identified overpayments. The $3 million is in addition to the $840,000.00 in overpayments that was eventually paid back by Continuum.

The first clue of potential overpayments came when New York State investigated the billing claims of four patients. According to court documents, Robert Kane, a technical director of revenue operations for Continuum, investigated the claims and discovered an error in a remittance code that resulted in the wrongful billing of Medicaid as a secondary payor. Medicaid then paid the claims. When Mr. Kane discovered the error, Continuum corrected the error moving forward but did not immediately refund the entire scope of overpayments, though Continuum did refund the overpayments from the four patient claims identified by the state.

Mr. Kane investigated the root cause of the error and ran a report which identified additional overpayments, including hundreds of additional claims containing the same erroneous remittance code. He alleged that he made efforts to convince Continuum to pay back all the identified overpayments, which fell on deaf ears. Eventually, he sent an email to upper management along with an attached spreadsheet identifying the overpayments. Four days later, his employment from Continuum was terminated. Mr. Kane eventually filed a whistleblower lawsuit under the False Claims Act. Interestly, the lawsuit doesn’t claim Continuum never refunded the overpayments. In fact, Continuum refunded all the overpayments before the lawsuit was ever filed. However, federal law requires all providers to return any overpayment of government healthcare funds within 60-days of identifying the overpayment. This was the basis of the whistleblower lawsuit.

The significant element of the case, is the judge’s ruling on when the clock started ticking, so to speak, as it relates to the 60-day time-limit for refunding overpayments. When is an overpayment considered to be “identified?” In this particular case, it was determined from the email sent by Kane to upper management, which included the spreadsheet of overpayments. The judge ruled that this was the point when the 60-day clock began to tick. Even though the email and spreadsheet did not conclusively close the investigation of potential overpayments.

The judge’s ruling on the issue is over 40 pages in length but one of the many key statements includes the following as it pertains to the strength of the law:

“The ACA itself contains no language to temper or qualify this unforgiving rule; it nowhere requires the Government to grant more leeway or more time to a provider who fails timely to return an overpayment but acts with reasonable diligence in an attempt to do so.”

He also wrote that:

“To define ‘identified’ such that the sixty day clock begins ticking when a provider is put on notice of a potential overpayment, rather than the moment when an overpayment is conclusively ascertained, is compatible with the legislative history of the FCA and the FERA highlighted by the Government.”

I have previously hosted a webinar on the 60-day overpayment Final Rule published by CMS that might be useful in preventing this from happening to your organization.

Reviewing your compliance program’s policies, procedures and most importantly, its resolve, to promptly quantify and return overpayments is more essential than ever. Though this may be the first case that highlights this important enforcement perspective of overpayments as false claims, it’s certainly not going to be the last. Compliance programs need to evolve and mature along with the law and enforcement environment. This case is just one more example of the importance of ascertaining the effectiveness of your compliance program