Reverse False Claims-The Latest in False Claims Act Exposure

Earlier this week, the Department of Justice announced that it had its second largest annual recovery of civil fraud claims in history, securing $2.4 billion in settlements and judgments in cases involving fraud against the government in the fiscal year ending Sept. 30, 2009. In making this announcement, Tony West, the Assistant Attorney General for the Civil Division, reiterated that “rooting out fraud” remains one of the Justice Department’s highest priorities.” The government thanked its partners in these recovery efforts, mentioning the cooperation it receives from whistleblowers, State Departments of Justice, Medicaid Fraud Control Units, and Congress.

The reference to Congress’ role in assisting with fraud recovery efforts cannot be minimized. With the enactment of the Fraud Enforcement Recovery Act of 2009 (“FERA”) and the Patient Protection and Affordable Care Act (“PPACA,” sometimes referred to as the Healthcare Reform Act) in March of this year, Congress has significantly expanded the scope of liability for individuals and entities that receive government funds.

As a result of these reforms, one area where we are seeing considerable exposure for healthcare providers is with “reverse false claims.” There is no longer any doubt that the knowing retention of Medicare and Medicaid overpayments can serve as the basis for False Claims Act liability.

Under PPACA, health care providers are required to “report and refund” any overpayment by within 60 days after the date on which the overpayment was identified (or the date any corresponding cost report is due, whichever is later). The definition of overpayment under PPACA includes any funds received or retained under Medicare or Medicaid to which the provider is not entitled. And PPACA expressly makes the retention of any overpayment an obligation under the False Claims Act.

The Justice Department’s announcement last week that “A top priority for this administration is fighting health care fraud.” should come as no surprise to healthcare practitioners. In fiscal year 2009, health care fraud recoveries reached $1.6 billion, two-thirds of the year’s total. With the recent expansion to the Justice Department’s arsenal of recovery weapons, we will continue to see an increase in recovery efforts. Now more than ever it is essential to be vigilant in avoiding risk related to billing and collections.