A decision handed down by a federal court in New York last week further evidences the government’s commitment to fighting health care fraud. The court finds the clock begins to run on the duty to return Medicaid and Medicare overpayments (also known as reverse false claims) when the provider is put on notice that an overpayment likely occurred, rejecting the defendants’ position that the period only begins when an overpayment is conclusively proven. Our health care fraud whistleblowers’ law firm applauds the decision fight back against health care fraud.
Understanding Motions to Dismiss
Before turning to the substance of the ruling, it is worth taking a brief look at legal procedure. When a complaint is filed, the defendant typically responds with an answer, a paragraph-by-paragraph response. If the defense believes the claim is entirely without legal merit, they may file a motion to dismiss instead. One basis is Federal Rule of Civil Procedure 12(b)(6) whereby the defendant asserts the complaint should be dismissed for “failure to state a claim upon which relief can be granted.” In essence, the defendant asserts that even if everything the plaintiff alleges is true, there is no actionable violation of law.
There are a few key points to keep in mind. First, when evaluating a motion to dismiss the court assumes the facts the plaintiff alleged are true. This is a temporary assumption. If the defendant wins, the case is dismissed. If the plaintiff wins, the motion is denied and the case moves towards trial where the plaintiff will have to prove those same facts. Denying a motion to dismiss does not mean the plaintiff wins and is not a finding of liability. However, in our experience, defendants often become more interested settling after the court denies a motion to dismiss.
Court Finds 60-Day Return Period Begins With Notice of Likely Overpayment
On August 3, a federal court in New York denied a motion to dismiss filed by Continuum Health Partners, Inc. (“Continuum”) and its co-defendants in a case we first discussed last summer (see link below). In brief, the whistleblower-initiated lawsuit alleges that a software glitch caused Continuum to overbill Medicaid in 2009 and 2010 and the government mistakenly paid the inflated bills. Continuum learned about the issue in late 2010 and in February 2011 an employee (who eventually became the realtor who filed the complaint) created a detailed spreadsheet listing potentially affected claims. Both sides agree the list contained claims that were not overpaid, but also included the vast majority of the overpaid claims.
When an organizations receives an overpayment from a federal health care program, it must report and return the overpaid amount within sixty days from when the overpayment is identified (42 U.S.C. § 1320a-7k(d)(1)). Ultimately, the court reads “identified” strictly finding that the 60-day period begins when an organization is put on “notice of a set of claims likely to contain numerous overpayments.” The court rejected Continuum’s suggestion that the period should only begin when the provider determines with certainty money was due, noting that stance would create a perverse incentive to delay a thorough investigation. Further, the court rejects Continuum’s suggestion the rule would allow an organization to be punished if a payment is delayed when it is diligently investigating a potential overpayment, stating:
Rather, in the reverse false claims context, it is only when an obligation is knowingly concealed or knowingly and improperly avoided or decreased that a provider has violated the FCA. Therefore, prosecutorial discretion would counsel against the institution of enforcement actions aimed at well-intentioned healthcare providers working with reasonable haste to address erroneous overpayments.
The interpretation leads the court to find the complaint does state a claim and the court denies the motion to dismiss.
A Victory for Whistleblowers and the American People
The ruling is a victory in the fight against health care fraud. The journal Modern Healthcare warns, “Providers might want to make sure they act swiftly to return Medicare and Medicaid overpayments to the government following a judge’s decision Monday.”
Many whistleblowers are current or former company insiders who tried to resolve their concerns internally before turning to the courts. In finding the overpayment clock begins to run with notice of likely overpayments, the court gives added weight to these attempts to get the company to do the right thing. If you’ve tried to get your company to remedy a fraud, be it returning overpayments or remedying another fraud, and the company has turned a blind eye to your concerns or retaliated against you for raising them, call us. Our False Claims Act lawyer can protect your interests while joining your fight for what’s right. This is a fight worth fighting, but you don’t need to fight alone.
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(Image by Brian Turner)