Overpayments from Medicare to Providers — an Important new False Claims Act Opinion
Today’s post is the first of a two-part post examining a very important opinion from the U.S. District Court for the Southern District of New York. But don’t take my word for it that this is an important opinion — the case, styled U.S. ex rel Kane v. Continuum Health Partners et al., has been the subject of much discussion in industry circles, including (IMHO) the very best of the FCA defense blogs.
The opinion is important because it is the very first ruling interpreting the overpayment provisions of the federal False Claims Act as amended by the Affordable Care Act. Those provisions requires Medicare and Medicaid overpayments be reported and returned within “60 days after the date on which the overpayment was identified.” 42 U.S.C. §1320a-7k(d)(2). The ACA further provides that the failure to make a timely refund can serve as the basis for False Claims Act liability. Id. § 1320a-7k(d)(3).
As regular readers know, I have a great interest in the topic of overpayments — so, in general, I have been waiting for a Court to rule on the new overpayment framework. I have been waiting for this opinion in particular since March of 2014 when the United States Attorney’s Office for the Southern District of New York filed its Complaint-In-Intervention in this case. The defendants filed Motions to Dismiss under Fed. R. Civ. P. 12(b)(6) and Fed. R. Civ. P. 9(b) last summer and the matter was argued last fall, at which point the Court took the matter under advisement. Recognizing that his opinion would ultimately be heard by multiple levels of appellate review either way, Judge Ramos took the time to write a careful, thorough, and well-reasoned opinion.
The Factual Underpinings of the Case
The false claims alleged by the government stem from a software problem at defendant Healthfirst in 2009. The software “glitch” that year caused three New York City hospitals to submit improper claims seeking reimbursement from Medicaid for services rendered to beneficiaries of a managed care program administered by Healthfirst. Because those individuals sought treatment for health care covered by Healthfirst, Medicaid would not pay the claims as a matter of law.
Importantly, no one thought — and the government did not allege — that the hospitals were in any way responsible for intentionally causing the overpayments. The government asserted and believed all along that the overpayments were caused by the computer glitch and were in fact unknown to Healthfirst until 2011.
Fast forwarding to January of 2011, the software glitch — and the overpayments — came to light during a New York state audit, at which time Continuum created a software patch to fix the problem. Continuum also assigned several employees – including Relator Kane – to figure out how much money, if any, was owed back to the government. Relator Kane did just that, and prepared a spreadsheet with more than 900 entries which in his view were erroneous. He emailed this spreadsheet to his superiors with an email indicating that the problem may have been more serious than originally thought.
Tune in next time for the second of this two part post…..