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The False Claims Act ("FCA"), 31 USC §§3729, et. seq. is a significant tool in the Government’s fraud and abuse tool box. Established in 1863 during the American Civil War in an effort to prevent individuals from selling defective equipment to the union soldiers, the modern FCA was re-born in 1986. The FCA imposes liability on health care providers/suppliers ("provider(s)") for knowingly filing a false or fraudulent claim. The intent in "knowingly" has been defined as actual knowledge, deliberate ignorance or reckless disregard of the existence of the false claim.The Fraud Enforcement and Recovery Act ("FERA"), Pub. L. 111-21, codified as 18 USC §27 (2009) strengthened the FCA’s "Reverse False Claim" provision. A provider may incur FCA Reverse False Claim liability when it "knowingly…avoids or decreases an obligation..to pay…money…to the Government". FERA defines "obligation" as "an established duty … arising from … the retention of any overpayment".
The Patient Protection and Affordable Care Act ("ACA"), Pub. L. 111-48, upheld by the U.S. Supreme Court on June 28, 2012, adds another potential liability in the FERA amended FCA by adding a new section to the Social Security Act titled "Reporting and Returning of Overpayments", ACA §6402(a). Overpayments are "any funds that a provider receives or retains…to which the provider, after applicable reconciliation, is not entitled." Under this so-called "Report and Return" mandate, ACA creates a duty to report and return an overpayment to the Government within 60 days after such an overpayment is "identified". A provider has identified an overpayment, if it has actual knowledge or acts in reckless disregard or deliberate ignorance of the overpayment. Any overpayment retained after 60 days is an obligation, which then triggers the Reverse False Claim liability regardless of whether the overpayment resulted from intentional fraud or an innocent error. The proposed rule published by the Centers of Medicare and Medicaid Services ("CMS") of the U.S. Department of Health & Human Services on February 16, 2012 states that when a provider receives information concerning a potential overpayment, it creates an obligation to make a "reasonable inquiry" to determine whether an overpayment exists. If the reasonable inquiry reveals an overpayment, the provider has 60 days from the identification of the overpayment to report and return it. Failure to make a reasonable inquiry with "all deliberate speed" could result in the provider "knowingly retaining an overpayment because it acted in reckless disregard or deliberate ignorance of whether it received such an overpayment". The proposed rule illustrates triggers of such reasonable inquiry including an audit or discovery of an incorrect coding.
Admittedly, there are ambiguities. If a staffer thinks there is a problem in coding a claim, how many days does it take for the provider to investigate before deliberate speed becomes reckless disregard? In the meantime, the providers should consider instituting/strengthening the policies and procedures in their compliance programs as well as robust training and documentation to avoid the reverse false claim liability under ACA.
