Attention Whistleblowers: CMS Clarifies the 60 Day Overpayment Rule which Drastically Affects False Claims Act Cases

Normally, whistleblowers that come into our office have identified an overpayment made by the government to their employer and the employer, most often, knowingly neglects to repay the amount.  The “60 Day Rule” as it is called was a part of Obama’s Affordable Care Act and implemented in March 23, 2010.  It requires providers and suppliers who receive Medicare to report and return overpayments by the later of (i) the date that is 60 days after the overpayment was identified or (ii) the date any corresponding cost report is due, if applicable.  In other words, in most cases, once any person in the organization that is in charge of billing or management gets notified that Medicare overpaid the company, he or she has a duty to investigate, report, and if applicable, repay the amount. If the overpayment is retained after the 60 day deadline, the company is then under an obligation to repay and is at that point liable under the federal False Claims Act (FCA). (See 31 U.S.C. § 3729, et seq.)  See below for a run-down of the penalties.  Importantly, next month, specifically on March 14, 2016, the 60 Day Rule’s definition of what it means when a company “identifies” an overpayment will be clarified by the Final Rule.

The Final Rule states that an overpayment is considered “identified” when a company has or should have, through the exercise of reasonable diligence, determined that it has received an overpayment AND quantified the amount of the overpayment. In other words, just a notification by the whistleblower of the possibility of an overpayment (which was the standard until now) does not start the 60-day clock ticking on the requirement to repay.  Instead, the notification to the employer triggers the obligation to exercise reasonable diligence.

This followed much uncertainty and a famous district court decision where a judge held that the clock for overpayments started when the company received a whistleblower’s email.  The judge ruled that the hospital was “put on notice” of the mere possibility of an overpayment and that was enough to start the 60 day clock.  The email was indeed specific and listed claims that may have been billed improperly.  Now, the company must analyze such claims, quantify the amount, and then report within 60 days of the assessment.  This gives companies a little breathing room.

As a review, a violation of the FCA may subject the wrongdoer to substantial penalties of $5,500-$11,000 per violation plus three times the damages sustained by the government. Although California’s FCA is modeled after the federal FCA, there are nonetheless specific particularities that demand constant monitoring. Since 2009, the U.S. Justice Department has recovered more than $17.1 billion through FCA cases involving fraud against federal health care programs. See these blogs for many examples of multi-million dollar FCA settlements.

If you witness any potential false claims (i.e. requests for reimbursement to the government, not actually rendering work when reimbursement is received, or receiving and knowingly retaining an overpayment) by your company, or you are retaliated against for voicing your concern about potential wrongdoing, immediate action is crucial.  Contact the experienced employment law attorneys at Stephen Danz & Associates for a free consultation to discuss your circumstances and legal options.