False Claims Act 60 Day Clock on Retained Overpayments Begins on Initial Notice

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The Southern District of New York has put healthcare providers under the gun to act quickly when confronted with information that they may have received overpayments from Medicare and Medicaid or else have liability and treble damages imposed on them by the False Claims Act. In a decision in early August, the Court rejected Defendants theory that the 60 day clock set forth by the Patient Protection and Affordable Care Act of 2010 for a reverse false claim started when the Defendants were certain that an overpayment occurred.

The SDNY decision is the first in a case involving the question of retained overpayments. The complaint was filed in April 2011 and both the United States and the State of New York intervened in the litigation.

The United States’ Complaint-in-Intervention sets forth the operative facts. A software glitch beginning in 2009 and patched at the end of 2010 led the Defendant hospitals to mistakenly bill secondary payers for services covered by other insurance. After New York questioned its bills in September 2010, one of the Defendants tasked the Relator with creating a compressive list of potential claims for payment made in error. In early 2011, the Relator identified more than 900 claims totaling over $1 million. Approximately half of the claims listed did not actually involve overpayments by the government, but the vast majority of those listed did involve erroneous billing. Ultimately, the payments for those false claims identified did not conclude until March 2013.

The question on the motion to dismiss was whether the Relator identified the overpayments when including them on the 2011 list of possible errors or did the 60 day clock in the law start running when they were conclusively ascertained. The Court held that the U.S. had sufficiently alleged a viable complaint under the law that the claims were identified in 2011 and that the Defendants had the requisite scienter to warrant proceeding with the case.

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