On 2 July, the House Energy and Commerce Committee released a “manager’s amendment” to H.R. 6, the so-called 21st Century Cures legislation. Among other changes, this latest version of the bill would authorize significant new civil monetary penalties for fraud under a contract, grant, or other agreement through which the Department of Health and Human Services (HHS) provides funding. This latest version of the bill is scheduled to go before the House Rules Committee for approval this week, which is the next step before the bill can proceed to a floor vote by the full House. 
 
We have attached a full redline of the proposed changes for your review and summarize certain key provisions below.
 
Under current law, civil monetary penalties are available for a range of specified misconduct, such as making or causing to be made a false or fraudulent claim to a federal healthcare program, providing remuneration to a government healthcare program beneficiary to influence their selection of provider, or knowingly retaining an overpayment by Medicare or Medicaid. This bill would add the following to the list of actions for which penalties are available under the CMP statute:

  • Knowingly presenting or causing to be presented a false or fraudulent “specified claim” under an HHS contract or grant (up to US$10,000 per claim)
  • Knowingly making, using, or causing to be made or used a false statement, omission, or misrepresentation of material fact in a document required to be submitted to receive or retain funds under an HHS contract or grant (up to US$50,000 per false statement)
  • Knowingly making, using, or causing to be made or used a false record or statement that is material to a false or fraudulent “specified claim” (up to US$50,000 per false record or statement)
  • Knowingly making, using, or causing to be made or used a false record or statement material to an “obligation” to pay or transmit funds or property owed to HHS with respect to an HHS grant or contract (up to US$50,000 per false record or statement)
  • Knowingly concealing or knowingly and improperly avoiding or decreasing an “obligation” to pay or transmit funds or property owed to HHS with respect to an HHS grant or contract (up to US$10,000 per day that person conceals, avoids, decreases)
  • Failing to grant timely access to HHS OIG upon reasonable request for audits or to carry out other statutory functions in matters involving an HHS grant or contract (up to US$15,000 per day that access is not granted)

In addition to the specified money penalties, the bill would authorize the government to impose an “assessment” for all but the last of the specified actions above, which would be imposed “in lieu of damages” sustained by the federal or state government. Depending on the nature of the violation, a person who violates one of the provisions above would be required to pay an assessment of:

  • three times the amount claimed, in cases that involve a “specified claim”
  • three times the amount of HHS funds or property at issue, in cases involving receiving or retaining or failing to pay or transmit funds or property under an HHS grant or contract

The legislative language does not make clear what it means for persons to be subject to these assessments “in lieu of” damages. Note in addition that the bill would authorize the federal government to credit some or all of the specified money penalties and/or assessments to the HHS OIG as reimbursement for the costs of conducting investigations and audits with respect to the misconduct described above.
 
The bill also would authorize HHS to exclude a person who violates any of the new CMP provisions from participation in federal healthcare programs, and to direct state agencies to exclude the person from participation in state healthcare programs. 
 
Finally, note that the proposed bill would define a number of key terms broadly. Most notably:

  • A “specified claim” would be defined to mean “any application, request, or demand under a grant, contract, or other agreement for money or property” that is “presented or caused to be presented to an officer, employee, or agent” of HHS or a specified state agency, or that is “made to a contractor, grantee, or any other recipient if the money or property is to be spent or used on the Department’s behalf or to advance a Department program or interest,” and HHS either provides or reimburses the contractor/recipient for the funds requested or demanded. (The definition does, however, exclude “claims” as defined in the current CMP statute, which covers applications for payment for items or services under a federal healthcare program.)
  • An “obligation” would be defined to mean “an established duty, whether or not fixed, arising from an express or implied contractual, grantor-grantee, or licensor-licensee relationship, for a fee-based or similar relationship, from statute or regulation, or from the retention of any overpayment.”
  • “Material” would be defined to mean “having a natural tendency to influence, or be capable of influencing, the payment or receipt of money or property.”

However, these definitions would apply only to the proposed new CMP provisions and not to existing provisions of the CMP statute or other federal statutes.