On August 4, the U.S. Department of Justice (DOJ) announced that it had reached a “first of its kind” Settlement Agreement with Pediatric Services of America Healthcare and its affiliates (PSA) to resolve certain allegations that PSA violated the federal False Claims Act (FCA) by failing to investigate and return overpayments as required by Section 6402 of the Affordable Care Act. 

PSA owns and operates home health agencies that provide nursing services to infirm children. The DOJ alleged that PSA knowingly (1) failed to disclose and return overpayments that it received from the Medicare, Medicaid and TRICARE programs; (2) submitted claims under the Georgia Pediatric Program that were not reimbursable due to PSA’s failure to properly document supervisory visits; and (3) submitted claims to various state and federal healthcare programs that overstated the length of time care was provided, resulting in overpayments to PSA. The allegations against PSA were initially filed by two former employees under the FCA’s qui tam (whistleblower) provisions, which generally permit individuals to initiate actions on behalf of the United States alleging violations of the FCA. 

As part of the Settlement Agreement, PSA agreed to pay approximately $6.9 million to resolve the allegations, of which approximately $4.2 million will be paid to the United States and approximately $2.7 million will be shared by the states participating in the action. As qui tam relators, the two former employees are entitled to share in a portion of the recovery paid to the United States. The Settlement Agreement is neither an admission of liability by PSA nor a concession by the United States that the allegations against PSA were unfounded. 

In addition to the Settlement Agreement, PSA agreed to enter into a Corporate Integrity Agreement (CIA) with the Office of Inspector General of the U.S. Department of Health and Human Services. Under the CIA, PSA will be required to, among other things, develop, implement and monitor policies and procedures to prevent the conduct that gave rise to the allegations of violating the FCA.