We previously reported on the Department of Justice’s (“DOJ’s”) and the New York Attorney General’s pioneering suits against a provider network, based solely on a failure to timely refund overpayments. See U.S. ex rel. Kane v. Continuum Health Partners, Case No. 11-2325 (S.D.N.Y.).

On September 22, 2014, the defendants (“Continuum”) filed motions to dismiss the federal and State of New York False Claims Act suits, arguing that the relator’s internal email to colleagues listing a set of potential overpayments did not trigger an obligation to return “identified” overpayments. Continuum emphasizes that the relator’s preliminary assessment, by the DOJ’s own acknowledgement in its complaint, required “further analysis” to “corroborate” the relator’s suspicions. The focal point of Continuum’s brief is DOJ’s position that “mere notice of a potential but unconfirmed overpayment” is equivalent to “identifying” an overpayment. Continuum marshals arguments sounding in legislative history and statutory construction, but one of its most forceful points is to highlight the practical necessity of allowing providers sufficient time to investigate and confirm any potential overpayments uncovered during internal audits. Indeed, as Continuum observes, the government itself is rarely able to complete its own investigations within the initial sixty day timeframe during which a qui tam suit is held under seal.

Continuum also argues that even if it is deemed to have “identified” overpayments when the relator sent his email, the government has failed to allege that Continuum “concealed,” “avoided,” or “decreased” an obligation. Continuum alleges that these terms imply some affirmative conduct, not simply failing to act (report), and that the plaintiffs have alleged no such conduct.

Continuum also notes that the reverse false claims provision of the federal FCA applies to obligations to pay “the Government,” and Continuum maintains that the statutory treatment of this word indicates a narrow application to the federal government, and not state governments. As such, Continuum contends, its allegedly belated repayments of funds to New York Medicaid cannot create liability.

With regard to the New York False Claims Act, Continuum makes the further argument that its reverse false claims provision was not enacted until March 2013 and should not be applied retroactively. Because the alleged violations occurred two years prior to the provision’s enactment, Continuum contends, they cannot serve as a basis for liability.

Continuum’s motions can be found here and here. Opposition briefs are due on October 22, 2014.