The relator’s allegations stemmed from a computer glitch that resulted in the submission of improper claims starting in 2009. The relator, a then-employee of the MCO defendant, was asked to ascertain which claims had been improperly billed. On February 4, 2011, the relator sent an email to management listing 900 claims he had identified, along with a statement that further analysis would be needed to confirm his findings. Four days later, the relator was terminated. He filed a sealed qui tam on April 5, 2011 – 61 days after he sent his email identifying the 900 claims – asserting reverse false claims liability and a claim for retaliation under the FCA. Upon intervening as to the relator’s reverse false claims allegations, the United States alleged that the defendants “did nothing with the set of claims [the relator] pointed out as potentially overpaid and paid back hundreds of claims only after the Government’s [Civil Investigation Demand].”
On August 3, 2015, the judge denied the defendants’ motion to dismiss, holding that “the date on which the overpayment was identified” occurs when a health care provider is “put on notice of possible overpayments” – in this case, the date of the relator’s February 4, 2011, email. The parties then moved to stay discovery and entered into settlement negotiations, which resulted in a $2.95 million settlement to resolve allegations that the defendants knowingly retained over $844,000 in overpayments made by Medicaid in violation of the federal and New York False Claims Acts.
Ober|Kaler’s Comments: Implications for the Future
On a going-forward basis, it seems unlikely that the initial decision in Kane or this settlement ultimately will have much influence on the 60-day requirement. CMS’s final rule on the 60-day requirement, which became effective on March 14, 2016, clarifies that an overpayment is considered to be identified when a provider or supplier 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, mere notification of the possibility of an overpayment does not start the 60-day clock ticking on the requirement to make a repayment, as the initial decision in Kane suggests. Instead, such notification triggers an obligation to exercise reasonable diligence. This clarification allays some of the initial concerns that arose in the wake of the Kane court’s August 2015 opinion.