As part of a case we continue to follow, in which the US Department of Justice (DOJ) intervened in a False Claims Act (FCA) suit against Continuum Health Partners and Mount Sinai Health System, the defendant hospital system recently filed a motion to dismiss the DOJ’s complaint-in-intervention. In the motion to dismiss, the hospital system argued that the government failed to state a claim in arguing that the health care providers did not repay alleged overpayments within the 60-day period required by the FCA.

As discussed in a previous Arent Fox Client Alert, 42 U.S.C. § 1320a-7(k)(d) establishes that anyone who receives an overpayment from Medicare or Medicaid and does not report and return the overpayment within 60 days of “identification” is subject to FCA liability. In this rare instance of DOJ intervention on this issue, the government asserted in its complaint-in-intervention that Continuum and Mount Sinai failed to return over $1 million in overpayments, identified by the Comptroller of New York, in the requisite 60-day period.

Continuum and Mount Sinai disputed the government’s allegations in their motion to dismiss, making three main arguments:

  1. The hospital system first argues that the complaint fails to allege that the hospital system had an “obligation” to report or return overpayments at the point in time alleged by the DOJ. Defendants make the argument that both the plain language of the FCA and its associated legislative history differentiate between potentially-identified overpayments and confirmed overpayments. Only when overpayments are confirmed — which the hospital system stresses is a time-consuming, multi-faceted process — does any FCA obligation arise. Accordingly, the hospital system’s obligation was not identified, the hospital system’s duty to report and return overpayments was not triggered, and the 60-day clock for returning overpayments did not begin, as claimed by the DOJ.
  2. The hospital system also argues that the complaint fails to allege that the hospital system knowingly concealed, avoided, or decreased an “obligation.” The hospital system analyzes the plain language definitions of conceal, avoid, and decrease, and makes the argument that the government has failed to provide evidence beyond “an alleged failure to act.”
  3. Finally, the hospital system argues that the complaint fails to allege that the hospital system had an obligation to pay or transmit money to the federal (as opposed to the state) government. As a result, defendants claim the alleged Medicaid overpayments could not create any obligation under the FCA.