Expansion of the False Claims Act under the Affordable Care Act

May 20, 2013
Sarah Q. Wirskye

It is imperative that procedures are implemented or modified to identify overpayments at your medical practice to avoid a False Claims Act violation.

While the Affordable Care Act is not generally characterized as healthcare fraud legislation, there are some aspects of the Act that certainly affect healthcare fraud. Nowhere is this more evident than the ACA’s provisions that make the failure to return an overpayment a basis for a False Claims Act violation.

The Act requires anyone who has received a Medicare or Medicaid overpayment to report and return it and to notify the government for the reason of the overpayment. Generally speaking, the overpayment must be reported and returned within 60 days. The deadline for reporting and returning payments is 60 days from the date on which the overpayment was identified or the date any corresponding cost report is due, if applicable. Notably, the False Claims Act definition of knowledge applies to this provision - so a provider cannot avoid having actual knowledge, and therefore liability, if they act in reckless disregard or deliberate ignorance of the overpayment.

Significantly, the failure to do so within the deadline could be a basis for a False Claims Act violation. Penalties under the False Claims Act could include civil penalties between $5,500 and $11,000 per violation, plus treble (or triple) damages. Any person who fails to report and return the overpayment may also be found liable under the Civil Monetary Penalties Law and could be excluded from participation in federal healthcare programs.

The potential liability under the False Claims Act is particularly important because the ACA is the basis of most whistleblower actions. This change in the law coupled with the 2011 amendments to the False Claims Act statute make it easier than ever for a whistleblower to file a False Claims Act violation.

It is imperative that procedures are implemented or modified to identify overpayments. This may include payments for non-covered services or payments in excess of allowable amounts. This may also include situations where there may be a duplicate payment in error or receipt of payment when another payor had the primary responsibility of the payment.

This change in the law is just another example of increased healthcare legislation attempting to target healthcare fraud and abuse. Notably, the ACA appropriated over $350 million for fighting healthcare fraud. Therefore, it is more important than ever to ensure that you are compliant with all applicable laws and regulations.