WHISTLE BLOWING AND STATUTES OF LIMITATION

The False Claims Act requires that a whistleblower file a False Claims Act within six years (where the government has not intervened).

The War Time Suspension of Limitations Act (SLA) suspends or tolls such statutes of limitation for claims involving fraud against the United States when the Country is at war or Congress has authorized the use of military force.

The Supreme Court has agreed to consider whether this suspension and tolling of the statute of limitations under the SLA applies to claims of civil fraud brought by private whistleblowers, and whether it is triggered without a formal declaration of war.

PROVIDER 60 DAY RULE FCA CLAIMS

Several years ago, the Patient Protection and Affordable Care Act (PPACA) created a 60 day rule requiring providers who have received an overpayment to return the funds, and report the reason for the overpayment by the later of 60 days from the date of overpayment identification, or the date any related cost report is due.  In 2012, CMS issued proposed regulations for this rule which have yet to be finalized.

In this case, erroneous claims were submitted to New York Medicaid due to a computer coding issue.  The issue of overpayment was first raised in September 2010 where the State Controller of New York identified a small number of claims as potential overpayments.  The hospitals involved conducted an internal investigation, and discovered in February 2011 a coding error existed, and that more claims may be affected.  The hospitals investigated the error further, and following this further investigation, the internal auditor involved was terminated by the hospitals.  The hospitals began to make repayments to New York Medicaid, but did not complete the repayment until 2013.  The auditor then filed a FCA action, and, as indicated above, the United States and New York have intervened.

The issues raised here are interesting because no final rule has been promulgated which defines the date an overpayment is “identified”.  The court may decide what the definition is, or could dismiss the action since there is not adequate definition.  As an example of the problem involved, is that the whistleblowers pre-firing email to hospital administrators confirmed the general scope of the computer error and resulting incorrect claims, but did not attach a specific calculation or dollar value.

Can “identification” occur under the 60-day rule if the dollar amount is unknown?

The next question will be what effect the size and complexity of the overpayment has on the 60 day time period?  This may be a credibility issue as much as a fixed rule.

The court will need to determine whether full FCA damages (treble damages plus $11,000 per claim and daily money penalties are applicable) or will there be a mitigation of this based upon the credibility of the initial investigation, and the reasonableness of the speed of investigation and response.  Stay tuned.

PAYOR PROVIDER DISPUTE SOLUTIONS

When a provider is dealing with an insurance company or state or federal claim payors, it is often a shock to the provider to discover the lack of adequate mediation, arbitration, or litigation resources in dealing with provider-payor claims.  In most cases, a payor will simply withhold any claims it has from the current claim payment stream which can result in severe cash flow consequences for the provider.  When this occurs, providers often seek advice as to what remedies they have so that cash flow can be restored while the validity of the overpayment claims of the payor are reviewed and tested.  Currently, there are few resources and courts are reluctant to issue restraining orders or injunctions against payors requiring that they stop offsets or payment withholding while the validity of their claims are tested.

I believe that providers and payors would both be served better by providing, in their contracts, a methodology for dealing with such instances and providing for mediation or other review of overpayment claims and offsets in some other form rather than civil courts.  This would provide an opportunity for a non-litigation based objective fact finding based review of samples of claims that are claimed overpayments, and perhaps provide a more efficient resolution.

This newsletter is edited by Paul Wallace of Jones • Wallace, LLC, a member of the American Bar Association Healthcare Law Section and the American Health Lawyers Association who has been representing physicians and healthcare practices for over 25 years.  Mr. Wallace assists physicians in health practices in contract items, federal legal compliance, creation of practice entities, estate and wealth planning and similar issues.  Please feel free to call if you have any questions on this newsletter or legal matters at (812) 402-1600 or pwallace@joneswallace.com.