The False Claims Act (FCA) is usually used to punish people and corporations that submit false claims for money to which they are not entitled. However, the FCA can also be used against those who fail to pay money they owe the government—a so-called “reverse” false claim. The reverse false claim provisions of the FCA are particularly powerful in the healthcare context, where companies must return overpayments within 60 days of their identification.

Reverse False Claims and the 60-Day Rule

In order to prove a reverse false claim, a whistleblower must demonstrate:

  1. A person or company knowingly made, used, or caused to be made or used, a false record or statement material to an obligation to pay or transmit money or property to the government, or
  2. A person or company knowingly concealed, or knowingly and improperly avoided or decreased, an obligation to pay or transmit money or property to the government.

The Centers for Medicare & Medicaid Services (CMS) bolstered the FCA by establishing the “60-day rule.” Under this rule, healthcare providers receiving funds from government healthcare programs must use reasonable diligence to determine the fact and amount of an overpayment. A healthcare provider must return any overpayment within 60 days of identifying the overpayment (or by the date on which any corresponding cost report is due).

After these 60 days have expired, the overpayment becomes an “obligation” under the FCA, meaning the person or company can be held liable for treble damages and tens of thousands of dollars in penalties for each overpayment.

Identifying Overpayments

An overpayment is any amount of money a healthcare provider receives from the government to which the provider is not entitled. Common examples of overpayments include:

  • Duplicate or mistaken For instance, in 2016, a hospital group paid $2.95 million to resolve claims that it failed to return overpayments caused by billing errors.
  • Payments for services that should have been paid for by another person or entity. For example, in 2017, a healthcare provider paid nearly $450,000 to resolve allegations that it retained overpayments from Medicare, Medicaid, TRICARE, and the Department of Veterans Affairs. This provider had allegedly billed the government for care that was paid for in part by private insurers.
  • Payments for erroneous or non-reimbursable expenses included in cost reports. For instance, in 2017, a home healthcare company paid $1 million to resolve allegations that it submitted cost reports that included non-reimbursable travel and entertainment expenses, as well as other non-reimbursable costs.
  • Payments in excess of the allowable amount under Medicare, Medicaid, or another government healthcare program.
  • Payments for medically unnecessary or non-covered services.

Whistleblowers are essential in identifying, reporting, and stopping the fraudulent retention of overpayments. Healthcare providers submit hundreds of thousands of claims for payment to government healthcare programs every day. With this high volume of claims, overpayments are bound to fall through the cracks—either because a healthcare provider made a mistake in submitting the claim or because the provider intended to defraud the government.

No matter the reason for the overpayment, the government is unable to identify every instance in which it has paid too much money for healthcare services. Whistleblowers who are familiar with a healthcare provider’s billing practices can determine which charges were legitimate and which were not. While many whistleblowers are employees (or former employees) of healthcare providers submitting false claims, with inside information about fraud being committed, even non-employee “outsiders” or competitors often are able to use their technical knowledge to identify and report fraud.

Our Team

With more than 30 years of experience, the attorneys on Baron & Budd’s whistleblower representation team have represented dozens of clients in government fraud cases returning over $5.4 billion to federal and state agencies, with whistleblower recovery shares as high as 49%. They are ready to help if you have evidence of reverse false claims or the fraudulent retention of overpayments.

Please call (866) 401-5971 or complete our contact form if you would like more information. For more information, see What You Need to Know About Becoming a Whistleblower. Please understand that contacting us does not mean that you have established an attorney-client relationship with Baron & Budd, P.C.

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