Repayment Delay Fuels Whistleblower Settlement

On October 13, 2017, the United States Department of Justice (DOJ) revealed that First Coast Cardiovascular Institute, P.A. (FCCI) entered into a Settlement Agreement with the federal government and the State of Florida requiring FCCI to pay nearly $450,000 to settle claims that it violated the False Claims Act. The federal government (via relator Douglas Malie) alleged that FCCI knowingly delayed repayment of more than $175,000 in overpayments owed to Medicare, Medicaid, TRICARE and the Department of Veterans Affairs. The relator, FCCI’s former Executive Director, will receive approximately $90,000 of the settlement proceeds.

Though the settlement is not the first of its kind, providers should take note of the following:

1. Beware the 60-Day Rule. The DOJ press release and the related Settlement Agreement focus on FCCI’s failure to return overpayments within 60 days of identification, as required by Section 1128J(d)(2) of the Social Security Act. According to the Settlement Agreement, FCCI allegedly allowed the accrual of overpayments beginning in 2001. FCCI became aware of these overpayments no later than June 2016, and it failed to return the overpayments within 60 days. In the DOJ press release, the Acting U.S. Attorney stated, “This settlement should send a message that [HHS] will aggressively pursue those who seek to unjustly profit from our nation’s federal health care programs.”
2. Focus on Process Control. The specific basis of the underlying complaint is that FCCI accrued credit balances on overpayments owed to federal health care programs. The complaint acknowledges that such overpayments can occur for a variety of reasons, “even innocently – for example, where a patient has two different insurances, sometimes both are billed as a primary insurer, or where an insurer is inadvertently billed twice for the same procedure, and so forth.” The issue in this case was that FCCI failed to issue credits on its balance sheets and to refund overpayments as part of its normal accounts payable process, even after being made aware of the oversight. The case serves as a reminder that providers should focus on basic process control as a means to ensure regulatory compliance.
3. Heed Employees’ Warnings. The relator in this case was an experienced health care administrator with nearly 25 years in the industry. The complaint demonstrates that the relator began raising concerns regarding FCCI’s accounts payable process just one month after becoming employed by FCCI. According to the complaint, the relator’s warnings continued for a period of over one year, culminating in the relator’s provision of the Centers for Medicare and Medicaid Services (CMS) final rule regarding overpayments to his supervisors. Providers should take such warnings seriously and respond promptly to mitigate risk of litigation.
4. Email Carefully. The complaint includes detailed excerpts from numerous emails between the relator and his supervisors and serves as a reminder that providers and their staff should take care when emailing about sensitive issues. Though not an issue in this case, providers and their counsel should also ensure that communications are labeled “privileged and confidential” when appropriate.
5. Consider Financial Impact. According to the complaint, FCCI had liabilities in excess of $9 million, including overpayment credit balances. It is unclear whether the government accounted for FCCI’s financial position when determining the $450,000 settlement amount. Providers should consider the financial impact of failing to investigate the concerns of potential relators, particularly regarding the potential retention of overpayments.  

The full text of the October 13, 2017 press release is available here.