Government Recovers Millions from Hospital System that Allegedly Wrongfully Retained Medicaid Overpayments for Over 60 Days

Recently, the Justice Department announced a first-of-its-kind settlement involving allegations that a health system violated the False Claims Act by retaining Medicaid overpayments for more than 60 days after identifying that overpayments were made. This $2.95 million settlement with Mount Sinai Health System was the first settlement involving the Affordable Care Act provision that created FCA liability for healthcare providers that identify overpayments and do not return them within 60 days.

While the 60-day time limit has been on the books for over seven years, the Justice Department has shown little interest in going after providers who repay identified overpayments after sixty days. Indeed, the case against Mount Sinai is the only qui tam case raising such allegations where the government has filed a notice of intervention.

In this tide-turning case, U.S. ex rel. Kane v. Healthfirst, Inc. et al. (SDNY), the Government alleged in its Complaint-in-intervention that certain New York hospitals failed to refund Medicaid overpayments within 60 days of identifying them. According to the Complaint, beginning in 2009, the New York Department of Health Comptroller’s Office allegedly made an inquiry of Defendants regarding a small number of claims that were erroneously submitted for reimbursement.  As a result of the inquiry, Defendants undertook an internal investigation to determine the reasons for the improper claims and the scope of the problem.  By 2011, Defendants had allegedly identified more than 900 claims erroneously submitted to Medicaid, leading to over $1 million wrongfully paid by Medicaid as a secondary payor.  According to the Government’s Complaint, Defendants allegedly delayed repaying the majority of these claims for more than two years and that repayments were made only after further pressing by the Comptroller’s Office.

Hopefully, this recovery sends a message to healthcare providers that they can no longer sit on improper payments. If they make this wayward decision, Congress has empowered the Government to pay substantial rewards to qui tam relators who step forward and bring a successful action. If the Government is unable or unwilling to move forward with these cases, relators can.

More information for whistleblowers is located at the Nolan Auerbach & White website.