Page 10 - White-Collar Crime

S10 | MONDAY, SEPTEMBER 28, 2015 | White-Collar Crime
| NYLJ.COM

Overpayments
out that under FERA, an obligation is “an claims they ile, are likely to receive overpay- care providers is to not only self-disclose the

established duty, whether or not ixed, aris- ments at some times. Health care providers possible overpayment where the government
ing . from the retention of an overpayment.” routinely became aware of potential overpay- is unaware of it, but also to clarify at the
« Continued from page S3
Id. at *11 (citing 31 U.S.C. §3729(b)(3)), and ments, for example as a result of self-audits. outset who is taking on the responsibility of
Kane iled an FCA case on April 5, 2011— thus, FCA liability attaches where “there is an Kane holds that the identification of such investigating the scope of the overpayments,
day 60 after he provided his spreadsheet. established duty to pay money to the govern- “potential” overpayments triggers the obliga- and what a “reasonable” investigation will
The United States and New York intervened ment, even if the precise amount due has yet tion to repay within 60-days, creating a pow- entail. For example, where a provider discov-
in June 2014. The government alleged that to be determined.” Id. at *12. Ramos further erful disincentive for providers to engage in ers the possible overpayment it can com-
by failing to further investigate the potential noted that Continuum’s argument would create such self-audits. As a result of Kane, on day 61,
overpayments identiied by Kane, thereby an incentive for providers to not investigate the provider is now at risk of an FCA lawsuit.
mence investigating, and in parallel notify the
state or CMS of the possible overpayment,
delaying repayment for over two years, Con- potential overpayments. Id. at *14.
Nor does the decision’s reliance on the making it clear that investigation is neces-
tinuum improperly withheld monies owed to Ramos further rejected Continuum’s argu- good faith of federal prosecutors provide any sary to determine whether there is indeed an
New York past the 60-day period prescribed ment that applying the 60-day rule to merely real comfort. Providers cannot not rely on overpayment. Providers may even state in the
by the ACA.
potential overpayments would make the rule prosecutorial discretion to know when it is letter that, because they dispute whether any
Continuum moved to dismiss, arguing that unworkable. In particular, Continuum noted “OK” to not follow a court’s interpretation of
because Kane’s analysis was merely prelimi- that the amount of time it would take to inves- the law. Moreover, even if a provider could repayment is owed, they believe the 60-day
nary, no overpayment had been “identiied” tigate overpayments would ordinarily exceed rely on every government attorney’s discre- clock is not yet running. So long as the inves-
for purposes of the ACA. Thus the 60-day clock the 60-day rule, thereby exposing providers to tion not to bring weak or unfair FCA cases, tigation is being conducted in good faith, it
will be more dificult for the government or a
for reporting and returning the overpayment FCA liability even when they investigate the a relator can still bring such an action. After relator to show that the provider concealed
did not begin running at the time of Kane’s potential overpayments in good faith. Ramos all, private relators, and their lawyers, have or improperly avoided repayment.
email. Continuum argued that the 60-day rule rejected this argument, stating that “prosecu- powerful inancial incentives to bring even Such steps, although targeted to reducing
could not reasonably be applied to situations torial discretion would counsel against the weak False Claims Act cases. And notably,
where an overpayment had not been deinitively institution of enforcement actions aimed at in Kane, Kane iled his complaint on April FCA risk, do not eliminate FCA risk entirely. For
ascertained because of the time it would take well-intentioned healthcare providers working 5, 2011—the 60th day after his Feb. 4, 2011 that, CMS would have to provide guidance in
a provider to properly investigate claims of with reasonable haste to address erroneous email. At that point, Kane simply could not terms of when the overpayment is “identiied,”
alleged overpayments. Accordingly, Continuum overpayments.” Id. at *13. In contrast, Ramos have known whether Continuum was attempt- and that guidance would have to address the
argued, because it had no “obligation” to repay noted that Continuum never conveyed Kane’s ing to ascertain in good faith the amount of real world issues presented when a “possible”
overpayment is noted by an audit, a CID, or
New York for claims until it determined with report to the Comptroller’s ofice, and found the overpayment at issue. But he iled a case
certainty that those claims had been overpaid, “implausible [Continuum’s] suggestion that anyway. Indeed, given the irst-to-ile rule in a relator. Although CMS has issued proposed
it was not liable under the FCA.
they delayed their statutorily-required duty FCA litigation (limiting private recovery to guidance on when an overpayment is “identi-
because they were waiting for a report from the irst plaintiff to bring a qui tam action), ied” with respect to certain Medicare programs
Ruling
their terminated employee.” Id. at *18.
under Kane, one can expect relators to rou- (after the provider has an opportunity to con-
tinely bring such actions on the 60th day after duct “reasonable” diligence that “might require
Ramos rules that Continuum’s repayment potential overpayments are identiied, even an investigation conducted in good faith and in
obligation had been triggered by awareness ‘Kane’ Creates New FCA Risks
if providers are acting in good faith.
a timely manner”) no such guidance has been
of potential overpayments. Judge Ramos Notably, Kane is harder on providers than In short, Kane creates substantial FCA risks
provided in the Medicaid context. Further, CMS
squarely rejected Continuum’s arguments, the rules governing when states need to reim- to providers who become aware of potential announced this year that its long anticipated
holding that “the sixty day clock begins ticking burse the federal government as a result of overpayments, even if these providers are inal guidance for the Medicare and Medicaid
when a provider is put on notice of a potential overpayments. Speciically, when a state dis- acting in good faith. Providers, may however, 60 day rule has now been delayed one year.
overpayment, rather than the moment when an covers an overpayment to a provider under take steps to mitigate their FCA risk.
Since each state handles its interactions with
overpayment is conclusively ascertained.” Id. Medicaid, it has one year to reimburse the Most notably, while under Kane the “obliga- providers differently, more certainty with fewer
at *11. Ramos’s opinion turned on the meaning federal government its pro rata share of the tion” to repay arises on day 61 after a possible subjective factors should be incorporated into
of the word “identiied” in the context of the overpayment. Moreover, that one-year period overpayment is discovered, the mere “obliga-
60-day repayment rule. According to Ramos, is triggered only when a speciic overpayment tion” is insuficient to trigger FCA liability. Rath- the deinition of “identiication” of an overpay-
ment for purposes of triggering the 60-day rule
Continuum’s argument was that “identiied” amount is identiied. 42 C.F.R. §433.316. Thus, er, to trigger FCA liability a provider must know- in the Medicaid context. Otherwise, providers
means “ascertained with certainty.” In the in imposing FCA liability even where the pro- ingly conceal or knowingly and improperly avoid will ind themselves at the mercy of the whims
government’s view, a party has “identiied” vider is aware merely of an unspeciied poten- an obligation to pay. In Kane, the Comptroller of each individual local Medicaid program, pros-
an overpayment when it “has determined, or tial overpayment, Kane is placing a burden knew of the potential overpayment already, ecutor, and FCA relator.
should have determined through the exercise on health care providers that is signiicantly but Ramos relied heavily on the fact that Con-
of reasonable diligence, that [it] has received higher than the burden placed on states which tinuum had failed to notify the Comptroller of •••
an overpayment.” Id. at *8.
discover such potential overpayments.
Kane’s analysis, terminated Kane, and allegedly ••••••••••••••••••••••••••
Ramos ruled that “identiied” does not mean Kane creates signiicant FCA risks for health stopped its investigation entirely.
1. Some of the entities involved in this matter are
“ascertained with certainty.” Ramos pointed
care providers, who, given the sheer volume of
This suggests that one option for health
Manatt clients, though Manatt has not represented any
clients in this matter.

Sentencing
Sentencing Guidelines (Preliminary) (April 9, 2015) (Pre-
crimes will give courts additional latitude match the offense level to the defendant’s liminary Amendments), §2B1.1, cmt. (n.3(A)(ii)).
within the sentencing guideline regime, in culpability.
15. ABA Report, supra note 1, at 1.
appropriate cases, to lessen the historically 16. Testimony of James E. Felman on behalf of the
« Continued from page S5
harsh impact of the guideline for economic •••••••••••••• •••••••••••••• •
American Bar Association before the U.S. Sentencing Commission for the Hearing on Proposed Amendments
As the Task Force argued, the amendment’s crime. Courts should continue to heed the to the Federal Sentencing Guidelines Regarding Econom-
narrowing the sophisticated means enhance- advisory nature of the guidelines, particu- 1. American Bar Association Criminal Justice Section, A Report on Behalf of the American Bar Association ic Crimes (March 12, 2015) (Felman Testimony), at 14-15.
ment is an appropriate step toward better larly in cases involving economic crime, Criminal Justice Section Task Force on the Reform of 17. Id.
Federal Sentencing for Economic Crimes (Nov. 10, 2014) 18. Letter from Jonathan J. Wroblewski, Director, Of-
linking the defendant’s culpability to his or where the combination of the loss table and (ABA Report), at i.
ice of Policy and Legislation, U.S. Department of Justice to the Honorable Patti B. Saris, Chair, U.S. Sentencing
her offense level, and an improvement to the speciic offense characteristics sometimes 2. Id. at 1-6.
Commission (March 9, 2015) (Wroblewski Letter), at 28.
existing guidelines.
leads to double- or triple-counting of certain 3. Id.
4. Id.
19. Id. at 29.
at i. at 1-5.
factors, causing the defendant’s offense level 5. Id.
20. Preliminary Amendments, supra note 14, at 1.
Implications
to exceed his or her culpability. As they seek 6. Id.
§2B1.1(b)(2).
21. 2014 Guidelines Manual, supra note 13, §2B1.1(b)(2).
at i.
to fashion appropriate sentences, we expect 7. Id.
22. Preliminary Amendments, supra note 14,
Although the Task Force report and other additional judges, in appropriate cases, to 8. Id.
§2B1.1(b)(2).
at i, 6.
calls for reform in sentencing policy for eco- rely on the Task Force report or its methodol- 9. Id.
23. Id.
10. Tr. of Sentencing Hearing, United States v. Riv-
ernider, No. 3:10CR222 (D. Conn. Dec. 18, 2013), at 200:4-7, 24. Id., §2B1.1, cmt. (n.4(F)).
nomic crimes have not yet led the USSC to ogy in sentencing offenders covered by the 212:5-20, 216:17-18.
25. Id.
26. Felman Testimony, supra note 16, at 15.
signiicantly amend the economic crimes economic crimes guideline. Over time, we 11. Id. at 206:10-13, 212:5-14.
27. Id.
guideline, this is an area to continue to watch expect the USSC to adopt additional reforms 12. Tr. of Sentencing Hearing, United States v. Litvak, 28. 2014 Guidelines Manual, supra note 13, §2B1.1(b)(10).
closely as the guidelines continue to evolve proposed in the Task Force report, including No. 3:13cr19 (D. Conn. July 23, 2014), at 136:12-137:2.
29. Preliminary Amendments, supra note 14, §2B1.1(b)(10).
in coming years. In the meantime, the 2015 a slimming-down of the loss table to include 13. U.S. Sentencing Commission, Guidelines Manual, §2B1.1 (Nov. 1, 2014) (2014 Guidelines Manual), cmt. (n.3(A)). 30. Felman Testimony, supra note 16, at 15.
amendments to the guideline for economic
fewer tiers and other amendments to better
14. U.S. Sentencing Commission, Amendments to the
31. Wroblewski Letter, supra note 18, at 33.
32. Id.