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White-Collar Crime | MONDAY, SEPTEMBER 28, 2015 | S3

successful, relators can keep a portion (typi- tion to pay or transmit money or property or implied contractual, grantor-grantee, or September 2010, auditors from the New York

cally one-third) of the recovery. The FCA’s to the Government, or knowingly conceals or licensor-licensee relationship, from a fee- State Comptroller’s ofice raised the potential
remedies include the potential for treble knowingly and improperly avoids or decreas- based or similar relationship, from statute overpayments with Continuum and the par-
damages, signiicant penalties (as of today, es an obligation to pay or transmit money or regulation, or from the retention of an over- ties determined that these claims were caused
ranging from $5,500 to $11,000 per claim), or property to the Government.” 31 U.S.C. payment.” 31 U.S.C. §3729(b)(3). Moreover, by a third-party’s software glitch. The glitch
and the possibility of debarment from fed- §3729(a)(1)(G) (emphasis added). Pursuant the term “knowingly” includes “deliberate was ixed in December 2010.
eral programs. Unsurprisingly, the FCA has to this change, a party is liable under the FCA
ignorance” or “reckless disregard.” 31 U.S.C. According to the Complaint, Continuum
become a powerful, and much feared, weapon §3729(b)(1)(A).
management asked Robert Kane, the relator,
in the government’s arsenal to combat fraud, In 2010, as part of the Patient Protection to identify claims potentially implicated by
especially in the health care industry.
and Affordable Care Act (ACA), Congress add- the glitch. On Feb. 4, 2011, Kane wrote an

In 1986, Congress amended the FCA and Judge Ramos squarely rejected ed a provision requiring health care provid- email to management attaching a spreadsheet
added the so-called “reverse false claims” pro- Continuum’s arguments, hold- ers who receive an “overpayment” to “report of approximately 900 claims—totaling over $1
vision. This provision imposes liability on a and return” the overpayment within 60 days. million—that had potentially been affected by
party that “knowingly makes, uses, or causes ing that “the sixty day clock Monies retained beyond 60 days become an the glitch There is no dispute that the list was
to be made or used, a false record or state- “obligation” owed to the government, and over-inclusive—about half the claims listed
ment to conceal, avoid, or decrease an obliga- begins ticking when a pro- subject to the reverse false claims provision were never paid. Kane was terminated four
tion to pay or transmit money or property vider is put on notice of a of the FCA. 42 U.S.C. §1320a-7k(d)(1)-(3). Thus, days after sending this email.
to the Government.” 31 U.S.C. §3729(a)(7). providers who knowingly conceal or improp- The Complaint further alleges that Contin-
potential overpayment, rather
But this provision only imposed liability on erly retain overpayments beyond 60 days may uum “did nothing further” to investigate the
a party who afirmatively “made or used a than the moment when an be liable under the False Claims Act.
potential overpayments, and never brought
false record or statement” to avoid paying overpayment is conclusively Kane’s analysis to the attention of the Comp-
money to the government.
‘Kane’
troller’s ofice. Instead, beginning in April
In 2009, Congress passed the Fraud ascertained.”
2011, Continuum began reimbursing New York
Enforcement and Recovery Act (FERA), Kane illustrates just how dificult it can be state for overpayments speciically identiied
which, among other things, strengthened if they “knowingly conceal” or “knowingly and for providers to comply with these provisions. by the Comptroller. 2015 WL 4619686 at *17.
the reverse false claim provision by impos- improperly” avoid or decrease an obligation The origins of the alleged overpayments in Continuum did not complete reimbursing New
ing liability on a party who “knowingly makes, to pay the government. Further, FERA deined Kane are quite innocent. Three Continuum York until March 2013, after the U.S. Attorney

uses, or causes to be made or used, a false the term “obligation” as “an established duty, hospitals were paid for claims to Medicaid issued a Civil Investigative Demand regarding
record or statement material to an obliga-
whether or not ixed, arising from an express
that should never have been submitted. In
the overpayments. » Page S10

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