Healthcare Fraud and Abuse in a Tougher Enforcement Environment - PowerPoint PPT Presentation

Healthcare Fraud and Abuse in a Tougher Enforcement Environment presents Lessons Learned From Recent DOJ/HHS Fraud Investigations, presents L L d F R t DOJ/HHS F d I ti ti Prosecutions and Settlements A Live 90-Minute Teleconference/Webinar with Interactive Q&A Today's panel features: Michael W. Paddock, Partner, Crowell & Moring , Washington, D.C. Robert C. Threlkeld, Partner, Morris Manning & Martin , Atlanta Michael A. Dowell, Partner, Hinshaw & Culbertson , Los Angeles Thursday, April 8, 2010 The conference begins at: 1 pm Eastern p 12 pm Central 11 am Mountain 10 am Pacific You can access the audio portion of the conference on the telephone or by using your computer's speakers. Please refer to the dial in/ log in instructions emailed to registrations. CLICK ON EACH FILE IN THE LEFT HAND COLUMN TO SEE INDIVIDUAL PRESENTATIONS. If no column is present: click Bookmarks or Pages on the left side of the window. If no icons are present: Click View , select Navigational Panels , and chose either Bookmarks or Pages . If you need assistance or to register for the audio portion, please call Strafford customer service at 800-926-7926 ext. 10

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Healthcare Fraud & Abuse In A Tougher Enforcement Environment: g Lessons Learned From Recent DOJ/HHS Fraud Investigations, Prosecutions and Settlements Strafford Publications, Inc. Teleconference April 8, 2010 Michael W. Paddock, Esq. Crowell & Moring LLP 1001 Pennsylvania Avenue NW 1001 Pennsylvania Avenue NW Washington DC 20004 (202) 624-2519 mpaddock@crowell.com

Impact of Fraud Enforcement and Recovery Act of 2009 (“FERA”) on Potential Liability  FERA significantly amended the False Claims Act, 31 U.S.C. §3729 et seq. § q  Expanded definition of “claim” – Now includes claims made to contractors “if the money or y property is to be spent or used on the Government’s behalf or to advance a Government program or interest…”  Expanded traditional 31 U S C §3729(a)(1) liability  Expanded traditional, 31 U.S.C. §3729(a)(1) liability – “Presentment” no longer required  Together: resolves any doubt that claims to Medicaid Together: resolves any doubt that claims to Medicaid contractors and FHCP managed care organizations are subject to FCA 2

Impact of Fraud Enforcement and Recovery Act of 2009 on Potential Liability  Expanded traditional, 31 U.S.C. §3729(a)(2) liability – Expanded liability to use of false records or statements “material” to a false or fraudulent claim… as opposed to use of false records or f l f d l l i d f f l d statements “to get” a false or fraudulent claim “paid or approved.”  Reverses Allison Engine Co. v. U.S. ex rel. Sanders , 128 S.Ct. 2123 (June 7, 2008) (FCA defendant must intend for the government to pay claim). ) ( g p y )  “Material” now means “having a natural tendency to influence, or be capable of influencing, the payment or receipt of money or property.” 31 U.S.C. §3729(b)(4).   New definition of “material” may also reverse wealth of case decisions New definition of material may also reverse wealth of case decisions imputing “materiality” requirement to all FCA counts – Some prior courts: government or relator must prove that the false record or statement was material that the government relied on it and that such or statement was material, that the government relied on it, and that such reliance directly and proximately caused government to make a (payment) decision that it would not have made had it known of the falsity. 3

Impact of Fraud Enforcement and Recovery Act of 2009 on Potential Liability  Significant expansion of “reverse false claims” provision  Old reverse false claim provision 31 U S C §3729(a)(7)  Old reverse false claim provision, 31 U.S.C. §3729(a)(7) – “Any person who… knowingly makes, uses, or caused to be made or used, a false record or statement to conceal, avoid, or decrease an obligation to pay or transmit money or property to the bli ti t t it t t th Government….”  New reverse false claim provision, 31 U.S.C. §3729(a)(1)(G) – “Any person who… knowingly makes, uses, or causes 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 knowingly p y y p p y g y conceals or knowingly and improperly avoids or decreases an obligation to pay or transmit money or property to the Government…” (emphases added). 4

31 U.S.C. §3729(a)(1)(G)’s Third Actionable Offense  “… knowingly and improperly avoids or decreases an obligation to pay or transmit money or property to the obligation to pay or transmit money or property to the Government.” – Expansion: actionable without use of record or statement p – Expansion: actionable without falsity – Expansion: actionable without actus reus 5

31 U.S.C. §3729(a)(1)(G)’s Third Actionable Offense, cont.  31 U.S.C. §3729(a)(1)(G) includes key defined and undefined terms undefined terms  “Obligation” 31 U.S.C. §3729(b)(3) – an established duty, whether or not fixed, arising from an “an established duty whether or not fixed arising from an express or implied contractual, grantor-grantee, or licensor- licensee relationship, from a fee-based or similar relationship, from statute or regulation, or from the retention l ti hi f t t t l ti f th t ti of any overpayment…” (emphases added).  “Established duty… arising from” Established duty… arising from  “Overpayment” 6

What Was An “Obligation” Under Old (a)(7)?  “Obligation” was an operative term under (a)(7), but defined only by the courts, e.g. : – U.S. ex rel. Prawer v. Verrill & Dana , 946 F.Supp. 87 (D. Me. 1996) ( ‘obligation’ does not include potential liabilities, only current liabilities) – U.S. v. Q Int’l Courier, Inc., 121 F.3d 770 (8 th Cir. 1997) h ( ‘obligation’ does not include penalties due to undeclared violations of laws/regulations, or instances where administrative or prosecutorial discretion could interfere or where selection of various applicable discretion could interfere, or where selection of various applicable penalties and sanctions has not been made) – American Textile Mfrs. Inst. v. The Limited, Inc. , 190 F.3d 729 (6 th Cir. 1999) ( ‘obligation’ does include acknowledgement of 729 (6 Cir. 1999) ( obligation does include acknowledgement of indebtedness, court judgment, administrative judgment, contractual duty… but not “contingent” obligations, i.e. , those “that will arise only after the exercise of discretion by government actors”) 7

What Is An “Obligation” / “Established Duty” Under New (a)(1)(G)?  Consistent with previous, (a)(7) jurisprudence?  “Obligation” now defined by statute as an “established duty  Obligation now defined by statute as an established duty… arising from” any one of eight prescribed sources: – Express contractual relationship – Implied contractual relationship – Grantor-grantee relationship – Licensor-licensee relationship Li li l ti hi – Fee-based or similar relationship – Statute Statute – Regulation – Retention of overpayment 8

Obligations and Established Duties…?  Contractual relationships: – Enrollment agreement (CMS Form 855)? – CCAs and CIAs  Statutes: – 42 U.S.C. §1320a-7b(a)(3)? 42 U S C §1320a 7b(a)(3)? – 42 U.S.C. §1395nn(g)(2)? (requires refunds, but only to individuals) – 18 U.S.C. §§669, 1347?  Regulations: – 42 C.F.R. §411.353(d) (requires refunds of “all collected amounts”)  When does (can?) an “established duty” to pay the Government “arise When does (can?) an established duty to pay the Government arise from” a mere retention of an overpayment? – Equitable theories of recovery? 9

New “Obligation” / “Established Duty”  H.R. 3590: “Patient Protection and Affordable Care Act”, §6402, “Enhanced Medicare and Medicaid Program Integrity Provisions” (March 23 2010) (March 23, 2010)  “(d) REPORTING AND RETURNING OVERPAYMENTS.— – (1) IN GENERAL.-- If a person has received an overpayment, the person shall —  (A) report and return the overpayment to the Secretary, the State, an intermediary, a carrier, or a contractor, as appropriate, at the correct address, and  (B) notify the Secretary, the State, intermediary, carrier, or contractor to whom the overpayment was returned in writing of the reason for the overpayment. – (2) DEADLINE FOR REPORTING AND RETURNING OVERPAYMENTS (2) DEADLINE FOR REPORTING AND RETURNING OVERPAYMENTS.—An A overpayment must be reported and returned under paragraph (1) by the later of---  (A) The date which is 60 days after the date on which the overpayment was identified ; or  (B) The date any corresponding cost report is due, if applicable. – (3) ENFORCEMENT.--Any overpayment retained by a person after the deadline for reporting and returning the overpayment under paragraph (2) is an obligation (as defined in section 3729(b)(3) of title 31 of the United States Code) for purposes of section 3729 of such title…” (emphases added). 10