New Suit Challenges CMS On When Overpayments Are “Identified”

A new lawsuit filed against CMS challenges the agency’s position on when a healthcare entity will be deemed to have “identified” an overpayment – an issue that has significant implications for “reverse” false claims liability under the FCA.  See UnitedHealthcare Ins. Co. v. Burwell, No. 1:16-cv-00157 (D.D.C. Compl. Filed Jan. 29, 2016).  Section 6402 of the Affordable Care Act imposes on entities an affirmative duty to return overpayments within sixty days of the overpayment being “identified.”  Failure to fulfill this obligation can subject an entity to FCA liability.  As we previously reported here, in 2014, CMS issued a Final Rule applicable to Medicare Advantage plans and Part D sponsors, in which it defines “identified” as meaning the time when the entity “has determined, or should have determined through the exercise of reasonable diligence,” that it received an overpayment.  The plaintiffs charge that the Final Rule is arbitrary and capricious because, they contend, the term “identified” in the statute applies only to obligations that “a plan affirmatively knows it has received,” not to obligations that the plan does not know about, but that the government claims it should have known about (i.e., constructive knowledge).  A ruling on the merits of this argument could have significant implications on the scope of reverse claims liability under the FCA.  How this lawsuit affects the timing of CMS’s anticipated publication of the overpayments rule affecting Medicare Part A and Part B, which had been expected this month, remains to be seen.  We will continue to monitor these developments.

A copy of the complaint against CMS can be found here.