What’s Your Repayment Obligation Under the FCA?

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  • September 1, 2012
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After the 2012 AAPC National Conference, a question was presented to AAPC’s Legal Advisory Board:
Q: I recall a question and discussion at AAPC’s National Conference in Las Vegas about the coder/consultant who is aware of an overpayment. It seemed to me that your guidance could be interpreted to mean the individual had no obligation to recommend repayment of the overpayment (and should even avoid making such a suggestion in the audit report to his or her client). The highlighted language below might suggest otherwise:

Michael D. Miscoe, Esq., CPC, CASCC, CUC, CCPC, CPCO, CHCC, responds:
I understand your point and am very familiar with the statutory provisions and the case law interpreting and applying this provision. This is commonly referred to as the reverse False Claims Act (FCA).
You must consider who is a proper party for FCA analysis in the example we dealt with. The coder is not a recipient of money from the government relative to services performed and reported by the provider; therefore, he or she has no direct obligation to repay an overpayment received by the doctor. For that same reason, a coder knowing of an overpayment—as long as he or she doesn’t collaborate to actively conceal the existence of an overpayment—has no obligation to contact the government if the provider refuses to refund. Even in the case where the overpayment is clear and the provider refuses to refund, a coder’s obligation and liability ends with identifying the overpayment to the provider. It is not a coder’s obligation or duty to advise the provider of his or her legal responsibilities under the FCA. The provider is charged with such knowledge. A “heads up” or suggestion by the coder to contact health law counsel would not be inappropriate, but it is not required. To suggest a coder has an obligation to report such conduct to the government would be to eliminate the purpose of the incentive provisions of the qui tam statute.
Returning to the question, “What should a coder do in a situation where he or she believes an overpayment has been received—for example, as a result of an internal audit?” At national conference, I suggested simply reporting the findings to the provider. I also recommended that the provider could either have the concern evaluated independently if there was some disagreement about the internal audit results. In such a case, involvement of health law counsel is a good idea. Either way, if the overpayment is real, the provider will likely need assistance with the disclosure. If the provider refuses to refund, that decision and the resulting consequences rest solely on the provider.
An offshoot question was also discussed where the conduct arose out of claims to a purely commercial carrier. Usually, there is no legal duty to disclose, as similar to the duty for federal plans under the FCA. I suggested at the conference that it’s a good idea to disclose and refund any known overpayment. The coder’s obligation, however, remains the same. Report the findings to the provider or compliance officer. A provider who demonstrates a willingness to refund where appropriate is not only likely to be perceived more favorably by the carrier, but the fact that the provider willingly disclosed such overpayments when they became known may become useful evidence in the face of some future fraud allegation. Plus, it is simply the right thing to do.
Q: You seem to be relying on the “conceal” part of the statute. I’m more concerned about the “knowingly and improperly avoids or decreases an obligation to pay” language. 
I also don’t understand the importance of there being a “legitimate disagreement” between the parties. Are you suggesting a “legitimate disagreement” forms some sort of FCA reporting requirement threshold?
What if the facts are established and changed around a bit? Let’s say the coder works for a large group practice. The coder reports the overpayment to the compliance director. Does the compliance director’s liability also end when he or she identifies the overpayment to the group practice’s provider or board of directors?
To answer your three questions:

  1. Knowing and improper avoidance is connected to an obligation to repay. A coder would have no such obligation to repay; only the provider would.
  2. With respect to circumstances when there is a disagreement: I have been involved in a number of cases when a coder, biller, or other staff member raised an issue indicating that payment was inappropriate. Investigation revealed that the staff member either misunderstood the situation, misapplied the relevant rule, or applied a principle or standard that did not apply. In such a case, the provider has a legitimate basis for not disclosing the alleged error and refunding.
  3. In response to your hypothetical question, the answer is, “Yes.” The compliance officer or director has no obligation to personally repay the money that was inappropriately received. The compliance director also cannot be charged with inappropriately retaining the money because he or she is not likely in control of the money. If the compliance director had such authority and responsibility and failed to disclose, then there might be personal liability. More commonly, the provider or group would get tagged with FCA liability where it was discovered the provider or group knew of the overpayment, and knowingly and improperly retained the money.

Michael D. Miscoe, Esq., CPC, CASCC, CUC, CCPC, CPCO, CHCC, has a bachelor of science degree from the U.S. Military Academy, a juris doctorate degree from Concord Law School, is president of Practice Masters, Inc., and founding partner of Miscoe Health Law, LLC. He is a past member of AAPC’s National Advisory Board and a current member of the Legal Advisory Board. He is admitted to the Bar in California and to practice law before the U.S. District Courts in the Southern District of California and the Western District of Pennsylvania. He has nearly 20 years of experience in health care coding and over 15 years as a coding and compliance expert testifying in civil and criminal cases. He is a national speaker and has been published in numerous national publications.

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