Practice Management Alert

Question: A consultant told us that a healthcare provider can’t face false claims liability for failing to detect accidental overpayments. Is that true?

Wyoming Subscriber

Answer: The truth is that keeping overpayments is a false claim if you knew or should have known the circumstances creating the problem. The legal catch phrase there, of course, is “should have known.”

The way the FCA [False Claims Act] operates, the level of “knowledge” you must have regarding an overpayment means that you were something more than merely negligent in retaining the funds. But drawing the precise line between being merely negligent in retaining funds (which does not result in FCA liability) — and being reckless or deliberately ignorant (which does create FCA liability) — is a difficult one to do.

Example: Suppose a provider submits a batch of claims and receives substantial payment for them, but the provider doesn’t have audit or compliance procedures to detect overpayments. In that case, the government will likely claim the provider is being reckless if it failed to return an overpayment — even if the provider was ‘totally unaware’ of receiving it.

On the other hand, say a hospital with compliance procedures in place receives several hundred thousand dollars each month in federal healthcare payments. And despite the hospital’s best efforts, it fails to detect an overpayment that came to less than one percent of the revenue. Under these circumstances, the hospital would have a very good FCA defense that even if it were negligent in failing to identify the overpayment, it was not reckless or deliberately ignorant — so no FCA liability should be imposed.

Caution: If you believe that the “attorney or coder or consultant told me it was OK” provides a solid defense, you could be in for trouble. The reality is that as the provider, it’s the doctor’s practice and he sends the bill and is responsible for it. But a provider that can show he attempted to comply could defeat an allegation of criminal intent in a government prosecution.

Obtain this in good faith: The government is going to have a very hard time proving criminal intent if you have a written opinion from an attorney saying that what you’re doing isn’t a legal violation. This is called good faith reliance upon the advice of counsel. And a good faith effort in that regard means you consult an attorney who specializes in the particular area for advice before implementing a practice.

Caveats: Good faith reliance on the advice of an attorney only works in gray areas, however. For example, it wouldn’t work if something is obviously illegal like accepting or paying $50 per Medicare referral.

What about opinions provided by accountants and consultants who aren’t attorneys? Because you are relying on the attorney’s expertise in applying the law to facts and reaching a conclusion, relying upon a legal opinion from an accountant and/or a consultant is not the same.