By Zack Buck
The case, which serves as the first and most consequential interpretation of when an overpayment is “identified” for purposes of False Claims Act (FCA) liability, provides a measure of much-needed guidance for attorneys and compliance officers in an area that is rife with confusion. But not too much.
In the opinion, Judge Edgardo Ramos recognizes the difficulty in complying with the so-called “60-day rule,” which requires providers to identify and return overpayments within 60 days or face potential FCA liability. Judge Ramos notes that the rule may impose a stringent and “potentially unworkable” burden on defendants in “certain cases.” He continues in this rather interesting passage:
“The ACA itself contains no language to temper or quality this unforgiving rule; it nowhere requires the Government to grant more leeway or more time to a provider who fails timely to return an overpayment but acts with reasonable diligence in an attempt to do so. However, … prosecutorial discretion would counsel against the institution of enforcement actions aimed at well-intentioned healthcare providers working with reasonable haste to address erroneous overpayments. Such actions would be inconsistent with the spirit of the law and would be unlikely to succeed.”
Judge Ramos seems to be relying on the ability of individual prosecutors to determine which providers are “well-intentioned” and “working with reasonable haste” as opposed to those who are not.
But this chosen regulatory approach—(1) usage of a potentially draconian and “unworkable” rule, (2) the provision of little to no guidance for providers as to what defines which actions are “inconsistent with the spirit of the law,” and (3) increased reliance on prosecutorial discretion—does not provide much solace for the providers who are potential defendants in this regime. Indeed, in the world of health care fraud, prosecutorial discretion does not seem to be an apt substitute for clear legislative and structural guidance—as I’ve argued in published articles here and here. Solely relying on prosecutorial discretion—in an area with few trials, financial and political incentives that push prosecutors to be aggressive in their enforcement, and a widely applicable and devastating law—to ferret out the “good” actors from the “bad” ones, may harm the ultimate legitimacy of the enforcement mechanism by leading to overenforcement of the legal rule. Without clear rules governing its application, to defendants, it appears the rule is both difficult with which to comply and structurally limitless.
And in short, the opinion may be more of the same for defendants already facing jaw-dropping and career-ending liability with cloudy guidance on how to comply with the law—leading some to conclude that such a regime represents a “flawed approach.”