Annals of Health Law
READY OR NOT
The DOJ has historically taken the position that the “reverse false claim”
or “overpayments” provision applies to the knowing retention of payments
from federal programs when the recipient had not rightfully earned them.200
With the passage of FERA, Congress endorsed the DOJ’s purported
application of the FCA and validated a “reverse” false claims theory201 by
introducing new statutory language governing the provider’s “obligation,”
or legal responsibilities with respect to overpayments.202 FCA liability
arises when a person “knowingly conceals or knowingly and improperly
avoids or decreases an obligation to pay or transmit money or property to
the Government.”203 The pre-FERA FCA statute already established that
“knowledge” includes not only actual knowledge, but also acting in
“deliberate ignorance” or in “reckless disregard of the truth or falsity” of
information in a claim or record.204 Rather, regardless of whether
overpayments were retained conscientiously, they are nonetheless illegally
retained and the recipient of the funds is within the FCA’s reach.
Moreover, PPACA further expanded the scope of the obligation to return
an overpayment by introducing an aggressive time limit in which providers
must disclose and return funds. Specifically, under PPACA, any Medicare
funds received or retained to which a healthcare provider is not entitled
must be reported and refunded within sixty days from the date the
overpayment is “identified,”205 or the provider risks liability under the
FCA.206 In the context of VBP programs, if a hospital receives an incentive
payment, and subsequently realizes that the data upon which the incentive
payment was based was false or otherwise did not accurately represent the
provider’s performance scores, the incentive payment would amount to an
overpayment and the sixty-day clock for disclosure and return would begin
200. See id.
201. See id. The Senate Report accompanying FERA specifies that it was a DOJ
recommendation that Congress make it a violation of the FCA “once an overpayment is
knowingly and improperly retained, without notice to the Government about the
overpayment.” Accordingly, as the Senate Report stresses, “any knowing and improper
retention” of an overpayment would be actionable, if the overpayment is retained “beyond
the final submission of payment as required by statute or regulation.” Id.
202. See 31 U.S. C. § 3729(a)( 1)(G). For a discussion, see generally Hilgers & Welch,
supra note 77; ALSTON & BIRD LLP, OVERPAYMENT LIABILITY UNDER THE “REVERSE FALSE
CLAIMS” ACT (2010), available at http://www.alston.com/files/Publication/e2478934-2075-
203. See 31 U.S. C. § 3729(a)( 1)(G).
204. 31 U.S. C. § 3729(b)( 1)( A) as amended by FERA.
205. 42 U.S. C. § 1320a-7k(d)( 2) (providing that disclosure and refunding is due by the
date any corresponding cost report is due (if applicable)). The report must include a written
explanation of the reason why the overpayment occurred. Id. This provision went into effect
immediately upon enactment on March 23, 2010. 42 U.S. C. § 1320a-7k(d).