Update: Court Denies Motion to Dismiss Federal Case and Identifies When 60-day Clock for Repayment of Overpayments Begins Ticking

On August 3, 2015, Judge D.J. Ramos of the Southern District of New York denied Healthfirst’s motion to dismiss the United States’ action under the False Claims Act (FCA) and the related state action.  Healthfirst contended in its motion that the government failed to sufficiently plead the case.  Notably, in denying this motion, the court interpreted the meaning of identifying overpayments to be when providers are “put on notice of potential overpayments and not when providers have identified the overpayments with certainty.  This is a significant ruling.

The court further rejected other arguments made by Healthfirst, such as its assertion that the “failure to act quickly enough cannot equate to avoidance under the FCA and also that Healthfirst’s obligation was to New York’s Medicaid program and not the Federal government. Lastly, Healthfirst’s arguments relating to the state claims were also rejected for the same reasons as the federal claims and because the New York False Claims Act can, in fact, be applied retroactively, despite Healthfirst’s arguments to the contrary.

The court’s decisions here brings Healthfirst one-step closer to paying for its failure to report Medicaid overpayments within the ACA’s 60-day timeline and affirms the notion that the government will pursue the 60-day overpayment rule even when providers have only been put on notice of potential overpayments.  The court’s decision is available here.

The prior blog post discussing this case is available here.

Eric Dyer assisted in writing this blog post.  For more information about False Claims Act matters, as well as Medicaid self disclosures, contact David Ross who served as Acting New York State Medicaid Inspector General under Governors Pataki and Spitzer, as well as General Counsel, Deputy Medicaid Inspector General, and Director of Audits and Investigations for the Office of the Medicaid Inspector General.  He can be reached at (518) 462-5601 or via e-mail at dross@oalaw.com.