In a joint press release issued August 25, United States Attorney for the Southern District of New York Preet Bharara and New York Attorney General Eric T. Schneiderman announced a $2.95 million False Claims Act settlement with New York’s Mount Sanai Health System to resolve allegations that the hospital system knowingly retained over $800,000 in Medicaid overpayments for over two years.  The hospital system was required by law to return the overpayments within 60 days.  This is the first settlement involving this law, which was included in the Affordable Care Act and created False Claims Act liability for health care providers that identify overpayments and do not return the money within 60 days.

HHS-OIG Special Agent in Charge Scott J. Lambert commented: “Any threat to the financial health of Medicaid is a threat to the vulnerable citizens who depend upon it for critical services.  Today’s settlement should send a message to providers that this behavior will not be tolerated, and we will pursue justice in these cases.”

The case was originally brought under the qui tam provisions of the False Claims Act by relator Robert Kane, a former technical director at Continuum Health Partners, one of the Mount Sinai entities named as defendants in the case.  Kane alleged that he alerted Continuum to a software glitch that caused erroneous billing of 444 claims to Medicaid. After Mr. Kane compiled a list these erroneously billed claims and sought to convince Continuum to return the money to Medicare, he was fired.

Mr. Kane filed his case on behalf of the government and the government then exercised its right under the False Claims Act and intervened in the case.  The primary claim in the case, which is alleged when an entity unlawfully retains money that is owed to the government, is known as a “reverse false claim.”  Judge Edgardo Ramos’ denial of the Defendant’s motion to dismiss was the first such decision under this Affordable Care Act “60 day repayment” provision and has been interpreted by legal experts as “the most significant case interpretation” of the “reverse false claims provision” of the federal False Claims Act.  Brian Feldman, Health Care Overpayments and Reverse False Claims, New York Law Journal, September 8, 2015.

Of the $2.95 million settlement, $1.7 million will go to the State of New York and the federal government will receive $1.2 million.  Mr. Kane, the whistleblower, will receive a relator’s share of $354,000 out of the government’s recovery.

If you have questions about the False Claims Act or would like to report fraud, please contact Frohsin, Barger & Walthall.