By Jed Morrison 

The recently enacted health care reform law, the Patient Protection and Affordable Care Act (“PPACA”), further strengthens the government’s ability to prosecute providers under the federal civil False Claims Act.  The new law changes the meaning of “public disclosure” under the law, and also explicitly defines “overpayment” for purposes of false claims liability.  Both provisions are likely to lead to further False Claims Act (“FCA”) litigation and liability for healthcare providers. 

The “Public Disclosure” amendment is a significant change to the 147-year-old law.  The FCA allows “whistleblowers” with knowledge of false claims to bring a civil action on behalf of the government, and share in any recovery.  Historically, however, whistleblowers could not bring an FCA claim unless they were both the “original source” of the information, and such information had not previously been subject to public disclosure.  The amendments, however, limit “public disclosure” to disclosures made in a federal administrative or court setting or the news media only.  Disclosures in state court or state administrative proceedings no longer qualify.  Thus, fewer FCA cases will be subject to dismissal based upon the public disclosure exception.

In addition, the law allows a whistleblower lawsuit to continue if the whistleblower can prove that he is an “original source” of the information, notwithstanding the fact that the information has been subject to public disclosure.  In other words, if the qui tam relator can show additional information or details that were not part of the prior public disclosure, then the whistleblower lawsuit need not be dismissed.  While the FCA amendments thus resolve what has been a split in federal circuit courts, they continue the expansion of the FCA and give new incentives and ammunition to private whistleblowers and plaintiffs' attorneys to bring federal FCA lawsuits against healthcare providers.

Finally, the law requires providers to report and refund any “overpayment” within 60 days of the date in which the overpayment was identified.  In a prior e-Alert, we reported on the 2009 amendments to the FCA by the Fraud Enforcement and Recovery Act (FERA), which changed the definition of “obligation” under the FCA to include overpayments improperly retained.  The PPACA Amendments turn an overpayment into an “obligation” – hence a false claim – 60 days after discovery.  Failure to refund such an overpayment turns what perhaps started as an innocent and inadvertent overpayment into a false claim, subjecting the provider to treble damages and the $11,000 per claim monetary penalties under the FCA.

If you have any questions, please contact Jed Morrison at 210.978.7780 or jmorrison@jw.com, or any member of the Jackson Walker Healthcare Section.