How To Write A Government Contracting Law Report

Transcription

1 AN A.S. PRATT PUBLICATION OCTOBER 2015 VOL. 1 NO. 7 PRATT S GOVERNMENT CONTRACTING LAW REPORT EDITOR S NOTE: CYBERSECURITY FOR CONTRACTORS Victoria Prussen Spears ACTIONS FORESHADOW UNIFORM CYBERSECURITY REGULATIONS FOR FEDERAL CONTRACTORS Mary Beth Bosco OFFERED FOR SALE HEADED FOR THE SCRAP HEAP? PROPOSED DFARS RULE MAY CHANGE REQUIREMENTS FOR COMMERCIAL ITEM DETERMINATIONS AND PRICE REASONABLENESS EVALUATIONS Nicole J. Owren-Wiest IN SPLIT VICTORY FOR CONTRACTORS AND WHISTLEBLOWERS, SUPREME COURT REJECTS EXPANSIVE STATUTE OF LIMITATIONS THEORY FOR FALSE CLAIMS ACT CASES AND CLARIFIES APPLICATION OF ACT S FIRST-TO- FILE BAR Emily Crandall Harlan and Brian T. Kelly IN THE COURTS Steven A. Meyerowitz LEGISLATIVE AND REGULATORY DEVELOPMENTS Victoria Prussen Spears IMPORTANT DEVELOPMENTS ON OVERPAYMENT LIABILITY UNDER THE FALSE CLAIMS ACT Wade Pearson Miller, Kimyatta E. McClary, Dawnmarie R. Matlock, and Paula M. Stannard

2 PRATT S GOVERNMENT CONTRACTING LAW REPORT VOLUME 1 NUMBER 7 October 2015 Editor s Note: Cybersecurity for Contractors Victoria Prussen Spears 213 Actions Foreshadow Uniform Cybersecurity Regulations for Federal Contractors Mary Beth Bosco 216 Offered for Sale Headed for the Scrap Heap? Proposed DFARS Rule May Change Requirements for Commercial Item Determinations and Price Reasonableness Evaluations Nicole J. Owren-Wiest 221 Important Developments on Overpayment Liability under the False Claims Act Wade Pearson Miller, Kimyatta E. McClary, Dawnmarie R. Matlock, and Paula M. Stannard 225 In Split Victory for Contractors and Whistleblowers, Supreme Court Rejects Expansive Statute of Limitations Theory for False Claims Act Cases and Clarifies Application of Act s First-to-File Bar Emily Crandall Harlan and Brian T. Kelly 228 In the Courts Steven A. Meyerowitz 233 Legislative and Regulatory Developments Victoria Prussen Spears 243

3 QUESTIONS ABOUT THIS PUBLICATION? For questions about the Editorial Content appearing in these volumes or reprint permission, please call: Heidi A. Litman at For assistance with replacement pages, shipments, billing or other customer service matters, please call: Customer Services Department at (800) Outside the United States and Canada, please call (518) Fax Number (518) Customer Service Web site For information on other Matthew Bender publications, please call Your account manager or (800) Outside the United States and Canada, please call (518) Library of Congress Card Number: ISBN: (print) Cite this publication as: [author name], [article title], [vol. no.] PRATT S GOVERNMENT CONTRACTING LAW REPORT [page number] (LexisNexis A.S. Pratt); Michelle E. Litteken, GAO Holds NASA Exceeded Its Discretion in Protest of FSS Task Order, 1 PRATT S GOVERNMENT CONTRACTING LAW REPORT 30 (LexisNexis A.S. Pratt) Because the section you are citing may be revised in a later release, you may wish to photocopy or print out the section for convenient future reference. This publication is sold with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional services. If legal advice or other expert assistance is required, the services of a competent professional should be sought. LexisNexis and the Knowledge Burst logo are registered trademarks of Reed Elsevier Properties Inc., used under license. A.S. Pratt is a registered trademark of Reed Elsevier Properties SA, used under license. Copyright 2015 Reed Elsevier Properties SA, used under license by Matthew Bender & Company, Inc. All Rights Reserved. No copyright is claimed by LexisNexis, Matthew Bender & Company, Inc., or Reed Elsevier Properties SA, in the text of statutes, regulations, and excerpts from court opinions quoted within this work. Permission to copy material may be licensed for a fee from the Copyright Clearance Center, 222 Rosewood Drive, Danvers, Mass , telephone (978) An A.S. Pratt Publication Editorial Offices 630 Central Ave., New Providence, NJ (908) Mission St., San Francisco, CA (415) (2015 Pub.4938)

4 Editor-in-Chief, Editor, & Board of Editors EDITOR-IN-CHIEF STEVEN A. MEYEROWITZ President, Meyerowitz Communications Inc. EDITOR VICTORIA PRUSSEN SPEARS Senior Vice President, Meyerowitz Communications Inc. BOARD OF EDITORS MARY BETH BOSCO Partner, Holland & Knight LLP DARWIN A. HINDMAN III Shareholder, Baker, Donelson, Bearman, Caldwell & Berkowitz, PC J. ANDREW HOWARD Partner, Alston & Bird LLP KYLE R. JEFCOAT Counsel, Latham & Watkins LLP JOHN E. JENSEN Partner, Pillsbury Winthrop Shaw Pittman LLP DISMAS LOCARIA Partner, Venable LLP MARCIA G. MADSEN Partner, Mayer Brown LLP KEVIN P. MULLEN Partner, Jenner & Block VINCENT J. NAPOLEON Partner, Nixon Peabody LLP STUART W. TURNER Counsel, Arnold & Porter LLP WALTER A.I. WILSON Senior Partner, Polsinelli PC PRATT S GOVERNMENT CONTRACTING LAW REPORT is published twelve times a year by Matthew Bender & Company, Inc. Copyright 2015 Reed Elsevier Properties SA., used under license by Matthew Bender & Company, Inc. All rights reserved. No part of this journal may be reproduced in any form by microfilm, xerography, or otherwise or iii

5 incorporated into any information retrieval system without the written permission of the copyright owner. For permission to photocopy or use material electronically from Pratt s Government Contracting Law Report, please access or contact the Copyright Clearance Center, Inc. (CCC), 222 Rosewood Drive, Danvers, MA 01923, CCC is a not-for-profit organization that provides licenses and registration for a variety of users. For subscription information and customer service, call Direct any editorial inquires and send any material for publication to Steven A. Meyerowitz, Editor-in-Chief, Meyerowitz Communications Inc., Grand Central Parkway Suite 18R, Floral Park, New York 11005, [email protected], Material for publication is welcomed articles, decisions, or other items of interest to government contractors, attorneys and law firms, in-house counsel, government lawyers, and senior business executives. This publication is designed to be accurate and authoritative, but neither the publisher nor the authors are rendering legal, accounting, or other professional services in this publication. If legal or other expert advice is desired, retain the services of an appropriate professional. The articles and columns reflect only the present considerations and views of the authors and do not necessarily reflect those of the firms or organizations with which they are affiliated, any of the former or present clients of the authors or their firms or organizations, or the editors or publisher. POSTMASTER: Send address changes to Pratt s Government Contracting Law Report, LexisNexis Matthew Bender, 630 Central Avenue, New Providence, NJ iv

6 IMPORTANT DEVELOPMENTS ON OVERPAYMENT LIABILITY UNDER THE FALSE CLAIMS ACT Important Developments on Overpayment Liability under the False Claims Act By Wade Pearson Miller, Kimyatta E. McClary, Dawnmarie R. Matlock, and Paula M. Stannard * The authors of this article discuss a recent U.S. District Court for the Southern District of New York judicial opinion interpreting the Affordable Care Act s 60-day overpayment rule, applicable to Medicare and Medicaid payments to health care providers. The decision is the first to address what it means to identify an overpayment and to define the bounds of the 60-day rule under the False Claims Act. The potential implications of the decision are significant for compliance purposes. The U.S. District Court for the Southern District of New York recently issued the first judicial opinion interpreting the Affordable Care Act s 60-day overpayment rule, which requires providers to report and return an overpayment of Medicare or Medicaid funds to the appropriate government body within 60 days after the date on which the overpayment was identified. 1 Under the False Claims Act ( FCA ), any provider that knowingly fails to report and return an overpayment within the 60-day time period is in violation of the FCA s reverse false claims act provision and may be liable for a penalty between $5,500 to $11,000 for each false claim. The decision is the first to address what it means to identify an overpayment and to define the bounds of the 60-day rule under the FCA. The potential implications of the decision are significant for compliance purposes. BACKGROUND The case involves several New York hospitals, all operated by Continuum Health Partners, Inc., and allegations that each facility submitted erroneous claims for payment to Medicaid due to a glitch in Healthfirst, Inc. s billing software. Specifically, the relator and the government claim that Continuum violated the FCA by failing to report and repay overpayments within a 60-day period of first identifying them. The relator, a former Continuum employee, identified potential overpayments in February 2011 during an audit of claims * Wade Pearson Miller and Dawnmarie R. Matlock are partners, Paula M. Stannard is counsel, and Kimyatta E. McClary is a senior associate at Alston & Bird LLP. They may be contacted at [email protected], [email protected], [email protected], and [email protected], respectively. 1 U.S. ex rel. Kane v. Healthfirst, Inc. et al., No. 11 CIV 2325, 2015 U.S. Dist. LEXIS (S.D.N.Y. Aug. 3, 2015); 42 U.S.C. 1320a.7k(d)(1) (3). 225

7 GOVERNMENT CONTRACTING LAW REPORT for potential billing errors that may have resulted from the software glitch. Within days of submitting his report on the potential overpayments, the relator was terminated. He subsequently filed the qui tam action against Continuum in which the government later intervened. The relator and the government claimed that Continuum identified the overpayments, within the meaning of the FCA, in February 2011 when the relator initially provided the report to Continuum managers and executives. They claimed this put Continuum on notice of the overpayments, triggering Continuum s 60-day obligation to report and return any funds owed to the government. Continuum contended there was no obligation under the rule until it determined each overpayment with certainty. Continuum further argued that over the course of the next two years, it went through the process of investigating, identifying and returning the overpayments in the relator s report, approximately only half of which were, in fact, overpayments. THE DISTRICT COURT DECISION In an order denying Continuum s motion to dismiss, the court ruled that identification of overpayments, which triggers the 60-day repayment obligation, occurs when a company is put on notice of potential overpayments, rejecting Continuum s argument that identified means when the overpayment is known with certainty. While Continuum urged the court to consider the practicality of such a standard for providers, particularly given that it often takes longer than 60 days from notice to reconcile potential overpayments, the court suggested a reliance on 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. The decision in the Continuum case essentially interprets the 60-day rule in the same way the Centers for Medicare & Medicaid Services ( CMS ) interpreted the statute in its proposed rule on overpayments for Part C providers. The decision, thus, provides support for CMS to move forward with issuance of the final overpayment rule for Part C providers as proposed. PSA SETTLEMENT A day after the Continuum decision, the U.S. Attorney s Office for the Northern District of Georgia announced a $6.88 million settlement reached with Pediatric Services of America Healthcare and its affiliates ( PSA ) to resolve claims that PSA failed to report and return overpayments. This is the first settlement under the FCA involving a provider s failure to investigate credit balances on its books to determine whether they resulted from overpayments. 226

8 IMPORTANT DEVELOPMENTS ON OVERPAYMENT LIABILITY UNDER THE FALSE CLAIMS ACT In a statement released by the Department of Justice, U.S. Attorney John Horn stated, Participants in federal health care programs are required to actively investigate whether they have received overpayments and, if so, promptly return the overpayments. This settlement is the first of its kind and reflects the serious obligations of health care providers to be responsible stewards of public health funds. Collaborating on the investigation, U.S. Attorney for the Southern District of Georgia Edward J. Tarver added, The failure to report and return a known overpayment is a serious offense that ultimately drives up the costs of health care for all of us. This U.S. Attorney s Office and its federal and state law enforcement partners will continue to work together to ensure that health care providers, who receive millions of tax dollars every year, play by the rules and do not waste critical program funds. CONCLUSION As these recent decisions indicate, the failure to report and return overpayments is and will continue to be a focus area of enforcement for the government. In order to maintain proactive compliance, it is vitally important that providers diligently and promptly conduct investigations related to any potential overpayments. Notably, federal enforcement agencies appear to view credit balances attributable to federal health care program patients for any reason, including the Medicare Secondary Payer rule and duplicate payments, as indicative of overpayments. Therefore, it would be prudent for providers to review their procedures for timely identification and investigation of such credit balances and the prompt refunding of any balances that result from such overpayments. Moreover, while the Southern District of New York has provided context for what it means to identify an overpayment, it is not entirely clear when a provider is deemed on notice of an overpayment. Accordingly, providers should thoroughly document the measures they take to audit for overpayments and act with reasonable diligence to promptly refund any overpayments that are identified. 227