Known Overpayments can Implicate Criminal Statutes
We hear a lot about potential liability under the False Claims Act for the failure to repay overpayments within 60 days after discovery. Focus on the 60 day rule has taken some of the focus away from the potential for criminal charges for retaining known overpayments. Section 1128B(a)(3) of the Social Security Act (42 U.S.C. § 1320a-7b(a)(3)) makes it a crime to conceal or fail to disclose any occurrence that affects the initial or conued right to any benefit payment. A violations of the statutes requires a showing that the charged individual have knowledge of the event affecting the right to the applicable benefit. A violation of the statute is a felony and is punishable by a maximum of five years in prison and a fine of $250,000 for individuals or $500,000 for corporations.
The Office of Inspector General has applied this statute, even in cases where the overpayment occurs innocently but a party fails to repayment an overpayment after receiving knowledge. This type of situation is clearly subject to the False Claims Act where repayment is not made within 60 days. Criminal responsibility is also a potential; particularly when a decision is made not to repay after learning about the existence of an overpayment. Criminal exposure is present for the entity as well as the individuals who are responsible for failing to make repayment of a known overpayment. There is an element of ambiguity regarding application of the criminal component, but this has not stopped prosecutors from asserting the statute in the past.
The Federal Criminal False Claims Statute (18 U.S.C. § 287) can also apply to impose potential criminal liability. That statute applies potential criminal liability on any person who “makes or presents” any claim to an agency of the U.S. Government “knowing such claim to be false, fictitious, or fraudulent.” This statute can lead to potential 5 years imprisonment plus potential criminal penalties. Conspiracies to violate the Federal Criminal Claims Statute impose double penealties on participants. Failing to disclose and repay known overpayments could form the basis of a violation of this statutes as well.
Other criminal statutes could potentially apply to the failure to repay known overpayments. Mention of these above statutes is not intended to be an exhaustive list of potential exposure.
Source: Health Law Blog