We hear a lot about potential liability under the False Claims Act (FCA) for the failure to repay overpayments within 60 days of discovery. Focus on the 60-day rule has taken 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 continued right to any benefit payment.  A violation of the statutes requires showing the charged individual has 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 repay a known overpayment.  This type of situation is clearly subject to the FCA 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.  This 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 a potential 5 year imprisonment plus potential criminal penalties.  Conspiracies to violate the Federal Criminal Claims Statute impose double penalties on participants.  Failing to disclose and repay known overpayments could form the basis of a violation of this statute 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.

Self-disclosure is a strong consideration whenever overpayments are discovered.  The self-disclosure programs offered by the OIG and Centers for Medicare Medicaid Services can greatly reduce exposure when a provider discovers overpayments.  In advance of using either protocol, an internal investigation should be conducted to determine exactly what occurred.  This will help identify the nature and extent of exposure and will also help develop the case for disclosure.  Federal investigation standards as described in the Yates Memo will often guide the investigation process and should be considered when structuring the investigation process.  The Yates Memo requires an investigation to consider potential individual wrongdoing.  Failure to investigate and disclose potential individual wrongdoing can have a negative impact on governmental cooperation.

It is very possible an issue that is the subject of a potential self-disclosure is relatively new to the compliance department.  This does not necessarily mean the issue is new to others within the organization.  Something that looks like a simple overpayment may have been intentionally overlooked by an individual in the management chain, billing department, or provider staff.  This potential makes the investigation much more difficult than it might originally appear.  Federal standards now require the investigator to look for individuals who may have had earlier knowledge of an impropriety.  Failure to identify individual wrongdoing increases risk to the organization and can result in the failure of the Federal government to cooperate in the settlement of a case.
Source: Blue Ink Blog