When does the 60-day stop watch start ticking? It all depends on one word

Words matter. That's especially true when it comes to legislation.

A couple months ago we found out just how much even a few words matter in Supreme Court arguments surrounding the Affordable Care Act. Much of that decision hinged on the interpretation of just six words defining how healthcare subsidies operate through "an Exchange established by the State." The high court's interpretation of those six words made a huge difference to approximately 6.4 million people who were receiving subsidies from the federal government.

Sometimes it's not even multiple words that matter. Sometimes it's just one word.

Identified. That's the word that's up for close inspection in a False Claims Act (FCA) case that many providers, payers and health lawyers have been watching intently over the last year. At the beginning of August, they got some answers. Or at least part of an answer.

Kane ex rel. United States et al. v. Healthfirst et al. is one of the first cases to broach the topic of "reverse false claims," a 4-year-old provision of the FCA enacted through the passage of the ACA. Under the law, healthcare providers are required to return an overpayment within 60 days of the date that it is identified. Failure to do so violates the FCA, meaning the government can claim treble damages, plus thousands in fines. This case is particularly important because it's the first of it's kind in which the Department of Justice has elected to intervene.

The case is far from over, but a pivotal moment occurred Aug. 3, when U.S. District Judge Edgardo Ramos denied Healthfirst's motion to dismiss the case, based largely on the interpretaion of the word "identified."

The case revolves around Healthfirst's alleged failure to report and return Medicaid overpayments to the government in a timely manner. These overpayments stem from a glitch in Healthfirst's billing software that led to overpayments to three New York City hospitals owned by Continuum Healthcare LLC, which operated within HealthFirst's managed care program. Healthfirst fixed the glitch in December 2010 after it was approached by the New York State Comptroller's office regarding the potentially inaccurate claims, and Continuum employee Robert Kane was tasked with investigating which claims had been improperly paid.

Months later, Kane, who is named as the whistleblower in this case, sent a spreadsheet to Continuum executives containing 900 potentially improper claims totaling more than $1 million.

Here's where things get a little muddy. Four days after sending the report, Kane was terminated, and, according to government prosecutors, Continuum essentially dove headfirst into a pile of sand. After receiving Kane's report, Continuum reimbursed the Department of Health for five improper claims. Continuum would eventually repay approximately 300 of the affected claims over the next several years, but only after further investigations from the state comptroller, followed by a Civil Investigative Demand from the government.

Which brings us to that one seemingly innocuous word: "Identified." Under the ACA rule, that word signifies the start of the 60-day stopwatch. But identifying exactly what legislatures meant by "identified" became the primary point of contention.

Government prosecutors argued that the stopwatch started on Feb. 4, 2011, the day that Kane sent the spreadsheet of 900 potential improperly paid claims. Defense lawyers countered that those were simply potentially improper claims, and that 60-day countdown shouldn't begin until those overpayments could be "classified with certainty."

Not to be outdone, the court analyzed the definition of that single word nearly to death, even soliciting help from trusty resources like Webster's and the Oxford English Dictionary. Even those dictionary definitions were too loose and fluid. Old versions of the ACA that used the word "known" rather than "identified" were dredged up in order to get a better grasp on Congress' intent, and defense attorneys argued that the 60-day window to return overpayments was an "enormous burden" that was "impossible to meet" anyway. Prosecutors shot back that under the defense's interpretation, the 60-day timeline would merely be a timeline to "cut the check," allowing providers to freely delay the actual investigation. 

In the end, Judge Ramos could not reconcile the "defendant's suggestion that they delayed their statutorily required duty because they were waiting for a report from their terminated employee." In other words, the defense's interpretation of the rule just didn't jive with the intent of the law.

To be fair, the judge's decision not to award the dismissal merely allows the case to move forward. There will be plenty more to come that will offer providers a better interpretation of that 60-day rule, as endless disagreements over the intent or "reckless disregard" exhibited by HealthFirst and Continuum.

However, these initial arguments provided a window into the government's decision to prosecute these types of cases and how willing it is to strap itself to that 60-day timeline. Prosecutors suggested that their decision to intervene in this case is based not on a deadline that was missed by a couple days, but on a wonton disregard for the FCA provision, adding that "well-intentioned healthcare providers working with reasonable haste to address erroneous overpayments" wouldn't face the same kind of legal backlash. Whether the government is being completely honest in that assessment is probably another issue entirely. 

Interpreting the definition and intent of a single word can be a messy process, but the underlying takeaway for payers and providers should be pretty clear cut. Conduct a thorough investigation and return payments in a reasonable time frame--even if it's past that 60-day deadline--and the government will probably look the other way. Bury your head in the sand and shuffle your feet for a couple years, and you'll soon be staring at lengthy legal battle.  - Evan (@HealthPayer)

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