Qualified Nursing Facility Operator Resolves False Claims Case Involving Allegations Company Failed to Report and Refund Overpayments | Bricker & Eckler srl

On June 29, 2021, the Department of Justice (DOJ) ad a settlement with the operator of a qualified nursing facility in California Plum Healthcare Group LLC and the Azalea Holdings LLC dba McKinley Park Care Center (Plum) to resolve allegations that Plum violated the false claims law . The regulation resolves the liability of Plum in a qui tam lawsuit brought by a whistleblower who previously served as regional director of rehabilitation for Plum. In the amended complaint, the whistleblower alleged that a Plum employee knowingly created billing records for services that were not actually provided by inflating the number of minutes of therapy services received by patients in order to bill Medicare and Medicaid at the rate higher “ultra-rehabilitation” payment. The whistleblower alleged that she discovered the fraudulent billing practice and reported her concerns to her superiors and requested a records check to determine the extent of the fraudulent billings.

According to settlement agreement, “[a]fter being informed of the scope of the [overpayments, Plum] did not conduct an adequate investigation. The settlement agreement further states that Plum “performed an audit of the medical records covering a limited period, which did not include the entire period during which the employee created the false billing records” and then “submitted a reimbursement to Medicaid based on less than the full period of misconduct, and without disclosing that the [overpayments] results from the conduct described above. Plum has agreed to pay $ 451,439 to resolve the allegations and settle the lawsuit, of which the whistleblower will receive $ 90,287.80 as part of the settlement.

Section 6402 (a) of the Affordable Care Act (ACA) established Section 1128J (d) of the Social Security Act (Act), which requires a person who has received an overpayment to report and return the overpayment to the Secretary, State, intermediary, carrier or contractor as the case may be at the correct address, and notify in writing the Secretary, State, intermediary, carrier or the contractor to whom the overpayment was returned in writing of the reason for the overpayment. Section 1128J (d) (2) of the Act requires, in most cases, that the overpayment be reported and returned no later than 60 days after the overpayment has been identified. For the purposes of Medicare Parts A and B, what it means to “identify” an overpayment is defined in the Final rule CMS released in early 2016. Any overpayment withheld by a person after the overpayment declaration and return deadline is an “obligation” which may form the basis of liability for false claims under the provision against the false claims of the Federal False Claims Act.

While the settlement amount in this case is not particularly large, the case is significant in that it is based on the 60-day overpayment refund rule in the ACA. Plum’s failure to report and return the full amount of the overpayment to the Medicare program within 60 days of identifying the overpayment and its failure to notify the Medicare administrative contractor of the reason for the overpayment. Paid created the basis for the whistleblower and government case against Plum.

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