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Protecting Your Healthcare Organization from False Claims Act Liability After CARES Act Funding (PRF)

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The federal government enacted the Coronavirus Aid, Relief, and Economic Security (CARES) Act to help individuals and businesses adversely impacted by the novel coronavirus pandemic. In April 2020, the Department of Health and Human Services (HHS) announced a plan to distribute $175 billion in relief funds authorized by the CARES Act and subsequent relief bills to healthcare providers. The $175 billion allocation was called the Provider Relief Fund (PRF), and it was as generous as it was confusing. Healthcare organizations have struggled with how to calculate the figures necessary for PRF applications, how to handle issues such as changes in ownership, and what to do if they received the wrong amount of funds.

Below, we discuss FCA concerns in connection with CARES Act funding and how you can protect your organization from liability. If your healthcare organization is under investigation for FCA violations, or if you are facing other civil or criminal liability, call a dedicated healthcare fraud and abuse defense lawyer for advice and representation.

FCA Liability and the PRF

The FCA imposes penalties on parties that knowingly or recklessly present false or fraudulent claims to the government for payment. The FCA also covers making false claims or statements in order to wrongfully retain government funds, or with regard to obligations owed to the government.

Concerning PRF funding, FCA liability might attach to any organization that included false or misleading information in their applications for relief. FCA liability is also possible for organizations that wrongfully retained relief funds. The Affordable Care Act (ACA) requires healthcare providers to report and return any overpayments within 60 days once identified.

More specifically, organizations that applied for or accepted PRF disbursements were required to attest to the accuracy of their applications as well as to their use of the funds. Recipients were required to certify that their payments would “only be used to prevent, prepare for, and respond to coronavirus and that the Payment shall reimburse the Recipient only for healthcare-related expenses or lost revenues that are attributable to coronavirus.”

Action Items to Protect Against FCA Liability

The PRF program was confusing and often appeared self-contradictory. The funds were distributed in multiple tranches, some of which applied more broadly to all Medicare fee-for-service providers while other distributions were made specifically to providers in “High Impact Areas.” HHS did not issue regulations governing the distribution of PRF monies, instead issuing sub-regulatory guidance in the form of FAQs on their website. Providers may have, for example, applied for funds based on the original HHS guidance concerning what constituted a High Impact Area only to learn in subsequently issued guidance that the parameters had changed. Retaining these funds, or retaining more than the proper allocation, could give rise to FCA liability.

One of the best ways to protect against FCA liability is to prove that your organization acted in good faith at all times. Retain documentary proof of the original application and the basis for answers included in the application, including the data on which the figures included in the application were based. If the application was based on the guidance available at the time, keep copies of that guidance as well as detailed notes concerning your reasoning and the facts available at the time.

If you are concerned that the guidance has changed since you applied for or received funds, or if you discover that your organization has received an overpayment, speak with a healthcare law attorney about what to do next. You may need to disclose the overpayment and repay some or all of the funds. The best option for your organization depends upon your specific circumstances.

Thankfully, the Justice Department has been at least somewhat sympathetic to confused healthcare providers. In 2017, then-Associate Attorney General Rachel Brand issued a memo directing the DOJ not to pursue civil charges based on noncompliance with sub-regulatory guidance not yet codified into proper regulations. The memo may serve as a defense to healthcare organizations who inadvertently ran afoul of HHS guidance when applying for or retaining PRF distributions.

Call an Experienced Healthcare Fraud and False Claims Act Defense Attorney to Protect Your California Medical Practice

For help defending against FCA and other healthcare fraud investigations, if you are fielding kickback allegations or regulatory compliance issues, or for assistance with internal investigations, auditing, employment matters, governance issues, business disputes, licensing, or any other California healthcare law matter, contact the Law Offices of Art Kalantar in Los Angeles or California statewide at 310-773-0001.

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