A recent civil settlement announced by the Department of Justice reminds providers that failing to repay the government can be as costly as fraudulent billing. Although a medical practice paid nearly $450,000 to resolve an investigation, the contested amount was only $175,000. That’s the kind of 250% penalty often associated with a false claim settlement. Similarly, this incident of failing to repay was brought to the government’s attention by a qui tam relator, as are instances of false billing.
Yet the medical practice had not submitted any false billing. To the contrary, the government’s press release went out of its way to say that “credit balances often occur in a medical practice, for example, when two insurers share responsibility for a payment and one pays too much.” The government appears to have viewed the overpayment as a typical problem that should have been resolved during account reconciliation.

Amendment to the False Claims Act
Failing to repay became actionable when Congress amended the False Claims Act in 2009. Under the amendment, knowingly failing to repay an obligation to the government within 60 days is treated as a false claim. The potential penalty is treble damages, and a qui tam relator can bring suit in order to gain part of the settlement in addition to an award of the relator’s attorney’s fees.
Of course, the mere fact of an overpayment does not create immediate liability under the False Claims Act. In order to be “knowing,” failing to repay must involve identifying the overpayment, or failing to exercise reasonable diligence to identify the overpayment. Government regulations contain a final rule allowing a reasonable amount of time to determine whether an overpayment has been identified, but also establish a six year look back period to find the overpayments.
A Warning Issued
Unquestionably, the government intended to accomplish more than collect money when pursing this overpayment. The acting U.S. Attorney warned in the press release that this settlement would “send a message that we will aggressively pursue those who seek to unjustly profit from our nation’s health care programs.” Similarly, one investigator said, “This settlement will hopefully be a deterrent for others who consider similar practices.” The takeaway is that providers are liable for identifying overpayments they receive and returning them within 60 days.