In rejecting a hospital system’s argument that the 60-day clock under the ACA to return a known overpayment does not commence until one is precisely identified, a New York District Court ruled this week that identification, and thus the starting of the 60-day period, actually occurs when providers are “put on notice“ of possible overpayments. Notably, in its decision the court disagreed with the hospital’s argument that only active and conscious action constitutes knowing avoidance of repayment obligations; instead, the court opined that such avoidance includes circumstances where a hospital is put on notice of a possible issue and does nothing. Nevertheless, the court omitted any discussion of when a provider is in fact “put on notice.” While the court ultimately dismissed the hospital’s motion to dismiss, the court acknowledged that good intentions could be a viable defense. That is so, the court said, because FCA suits “would be unlikely to succeed” if commenced against providers that honestly attempt to return overpayments, but just miss the sixty-day deadline. Furthermore, as the facts were interpreted in a light favorable to the government because of the procedural posture of the case, the hospital will eventually have the opportunity to present its own version of events. This marks the first federal court opinion where the ACA’s 60-day notification provision has been examined in detail and thus, will likely influence decisions in other circuits.

United States v. Continuum Health Partners Inc. et al., No. 11 CV 02325 (S.D.N.Y. Aug. 3, 2015).