Health Care Providers That Submitted Reimbursements to HRSA’s UIP for Testing or Vaccines Should Be Aware of Growing Risk of FCA Lawsuits

Health care providers that submitted pandemic-era reimbursement claims to the Health Resources and Service Administration’s COVID-19 Uninsured Program (UIP) are already aware that both HRSA and the HHS Office of Inspector General (OIG) have ramped up efforts to determine whether UIP payments for COVID-19 testing and vaccines were improper.

Now, in addition to those audits and investigations, providers may have to grapple with federal False Claims Act (FCA) lawsuits.

The UIP reimbursed health care providers for testing, treatment, and vaccine administration provided to individuals who lacked health insurance coverage. Reimbursement was generally made at Medicare rates. A July 2023 OIG report asserted that providers could have received as much as $784 million in overpayments pertaining to services provided to people who actually had insurance coverage when they received COVID-19 related care.

As we reported in February, HRSA and the OIG are using their audit authority to assess whether providers received UIP reimbursements for claims associated with services provided to patients who had third-party health insurance coverage. The aim of these audits is to recoup any overpayments, i.e., money paid out of UIP funds that should have been covered by a patient’s insurer.

CityMD Settles for More Than $12 Million to Resolve FCA Allegations

The government has signaled its interest in UIP recoupments extends beyond mere recovery through audits. In early June, CityMD, an entity that manages and operates approximately 177 urgent care practices in New York and New Jersey, agreed to pay a settlement of more than $12 million to resolve allegations it violated the FCA by submitting false claims for UIP payments for COVID-19 testing of insured individuals.

According to the Department of Justice, from February 2020 through April 2022:

• CityMD administered COVID-19 tests to insured individuals and failed to verify their health insurance coverage before submitting associated UIP claims;
• In some instances, CityMD had health insurance cards on file for the patients in question; and
• CityMD issued erroneous requisition forms to laboratories indicating that patients were uninsured, causing those outside laboratories to also submit false UIP claims.

A patient of CityMD brought the claims on the Government’s behalf under the qui tam provisions of the FCA in a federal suit initially filed under seal in New Jersey district court. The whistleblower—or “relator” in FCA parlance—will receive more than $2 million as his share of the total monetary recovery.

Serious Risks Under the FCA’s “Knowledge” Standard

It’s easy to think back to the chaos and confusion of the pandemic and wonder whether DOJ is holding providers to an impossible standard, especially where the False Claims Act’s treble damages come into play. But under that Act—the DOJ’s primary tool for civil fraud enforcement—an entity’s knowing submission of a false claim can result in serious consequences. And “knowing” means not only actual knowledge, but also reckless disregard and deliberate ignorance. In fact, despite its serious penalty provisions, the FCA doesn’t require an intent to defraud at all.

In other words, even if CityMD wasn’t aware at the time it submitted its UIP claims that some patients were, in fact, insured, reasonable diligence—at least in the Government’s view—should have revealed that to be the case.

Under 31 U.S.C. § 3729(a)(1)(G), the so-called “reverse false claims” provision of the FCA, retention of any overpayment can also form the basis of a false claim. So even if the early uncertainty of the pandemic could serve to defeat the “knowledge” element of a UIP-based false claim, continuing to turn a blind eye or to bury one’s head in the sand—rather than undertaking reasonably diligent efforts to confirm entitlement to UIP reimbursement—can be a dangerous course.

Guidance for Health Care Providers that Submitted UIP Claims

The CityMD settlement is further evidence that the DOJ has committed significant resources to combat pandemic-related fraud and to ensure that pandemic relief programs were used as Congress intended. The UIP reimbursed many different types of providers—for testing, treatment and vaccines—meaning that HRSA’s audits to recover overpayments will span a wide net in the health care industry, including FQHCs, laboratories, city and county governments, hospitals, urgent cares, and family physician groups.

As HRSA seeks to recover improper UIP payments through its audit authority, providers should also recognize the attendant—and financially significant—risk of FCA lawsuits. If your organization billed the UIP, we strongly encourage reviewing UIP terms and conditions, as well as agency guidance in place at the time claims were made, keeping accurate records of the amount of UIP payments received and how the money was used, and documenting verification of patient insurance status, including through retrospective sampling and regular internal audits.

Keep in mind that significant risks associated with knowing retention of overpayments can be partially mitigated through self-disclosure and cooperation. In this instance, the settlement agreement credits CityMD for cooperating with the government’s investigation by voluntarily contracting with a third-party to assist in determining the number of UIP claims (and the value of those claims) submitted to patients who had health insurance.

If you are a provider, FQHC, laboratory, hospital, or other health care entity listed above that received COVID-19 testing, treatment, or vaccine reimbursement from HRSA’s UIP and now have questions about next steps pertaining to audits or investigations, please contact Feldesman Leifer LLP Managing Partner Ted Waters at ewaters@feldesman.com or Partner Mindy B. Pava at mpava@feldesman.com.

If you have any questions regarding False Claims Act investigations or litigation, please contact Feldesman Partners and Enforcement Insider Editors Rosie Dawn Griffin (rgriffin@feldesman.com) and Mindy B. Pava (mpava@feldesman.com) or call 202.466.8960. Be sure to also check out our Enforcement Insider blog to stay up to date on the latest enforcement actions and court decisions of interest to federal grantees and other recipients of federal funding.