Free Relief Money or a Potential False Claim?

The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) provides for billions of dollars in relief funds to healthcare providers responding to the coronavirus (COVID-19) pandemic. In April 2020, the U.S. Department of Health and Human Services (HHS) began distributing these funds. Unlike other aspects of the CARES Act, this money is not a loan and need not be repaid.

In general, healthcare providers who received reimbursement for Medicare fee-for-service (FFS) claims in 2019 are eligible for these funds, with the CARES Act payment allocations based on the share of Medicare FFS reimbursements in 2019.

According to various reports, money has been deposited into various healthcare providers' accounts with no notice. HHS has provided information about these funds on its website. The information includes that:

• providers who receive funds from the general distribution have to sign an attestation confirming receipt of funds and agree to the terms and conditions of payment and confirm the Centers for Medicare and Medicaid Services (CMS) cost report.
• the Terms and Conditions provide: "If you receive a payment from funds appropriated in the Public Health and Social Services Emergency Fund for provider relief (Relief Fund) under Public Law 116-136 and retain that payment for at least 30 days without contacting HHS regarding remittance of those funds, you are deemed to have accepted the following Terms and Conditions." The terms and conditions require recipients to submit documents sufficient to ensure that these funds were used for healthcare-related expenses or lost revenue attributable to coronavirus. Further, the terms and conditions state that there "will be significant anti-fraud and auditing work done by HHS, including the work of the Office of the Inspector General."

Considerations and Takeaways

In the haste to get much-needed funds to the frontline providers who are giving so much to treat coronavirus patients in need, there may be a certain lack of clarity from the government of the obligations of those who have received deposits, particularly those who may not have received a "dear valued provider" letter from HHS referring to the website and the terms and conditions. Providers should be mindful that money received under the CARES Act is not a windfall from the government. In addition to the attestation and certification requirements regarding receipt and use of funds, providers currently involved in disputes with CMS – such as provider enrollment issues, billing and overpayment claims raised by CMS and fraud allegations – should carefully weigh the implications of receiving and retaining such funds. 

CARES Act funding also has the potential to trigger enforcement actions under the False Claims Act (FCA). A violation of the FCA can occur when a provider receives a payment from the government and knowingly fails to report and return it within 60 days after the date on which the provider determines that the provider was not entitled to receive funds. Providers who have received funding from the government should carefully assess eligibility to maintain the funds.

Providers should also be aware that provider enrollment agreements signed by providers contain the following provisions that can also merit consideration:

• Providers agree to abide by all Medicare laws, regulations and program instructions that apply to their organization structure.
• Providers acknowledge and agree that the government may assert common law claims such as "common law fraud," "money paid by mistake" and "unjust enrichment." Remedies available to the government include actions for compensatory and punitive damages, restitution and recovery of the amount of unjust profit.
• Providers agree that any existing or future overpayment made by Medicare may be recouped by Medicare through withholding of future payments.

If you have questions regarding the receipt of CARES Act funding, submission of an attestation statement or the implications regarding use of such funds if you have ongoing disputes with CMS, contact the authors or another member of Holland & Knight's Healthcare & Life Sciences Team. Holland & Knight's healthcare attorneys have in-depth experience to help you navigate these issues as well as other healthcare regulatory enforcement actions.

DISCLAIMER: Please note that the situation surrounding COVID-19 is evolving and that the subject matter discussed in these publications may change on a daily basis. Please contact your responsible Holland & Knight lawyer or the authors of this alert for timely advice.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem. Moreover, the laws of each jurisdiction are different and are constantly changing. If you have specific questions regarding a particular fact situation, we urge you to consult competent legal counsel.