Recent Ruling Could Mean Rise in Reverse False Claims Actions

When the False Claims Act was first passed, the most common cases involved companies that submitted false claims to the government in order to receive money from the government that they did not earn. For example, a common False Claims Act case is when a doctor submits a bill to Medicaid for services he did not perform. However, a growing number of cases are brought against companies who do not pay money that they owe the government. These claims are often referred to as “reverse false claims.” 

An example of a reverse false claim is when a company is overpaid by the government and makes a false statement to hide the fact that the company was overpaid. The Fraud Enforcement and Recovery Act passed in 2009 clarified that a company’s failure to repay the government when the government has made an overpayment violates the False Claims Act. Failures to report overpayments are a common problem with companies that accept Medicaid or Medicare payments.  Importantly, under the Patient Protection and Affordable Care Act, passed in March 2010, health care providers have just 60 days to report any overpayments from Medicaid or Medicare to the government.  

Another example of a reverse false claim is when a health insurance company rejects a claim in order to get Medicaid to pay it. Some people have both private health insurance and Medicaid coverage. Medicaid only pays claims, however, when there is no private insurance coverage. If a person is covered by both Medicaid and private insurance, then the private insurance company must pay the claim. Insurance companies are not allowed to deny claims just because an insurance policyholder is also covered by Medicaid. In February 2011, the Fifth Circuit Court of Appeals in United States v. Caremark held that an insurance company’s denial of a claim for the purpose of having Medicaid pay the claim instead is a violation of the False Claims Act. Due to such recent developments, reverse false claims are very likely to be a growing area of law. 


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Jennifer L. McIntosh is an attorney at Waters & Kraus, LLP, in the firm’s West Coast practice — Waters, Kraus & Paul. Her practice focuses on class action cases, qui tam (whistleblower), and commercial litigation.