Opinion ID: 787607
Heading Depth: 2
Heading Rank: 1

Heading: The Submission of the Initial Medicaid Claim

Text: 13 The FCA imposes liability on any person who 14 (1) knowingly presents, or causes to be presented, to an officer or employee of the United States Government ... a false or fraudulent claim for payment or approval; 15 (2) knowingly makes, uses, or causes to be made or used, a false record or statement to get a false or fraudulent claim paid or approved by the Government.... 16 31 U.S.C. §§ 3729(a)(1), (2). A person acts knowingly when he (1) has actual knowledge of the information; (2) acts in deliberate ignorance of the truth or falsity of the information; or (3) acts in reckless disregard of the truth or falsity of the information, and no proof of specific intent to defraud is required. 31 U.S.C. § 3729(b). 17 Each time Pompton submits a claim for payment on the MC-6 form, it certifies that the services covered by this claim were ... rendered ... and ... the services covered by this claim and the amount charged thereof are in accordance with ... [Medicaid] regulations.... Quinn alleges that Pompton's initial claims are false due to its failure to adjust them when medications are returned for recycling. 18 There are several regulatory provisions which do require the voiding or adjustment of claims under certain circumstances. Section 10:49-8.3 of the New Jersey Administrative Code requires [a]djustments following payment of claims when a claim is incorrectly paid and the provider receives an overpayment or underpayment or when a claim is paid in error. Situations that may cause underpayment or overpayment include a payment by a private insurance company after Medicaid has paid for the medication, a billing error, or a computer error in processing the claim. A claim is paid in error when it is paid and it should not have been paid. See N.J.A.C. § 10:49-8.3(b). In addition, N.J.A.C. § 10:51-1.25(j)(2) requires [p]harmacies ... to initiate claim reversal for those services in which a claim was generated and adjudicated to payment ... and the service was not subsequently provided to a ... beneficiary. 19 FABS instructs the pharmacy to fill out an Adjustment Request form when a claim is underpaid, overpaid, or paid in error. In the case of a claim that is paid in error, the pharmacy voids the entire claim and Medicaid deducts the voided amount from the next payment. The provider indicates on the Adjustment Request form the reason for the adjustment or void. One of the reasons listed is service not provided. None of these regulations, however, instruct pharmacies on how to credit or adjust a claim for medications after those medications have been returned for recycling. 20 Nevertheless, Quinn contends that Pompton violates §§ 3729(a)(1) and (2) of the FCA by failing to void or adjust claims for medications after these medications have been returned for redispensing. Quinn argues that the initial claims become false when medications have been returned because the claims then become claims for services that were not provided to the intended beneficiaries. Quinn asserts that, after the return of the medications, unless Pompton reverses the claims as required by N.J.A.C. § 10:51-1.25, the certification on the initial MC-6 form is a false one. 21 The District Court rejected Quinn's argument because there is no language in the MC-6 form, its instructions, or Medicaid regulations that states that medications cannot be returned. Quinn, slip op. at 11. The court noted that, even though N.J.A.C. § 10:51-1.25(j)(2) requires reversal when services are not provided, the regulation does not further state that services are not provided when medications are dispensed and subsequently returned. Id. at 11-12. 22 We agree that there is no regulatory requirement of the reversal of a claim once a medication has been returned. As the District Court held, if there is no requirement to adjust the claim, there is no liability for a failure to do so. 23 However, even more fundamentally, Quinn's allegation is that the initial claim is rendered false by the return. The fallacy of this argument lies in the fact that the return of a medication, which at the outset has been dispensed to the Medicaid beneficiary, does not render the initial claim false or fraudulent. In order to prove FCA liability under §§ 3729(a)(1) and (2), Quinn must prove that (1) the defendant presented or caused to be presented to an agent of the United States a claim for payment; (2) the claim was false or fraudulent; and (3) the defendant knew the claim was false or fraudulent. Hutchins v. Wilentz, Goldman & Spitzer, 253 F.3d. 176, 182 (3d Cir.2001). There is no question that the MC-6 forms Pompton submits to Medicaid are claims under the FCA. 9 The only question is whether a claim, which is not false or fraudulent when initially submitted, can later be rendered so if the medication is returned. 24 There is FCA liability when a provider knowingly asks the Government to pay amounts it does not owe. United States ex rel. Clausen v. Lab. Corp. of America, 290 F.3d 1301, 1311 (11th Cir. 2002). The FCA reaches all fraudulent attempts to cause the Government to pay out sums of money. Harrison v. Westinghouse Savannah River, 176 F.3d 776, 788 (4th Cir.1999). The terms false and fraudulent are not defined in the FCA. The terms, however, do have independent meanings: 25 A common definition of fraud is an intentional misrepresentation, concealment, or nondisclosure for the purpose of inducing another in reliance upon it to part with some valuable thing belonging to him or to surrender a legal right. False can mean not true, deceitful, or tending to mislead. The juxtaposition of the word false with the word fraudulent, plus the meanings of the words comprising the phrase false claim, suggest an improper claim is aimed at extracting money the government otherwise would not have paid. 26 Mikes v. Straus, 274 F.3d 687, 695 (2nd Cir.2001) (citations omitted). 27 Under these standards, it is clear that, when Pompton submits the initial claim form, it is not intentionally making any misrepresentation. To the contrary, it is merely asking for reimbursement for medication which it has dispensed and for which it is entitled to payment. When Pompton submits the initial claim for payment, it has no way of knowing if a medication will be returned. Pompton has not then knowingly presented a false or fraudulent claim at the time of the original claim submission. Nor can the changed circumstances, caused by the later return of the medication, render the initial claim false or fraudulent. 28 Quinn contends, however, that, in order to impose FCA liability, it is not necessary that the claim have been false when it was originally submitted. We reject this argument. The FCA aims to impose liability for a broad range of conduct, including each and every claim submitted ... which was originally obtained by means of false statements or other corrupt or fraudulent conduct. S.Rep.No. 99-345 at 9 (1986), reprinted in 1986 U.S.C.C.A.N. 5266, 5274 (emphasis added). Pompton's claims were not originally false — they did not misrepresent the dispensing of the medication or the cost of what was dispensed. 29 We conclude that we would be exceeding the intent of Congress in defining false claims if we were to permit the transforming of a valid claim into a false claim by the occurrence of a subsequent fortuitous event which is not itself the basis of any required adjustment. 30 For the above reasons, we hold that Pompton is not liable under the FCA for the submission of the initial Medicaid claims or for the failure to adjust an initial claim when a medication is returned. 31