Opinion ID: 3047737
Heading Depth: 3
Heading Rank: 1

Heading: Obligation

Text: The district court dismissed Counts I and II for failure to establish the existence of an obligation that was knowingly unpaid.8 Defendants do not challenge the existence of an obligation, only whether that obligation was violated, which we discuss below. We conclude Relators have adequately alleged with particularity the existence of an obligation to pay money to the government. To sustain a reverse false claim action, relators must show that the defendants owed an obligation to pay money to the United States at the time of the allegedly false statements. See Pemco, 195 F.3d at 1236–37. An express contractual obligation to remit excess government property is a definite and clear obligation for FCA purposes.9 See id. at 1238 (holding a “written contract which 8 The district court does not state whether it evaluated the existence of an obligation under Rule 8 or 9. Because we conclude Relators have pled the existence of an obligation with particularity, we do not decide which pleading standard applies. 9 Although not applicable to this case, we note that Congress recently amended the FCA to define “obligation” as “an established duty, whether or not fixed, arising from an express or implied contractual, grantor-grantee, or licensor-licensee relationship, from a fee-based or similar relationship, from statute or regulation, or from the retention of any overpayment[.]” Fraud Enforcement & Recovery Act of 2009, § 4(b)(3), 123 Stat. at 1623. This amendment was not retroactive, and thus, this definition does not apply here. See id. § 4(f), 123 Stat. at 1625. 10 expressly obligated [defendant] to be responsible and accountable for the government property in its possession and to return that property . . . in accordance with the government’s instructions” a sufficient obligation). Here, the Complaint contains detailed allegations relating to the Defendants’ contractual obligation to identify, report, and remit excess government money in accordance with the CIA’s instructions. Specifically, Relators allege that the CIA obligated Defendants to report and remit all Overpayments within thirty days of identification through the use of the Overpayment Refund Payment Form. This allegation is supported by the terms of the CIA, which state that “[i]f at any time, PolyMedica identifies or learns of any Overpayment, PolyMedica shall notify the payor . . . within 30 days after identification of the Overpayment . . . . PolyMedica shall repay the Overpayment to the appropriate payor . . . .”10 The CIA defines Overpayments as “the amount of money PolyMedica has received in excess of the amount due and payable under any Federal health care program requirements.” The Complaint explains that money is not “due and payable” if PolyMedica lacks the necessary documentation to match that money to a specific patient account. Without the necessary 10 The CIA and account spreadsheets are attached to the Complaint as exhibits, and thus, we may consider them here. Fed. R. Civ. P. 10(c) (“A copy of a written instrument that is an exhibit to a pleading is a part of the pleading for all purposes.”). 11 documentation, the entire payment received is an Overpayment that must be repaid. The Complaint outlines the procedures set by the CIA which Defendants must use to remit any identified Overpayments. Under these procedures Overpayments must be remitted with an Overpayment Refund Payment Form within thirty days of identification. The Overpayment Refund Payment Form requires PolyMedica to specify a reason for the Overpayment such as duplicate, billed in error, or insufficient documentation. Thus, Relators have alleged an express contractual obligation on behalf of the Defendants to remit Overpayments within thirty days of identification and defined that obligation in detail with references to particular contract sections. These factual allegations are sufficient to plead with particularity the existence of an obligation to pay money to the government.