Opinion ID: 3052324
Heading Depth: 3
Heading Rank: 4

Heading: Purpose to Conceal, Avoid or Decrease an

Text: Obligation to Pay Money to the Government Appellants argue that they had no specific, independent, preexisting obligation to pay Medicare. Appellants argue that their interim payment rates were based upon the cost report from 1996, such that any repayment obligation arose because of the 1996 cost report. Appellants further argue that they had no duty to pay a “specific and definite sum” because the cost reports were never audited. [22] The FCA does not define “obligation,” and we have not set forth a framework for determining whether an obligation exists under the FCA. The Sixth and Eighth Circuits use the following analysis in determining whether an obligation exists: To recover under the False Claims Act, . . . the United States must demonstrate that it was owed a specific, legal obligation at the time that the alleged false record or statement was made, used, or caused to be made or used. The obligation cannot be merely a potential liability: instead, in order to be subject to the penalties of the False Claims Act, a defendant must have had a present duty to pay money or prop- erty that was created by a statute, regulation, contract, judgment, or acknowledgment of indebtedness. The duty, in other words, must have been an obliga- tion in the nature of those that gave rise to actions of UNITED STATES v. BOURSEAU 8665 debt at common law for money or things owed. . . . The deliberate use of the certain, indicative, past tense suggests that Congress intended the reverse false claims provision to apply only to existing legal duties to pay or deliver property. Am. Textile Mfrs. Inst., Inc. v. The Ltd., Inc., 190 F.3d 729, 735 (6th Cir. 1999) (quoting United States v. Q Int’l Courier, Inc., 131 F.3d 770, 773 (8th Cir. 1997)). This definition is consistent with the language and intent of the FCA, see S. Rep. No. 99-345, at 9 (“A false claim for reimbursement under the Medicare, Medicaid or similar program is actionable under the act . . . .” ), as well as holdings of the Fifth, Tenth and Eleventh Circuits. See U.S. ex rel. Bahrani v. Conagra, Inc., 465 F.3d 1189, 1195-96 (10th Cir. 2006), cert. denied, 128 S. Ct. 388 (2007) (holding that an obligation must be existing and arise from an independent legal duty); U.S. ex rel. Bain v. Ga. Gulf Corp., 386 F.3d 648, 657 (5th Cir. 2004) (defining what an obligation is not); United States v. Pemco Aeroplex, Inc., 195 F.3d 1234, 1237 (11th Cir. 1999) (recognizing an obligation exists pursuant to contract). We adopt it. [23] Under this framework, Appellants had a legal obligation to pay the government money at the time they submitted the cost reports. Between 1994 and 2000, CPMS was a Medicare provider, subject to a Medicare Provider Agreement requiring compliance with all Medicare regulations. See 42 U.S.C. § 1395cc; 42 C.F.R. §§ 411.406, 413.24(f), 489.11. Medicare regulations allowed CPMS to receive interim payments throughout the year from the Medicare Trust Fund, but required that CPMS repay any overpayments at the end of each reporting period. 42 C.F.R. § 413.20(d)(1); see also 42 U.S.C. § 1395g(a); 42 C.F.R. §§ 413.60, 413.64, 405.377, 405.378, 405.1803. Medicare was also required to pay CPMS any underpayments at the end of each reporting period. 42 8666 UNITED STATES v. BOURSEAU C.F.R. § 413.20(d)(1); see also 42 U.S.C. § 1395g(a); 42 C.F.R. §§ 413.60, 413.64, 405.377, 405.378, 405.1803. Because cost reports are not final until after an audit, the specific amount of the repayment obligation, for either CPMS or Medicare, may not have been known at the time the report was filed, see, e.g., 42 C.F.R. § 413.64(f), but both sides were under a continuing, specific obligation to repay each other. See S. Rep. No. 99-345, at 18-19 (“A false claim for reimbursement under [ ] Medicare . . . is actionable under the act.”). Similarly, CPMS’ bankruptcy may have frozen both the rate for interim payments and Medicare’s ability to collect overpayments, but it did not eliminate CPMS’ obligation to reimburse Medicare for overpayments. This obligation was not potential, like fines and penalties which have not been levied or assessed, but rather existing and specific because CPMS had been accepting Medicare funds. See Ga. Gulf Co., 386 F.3d at 657-58. [24] By including nonexistent, nonallowed and inflated costs in their cost reports, Appellants concealed and decreased amounts that they were obligated to repay to Medicare. This obligation was fixed, even if the specific amount of the repayment obligation was not.