First Court Case Under FERA

That sure didn't take long.  A federal district court has already had an opportunity to address the 2009 amendments to the False Claims Act contained in the Fraud Enforcement and Recovery Act of 2009 ("FERA").  The case involves claims of intentional upcoding by a physician.  What is interesting is that the Plaintiff attempted to avail themselves of more favorable language in FERA, but the court ruled that applying the 2009 amendments to conduct that occurred in 2002 and 2003 was an inappropriate retroactive application of the statute.

In this case the physician had submitted in appropriate claims, but the intermediary had downcoded or denied all of the physician's upcoded claims, which meant the physician did not actually receive any additional money as a result of his upcoding.  This created an issue for the Plaintiff, because one of his claims required actual payment or approval by the government.  Because the Plaintiff had not alleged any of the false claims were actually paid, the court ruled that this claim must fail. (Note that this was only one of his claims, so his suit would have survived regardless.) 

The Plaintiff attempted to avoid this fate by pointing to the wording of the same section of the false claims act after the FERA amendments.  With the pasage of FERA, the Court noted that the section of the act that required a false claim to be paid or approved no longer applied. It now required simply that a false statement be used that was "material to a false or fraudulent claim".  In the Courts words, FERA amended the False Claims Act in this way "arguably to eliminate the actual payment or approval requirement." 

This meant that if the 2009 amendments applied to the doctors 2002-2003 conduct, the Plaintiff's second claim would survive the motion to dismiss, even though the intermediary caught the upcoded claims and did not pay them.  The Court determined that applying FERA retroactively in this fashion would not meet the standards set forth by the Supreme Court, because it would increase the defendant's liability for past conduct ("retroactive effects").  The Court noted that FERA specifically stated the amendments would apply to conduct occurring on or after the date the amendments were enacted and that Congress had specifically directed against applying the amendments in a way that would have retroactive effects.  Thus, the Plaintiffs second claim was dismissed, because the claims were not actually paid.

This case does illustrate how the FERA amendments have broadened the False Claims Act.  Conduct that was clearly outside of the "paid or approved" language of the FCA is likely now within the "material statement" portion of the FCA.  It may be a moot point, as it was arguably within other language of the FCA. (Which raises a collateral question - if it was covered anyway, why did we need this amendment?)