False Claims Actions May Rise Under Medicare Part D

A recently unsealed action brought under the False Claims Act is one of the first to allege claims related to Medicare Part D. Medicare contracts with private entities known as Part D sponsors to administer prescription drug plans. A sponsor may use subcontractors to obtain and provide the medications. Medicare  makes certain monthly payments based on a complex set of estimates to the plan sponsor. In the following year, there is a reconciliation of the amounts paid against what the sponsor bid in order to provide benefits.

Government’s Take on False Claims Action Under Part D

Of particular interest are the positions taken by the United States in a Statement of Interest it filed even though the government had chosen not to intervene in the case. In its filing, the government plainly stated that the failure to intervene could not be considered to mean the government thought the case lacked merit.

It went on to explain its position that the Prescription Drug Extract records (“PDEs”)  used by a Part D plan sponsor to notify Medicare that a drug had been dispensed to a Part D plan participant and the actual cost of that drug are claims under the False Claims Act. In doing so, it relied on the definition of claim in the False Claims Act and it also relied on the regulations governing the submission of PDEs. The Government agreed with the relator that the PDE causes the making of payments under Part D.

Conclusion: Prescription Drug Extract Could Be Filed Under the False Claims Act

It will be interesting to see if the court will agree with the government’s position. If the court does not agree, and finds that the PDEs are not claims, it may be difficult to use the False Claims Act to recover money improperly paid under Medicare Part D.

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