Recently, the Seventh Circuit partially reversed a district court’s dismissal of a qui tam complaint alleging that debt collection agencies and their client hospital are liable under the FCA for the agencies’ knowing failing to comply with Medicare’s “bad debt” collection requirements. See United States ex rel. Sibley v. University of Chicago Medical Center, No. 21-2610 (7th Cir. Aug. 11, 2022). In reaching this decision, the court concluded that the relators had adequately pled that reasonable collection efforts are material to the government’s decision to reimburse Medicare bad debts.

CMS reimburses Medicare providers for bad debts if a Medicare patient fails to make required deductible or coinsurance payments as long as Medicare providers have first made reasonable efforts to collect those debts. See 42 C.F.R. § 413.89. A provider’s reasonable collection efforts must last at least 120 days after the issuance of the original bill before a debt is written off as uncollected. If a provider takes the appropriate steps, it may seek reimbursement for debts from CMS when it submits its annual cost report.

The relators alleged that the academic medical center defendant knowingly avoided an obligation to repay the government after it effectively learned that it had been reimbursed for noncompliant debts. Relators further alleged that two jointly owned companies that deliver medical billing and debt collection services to healthcare providers—Medical Business Office Corp. (“MBO”)...

Read Full Story: https://fcablog.sidley.com/provider-escapes-contractor-remains-in-qui-tam-all...