(a) No later than 60 days after the completion of an audit or examination pursuant to Sections 10722 and 14170, the department shall issue the first statement of account status or demand for repayment.

(b) (1) Notwithstanding the provisions of Section 14172 or any other law, when it is established that an overpayment has been made to a provider or a civil money penalty assessed pursuant to Section 14123.2, 14123.25, 14171.5, or 14171.6 is due from a provider, the department shall not begin liquidation of the overpayment until 60 days after issuance of the first statement of accountability or demand for repayment after issuance of the audit or examination report establishing the overpayment or the document establishing the penalty. The department shall pursue liquidation of the overpayment or penalty upon expiration of the 60-day period. If the department finds, upon appeal, that no overpayment was made to, or no penalty is due from, the provider, the department shall repay the amount collected, together with the payment of interest thereon, from the date occurring 60 days after issuance of the first statement of accountability or demand for repayment after issuance of the audit or examination report alleging the overpayment or the document establishing the penalty.

(2) This subdivision shall not be construed so as to affect the department’s authority under other provisions of law for liquidation of overpayments to providers.

(c) Liquidation of the overpayment or penalty may be by any of the following:

(1) Lump-sum payment by the provider.

(2) Offset against current payments due to the provider.

(3) A repayment agreement executed between the provider and the department.

(4) Any other method of recovery available to and deemed appropriate by the director.

(d) An offset against current payments shall continue until one of the following occurs:

(1) The overpayment or penalty is recovered.

(2) The department enters into an agreement with the provider for repayment of the overpayment or penalty.

(3) The department determines, upon appeal, that there is no overpayment or that the penalty should not have been assessed.

(e) The provider shall pay interest on any unrecovered overpayments or penalty assessments as provided by subdivision (h) of Section 14171. If recovery of a disallowed payment has been made by the department, a provider who prevails in an appeal of a disallowed payment or penalty assessment shall be paid interest as provided by subdivision (g) of Section 14171.

(f) Nothing in this section shall prohibit a provider from repaying all or a part of the disputed overpayment or penalty assessment without prejudice to the provider’s right to a hearing pursuant to subdivision (b) of Section 14171 or pursuant to Section 100171 of the Health and Safety Code.

(g) If a provider appeals the assessment of a civil money penalty, liquidation of the penalty shall be deferred until the appeal is rejected or a final administrative decision is issued.

(h) If on the basis of reliable evidence, the department has a valid basis for believing that, with respect to a provider, proceedings have been or will shortly be instituted in a state or federal court for purposes of determining whether the provider is insolvent or bankrupt under appropriate state or federal law, or that a provider is or will shortly be taking action which reasonably might seriously hinder or defeat the department’s ability to collect overpayments in the future, the department may immediately adjust any payments to the provider to a level necessary to insure that no overpayment to the provider is made.

(Amended by Stats. 2003, Ch. 601, Sec. 17. Effective January 1, 2004.)