A specialty laboratory recently agreed to pay up to $43 million to resolve FCA claims based on allegations raised internally and later in a whistleblower complaint filed by its former Chief Medical Officer (CMO). The defendant, Genova Diagnostics Inc. (“Genova”), provides laboratory testing services focused on potential interactions between the environment and the gastrointestinal, endocrine, and immune systems. The tests are used by functional medicine specialists to help develop treatment regimens.
The Third Circuit recently held that relators are not automatically entitled to an in-person hearing when the government moves to dismiss a qui tam suit over the relator’s objection. U.S. ex rel Chang v. Children’s Advocacy Center of Delaware, No. 18-2311 (3d Cir. Sept. 12, 2019). Weih Chang filed qui tam lawsuit in 2015 alleging the Children’s Advocacy Center of Delaware had misrepresented material information when applying for governmental funding. After a lengthy investigation, the United States declined intervention and moved to dismiss under the statutory provision that allows dismissal, “notwithstanding the objections of the person initiating the action if the person has been notified by the Government of the filing of the motion and the court has provided the person with an opportunity for a hearing on the motion.” 31 U.S.C. § 3730(c)(2)(A). The district court granted the motion to dismiss, holding that the government had shown a legitimate interest in dismissing the suit and Chang had not met the burden of showing that the move to dismiss was arbitrary or capricious. Chang appealed, arguing that he had a statutory right to an in-person hearing prior to dismissal and that at the hearing he could have introduced evidence to show that the dismissal was arbitrary and capricious. Id. at *5-6. The Third Circuit affirmed the district court opinion, holding the court had not erred in granting dismissal without conducting an in-person hearing. Id. at 8.
In Carrel v. AIDS Healthcare Foundation, No. 17-13185 (August 7, 2018) the Eleventh Circuit affirmed summary judgment for the defendant on Anti-Kickback Statute-based FCA claims, holding that incentives to employees for referring patients for its services were covered by the employee safe harbor to the Anti-Kickback Statute, and that these payments in particular served the congressional intent of the Ryan White Act to provide AIDS patients with ease of access to services. The Court also upheld the prior dismissal of all other allegations for a lack of particularity, noting that the only instances that relators alleged with particularity were actually covered “services” under the Ryan White Act and that they would not “infer fraud from instances of lawful conduct.” (more…)
The Third Circuit’s recent decision in Greenfield ex rel v. Medco Health Systems, Inc. recently clarified the “link” that plaintiffs must show to connect the alleged kickback scheme to the submitted claim. Greenfield, No. 17-1152 (3d Cir. Jan. 19, 2018). In affirming summary judgment for the defendant, the Third Circuit held that to create an issue for trial, a plaintiff alleging a violation of the Anti-Kickback Statute (AKS) must present evidence of a claim submitted to the federal healthcare government that was actually exposed to the alleged kickback scheme. (more…)