On March 22, 2017, the District Court for the Northern District of California dismissed a False Claims Act, 31 U.S.C. §3729 complaint against several hospitals for alleged Medicare, Medicaid, Tricare claims submission schemes. United States ex rel. Cherry Graziosi v. Accretive Health, Inc., et al, No. 13-cv-1194 (N.D. Ill. Mar. 22, 2017).
The relator alleged that each of the Defendant hospitals submitted a claim for payment to federal health insurance programs for hospital admissions. When submitting this form, Relator alleged, the hospital must certify that inpatient admissions were determined to be medically necessary by a licensed physician with personal knowledge of the medical necessity. She alleged that the hospitals submitted forms for reimbursement for inpatient treatment in circumstances where the Emergency or Hospital Staff physicians had previously determined that inpatient treatment was not required. According to Relator, these fraudulent submissions were generated or recommended by Accretive Health, Inc., a consultant.
On December 6, 2016 the Supreme Court ruled that violation of the FCA’s seal provisions does not mandate dismissal of a relators’ complaint. Rather, while Section 3730(b)(2) requires relators to file under seal, the text of the statute is silent as to the remedy for violating this requirement. The Court left to the District Court’s discretion to determine the appropriate remedy for violations of the seal provision. Slip Op. at 10.
The False Claims Act allows relators to share in a recovery even where the United States pursues an “alternative remedy” rather than direct FCA litigation. In a recent decision, the District of Massachusetts determined that where an entity voluntarily repays stolen funds and takes action to do so as soon as the theft was discovered, that repayment does not constitute an “alternative remedy” requiring a relator’s share.
On May 31, 2016, the Supreme Court granted certiorari in State Farm Fire and Casualty Co. v. United States ex rel. Cori Rigsby and Kerri Rigsby, making it the third False Claims Act (FCA) case the Supreme Court has taken up in the last two terms. The issue to be decided by the Court is “[w]hat standard governs the decision whether to dismiss a relator’s claim for violation of the FCA’s seal requirement, 31 U.S.C. § 3730(b)(2)?”