On August 6, 2019, the United States District Court for the Western District of Texas granted a motion to dismiss filed by Baylor Scott & White Health (“Baylor”), a network of inpatient short-term acute care hospitals, in a False Claims Act suit alleging that Baylor submitted “more than $61.8 million in false claims” by upcoding certain diagnosis codes. The Court dismissed all claims with prejudice, finding that the Relator, Integra Med Analytics LLC, alleged only “naked assertions devoid of further factual enhancement” that were “insufficient under Rule 8’s pleading standards.” The Department of Justice declined to intervene in the suit.
On July 16, 2019, the United States District Court for the Central District of California granted in part and denied in part motions to dismiss a declined FCA suit against defendants Providence Health & Services (“Providence”), its affiliates, and J.A. Thomas and Associates, Inc. (“JATA”), a clinical documentation consultant. The suit alleges that Providence perpetrated an upcoding scheme whereby it trained its doctors to describe medical conditions with language that would support increasing the severity levels of the DRGs that Providence reported to Medicare, leading to inflated Medicare reimbursements.
Last week, the Eleventh Circuit issued an opinion holding that a Relator bringing an FCA claim premised on an AKS violation – at least when relating to lease arrangements – must show that the financial arrangements were not at fair market value. See Bingham v. HCA, Inc., Case No. 1:13-cv-23671 (11th Cir. 2019). Significantly, this ruling provides that proving fair market value (or lack thereof) is not a burden imposed solely on defendants as part of a safe harbor defense, but is instead an essential element to establishing the existence of remuneration in the first instance. In the same opinion, the court also held that a Relator cannot rely upon information gleaned in discovery to satisfy Rule 9(b)’s pleading requirements.
On June 14, 2019, Sutter Health (“Sutter”) filed a Motion to Dismiss the Department of Justice’s Complaint-in-Intervention in a False Claims Act suit alleging Sutter knowingly submitted and caused the submission of unsupported diagnoses codes for Medicare Advantage patients in order to inflate Medicare reimbursements. The Department of Justice filed its Complaint-in-Intervention on March 4, 2019, which we previously discussed here.
At the recent Compliance Week Annual Conference, Principal Deputy Associate Attorney General Claire McCusker Murray delivered extensive remarks on DOJ’s corporate enforcement priorities. Of particular note, Murray discussed a number of policy reforms focused on promoting and incentivizing corporate compliance and cooperation.
On March 29, 2019, the United States District Court for the Central District of California denied the Department of Justice’s Motion for Partial Summary Judgment against UnitedHealth Group (“United”) in a False Claims Act suit alleging that United knowingly retained overpayments for unsupported diagnosis codes submitted for Medicare Advantage patients. In reaching its decision, the Court relied on the decision by the United States District Court for the District of Columbia to vacate a portion of CMS’s 2014 Final Overpayment Rule applicable to the Medicare Advantage program in UnitedHealthcare Insurance Co. v. Azar, 330 F. Supp. 3d 173 (D.D.C. 2018), which we previously discussed here.
As we previously reported here and here, DOJ is pursuing a compounding pharmacy and its private equity fund owner alleging the pharmacy filed claims with Tricare that were rendered false by alleged kickbacks.
In November, the Magistrate Judge filed an opinion recommending the FCA claims be dismissed for DOJ’s failure adequately to plead its claims on either an implied or express certification theory of liability. However, the Magistrate went on to hold that the allegations that the private equity fund and its principals knew of some of the alleged misconduct and caused the submission of false claims by the portfolio company were otherwise sufficient to state a claim against those defendants under the False Claims Act. (more…)
On March 4, 2019, the Department of Justice filed its Complaint-in-Intervention against Sutter Health (“Sutter”) and its affiliate Palo Alto Medical Foundation (“PAMF”) in a False Claims Act suit alleging that the Defendants knowingly submitted and caused the submission of unsupported diagnosis codes for Medicare Advantage patients in order to increase reimbursements from Medicare. DOJ had previously announced its decision to intervene on December 11, 2018, as we previously discussed here.
The U.S. District Court for the Northern District of Florida recently held that a False Claims Act suit can proceed against a Florida pharmacy and its owner, rejecting in particular the owner’s arguments that the complaint did not sufficiently allege that he acted with improper intent or caused the submission of false claims.
Since last year’s Granston Memo (discussed recently here and here), DOJ has actively sought dismissal of FCA cases that it believes do not serve the interests of the federal government. DOJ’s power to do so derives from Section 3730(c)(2)(A) of the FCA, which provides that the Government “may dismiss” a relator’s action if the realtor “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.” In United States ex rel. Davis v. Hennepin County, the court considered two questions about the scope of that statutory power: (1) whether the government must first intervene in a case before moving to dismiss the action, and (2) whether the government must show a valid purpose and a rational relationship between dismissal and the accomplishment of its stated purpose. The district court answered “no” to both questions and dismissed the relator’s suit. In so doing, the court signaled its view that the Eighth Circuit would side with the D.C. Circuit in the split over the standard that applies when the government seeks dismissal under Section 3730(c)(2)(A) (the circuit split is discussed here and here).