By

Scott Stein

07 September 2018

What Might A Justice Kavanaugh Portend for False Claims Act Jurisprudence?

With Judge Brett Kavanaugh seemingly headed toward confirmation to replace Justice Anthony Kennedy on the Supreme Court, readers of this blog may be interested in his prior cases addressing the False Claims Act.  A judge on the United States Court of Appeals for the D.C. Circuit for over a decade, Judge Kavanaugh has been described as a conservative textualist and a “stalwart originalist,”[1] more in line with the late Justice Antonin Scalia than swing vote Justice Kennedy, for whom Kavanaugh clerked alongside recently appointed Justice Neil Gorsuch in 1993-1994, and whom he would replace if confirmed.   (more…)

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20 August 2018

AKS Safe Harbor Defeats FCA Claim in Eleventh Circuit

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…)

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13 August 2018

Massachusetts Prohibits Entities From Being Relators

We are increasingly seeing the use of entities as relators, in lieu of individuals.  In some instances these relator entities are actual businesses, though frequently they are special purpose entities formed for the sole purpose of pursuing qui tam litigation.  There are a number of reasons for this trend, including that the use of an entity may be used to keep secret the names of individual relator-plaintiffs secret even after unsealing, and the belief that by using a corporate entity, individual whistleblowers can be added or replaced in the event of jurisdictional problems. (more…)

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20 July 2018

Tenth Circuit Holds That Claims For Medical Care That Fail To Meet Industry Standards May Be Deemed Objective False

Earlier this month, in U.S. ex rel. Polukoff v. St. Mark’s Hospital et al., No. 17-4014 (Jul. 9, 2018), the Tenth Circuit reversed a lower court’s dismissal of FCA claims, holding that “[i]t is possible for a medical judgment to be ‘false or fraudulent’” under the FCA.  As previously reported here, the relator had alleged that a cardiologist performed and billed Medicare and Medicaid for unnecessary heart surgeries known as PFO closures.  The District of Utah, in granting defendants’ motion to dismiss, had concluded that claims associated with those procedures, in which the doctor represented that the procedures were medically necessary, could not be deemed objectively false because “liability may not be premised on subjective interpretations of imprecise statutory language such as ‘medically reasonable and necessary.’”

(more…)

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13 July 2018

Court Holds That Negotiated Settlement of A Contractual Dispute Implicated The Anti-Kickback Statute

On June 7, 2018, a federal judge in Chicago denied motions to dismiss filed by defendants Roche Diagnostics Corporation (“Roche”) and Humana, Inc. (“Humana”) in a qui tam lawsuit alleging that the defendants’ settlement for allegedly overpaid contractual rebates constituted unlawful remuneration under Anti-Kickback Statute. (more…)

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22 June 2018

Acting Associate Attorney General Discusses Trump Administration FCA Enforcement Policy

On June 14, 2018, at the ABA’s National Institute on the Civil False Claims Act and Qui Tam Enforcement, Acting Associate General, Jesse Panuccio, delivered wide-ranging remarks on the False Claims Act. Of particular interest, AAG Panuccio discussed several recent high profile enforcement priorities of the Trump Administration. (more…)

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20 June 2018

Sixth Circuit’s Split Decision In Prather Highlights Persistent Questions About the Pleading Standard for Materiality After Escobar

Last week, the Sixth Circuit again resurrected the relator’s case in United States ex rel. Marjorie Prather v. Brookdale Senior Living Communities, Inc. (a discussion of the Sixth Circuit’s previous opinion is available here.  In a 2-1 decision, the majority held that the relator’s materiality and scienter allegations sufficed under Universal Health Services, Inc. v. United States ex rel. Escobar, 136 S. Ct. 1989 (2016).  The majority issued the decision over a vigorous dissent by Judge McKeague.  The gulf between the majority and the dissent reflects persistent questions about how Escobar applies at the pleading stage (see discussion here). (more…)

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14 June 2018

Sen. Grassley Fires Warning Shot Over Evolving Interpretations of FCA Materiality Requirement

In a recent floor statement, Senator Chuck Grassley, considered by many to be the chief defender of the FCA in Congress, voiced concerns about how some lower courts are interpreting the FCA’s materiality requirement following the Supreme Court’s Escobar decision.   Senator Grassley’s speech is worth noting because he has led successful efforts to legislatively overrule FCA decisions with which he has disagreed in the past. (more…)

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11 May 2018

DOJ Defends Use of Statistical Sampling To Prove FCA Liability

In a case in which it chose not to intervene, DOJ has stepped in to defend the relator’s attempt to use statistical sampling to prove FCA liability.  The relators allege that Select Medical Corporation, a related entity in Evansville, Indiana, and a physician violated the FCA by making medically unnecessary admissions to long term care facilities and increasing reimbursements by manipulating patients’ lengths of stay and falsifying diagnoses.  The relators contend that their claims encompass Select’s facilities nationwide, and advised the Court that they intended to propose a plan to use statistical sampling to establish FCA liability based on evaluation of a subset of medical records from facilities throughout the country.  The defendants contend that the claims should be limited to the named facility in Evansville. (more…)

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07 March 2018

DOJ Pursues Private Equity Firm for Portfolio Company FCA Violations

On February 16, 2018, the U.S. Department of Justice (“DOJ”) filed a complaint in intervention against a compounding pharmacy, Patient Care America (“PCA”), alleging that the pharmacy violated the False Claims Act (“FCA”) by, among other things, paying illegal kickbacks to induce prescriptions for drugs reimbursed by TRICARE, the federal healthcare program for active duty military personnel, retirees, and their families.  What is notable about this particular case, however, is that DOJ is also pursuing claims against a private equity firm that had a substantial ownership stake in the pharmacy, based on allegations that principals in the fund were actively involved in the management of the pharmacy and helped implement the purportedly illegal strategy at issue in the complaint. (more…)

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