11th Circuit Holds Eighth Amendment Applies to FCA Monetary Awards in Non-Intervened Cases
The Eleventh Circuit recently held that the Eighth Amendment’s prohibition on excessive fines applies to monetary awards in non-intervened FCA actions—the first federal court of appeals directly to address the application of this constitutional protection in non-intervened cases. See Yates v. Pinellas, No. 20-10276 (11th Cir.). However, the panel concluded that while the amount of the fine in this case was “very harsh,” it was not unconstitutionally excessive.
In Yates v. Pinellas, following the government’s declination, the district court imposed a total monetary award of $1,179,266.62 under the FCA based on the defendant’s submission of laboratory test claims to Medicare without a proper CLIA certificate. Specifically, the jury found that the defendant violated the FCA on 214 occasions and that the United States had incurred $755.54 in damages. The court then imposed treble damages of $2,266.62 and statutory minimum penalties of $5,500 for each of the 214 violations, or $1,177,000, for a grand total of $1,179,266.62. The defendant moved for remittitur, arguing that this amount constituted an excessive fine in violation of the Eighth Amendment. The district court rejected the argument. (more…)
Eleventh Circuit Holds That It Is Relator’s Burden To Prove Lack of Fair Market Value As An Essential Element of AKS-Based Claims
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.
Supreme Court Agrees to Resolve Circuit Split on FCA Statute of Limitations in Non-Intervened Cases
On November 16, the Supreme Court agreed to resolve a percolating circuit split on an issue of critical importance under the FCA: are relators in non-intervened cases entitled to invoke the FCA’s alternate 10 year statute of limitations? The grant of certiorari in Cochise Consultancy, Inc. v. United States ex rel. Hunt, 887 F.3d 1081 (11th Cir. 2018) makes it the third Supreme Court case in recent years addressing the False Claims Act’s limitations periods. (more…)
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…)
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.’”
Eleventh Circuit Extends FCA’s Ten Year Limitations Period to Non-Intervened Cases, Creating Circuit Split
The False Claims Act provides that a case must be brought within the later of (1) six years after the date on which the alleged violation is committed, or (2) three years after “the date when the facts material to the right of action are known or reasonably should have been known by the official of the United States with responsibility to act in the circumstance, but in no event more than 10 years after the date on which the violation is committed.” 31 U.S.C. § 3731(b). When the government has declined to intervene in an FCA action and a relator files a qui tam suit more than six years after the violation, the Fourth and Tenth Circuits have held that the relator’s suit is time-barred and the relator cannot take advantage of § 3731(b)(2)’s more generous statute of limitations. Last week, in United States ex. Rel. Hunt v. Cochise Consultancy, Inc., __ F.3d __, 2018 WL 1736788 (11th Cir. Apr. 11, 2018), the Eleventh Circuit split from the Fourth and Tenth Circuits, holding that § 3731(b)(2) “applies to an FCA claim brought by a relator even when the United States declines to intervene.” And departing from the Ninth Circuit, the Eleventh Circuit further held that because the period “begins to run when the relevant federal government official learns of the facts giving rise to the claim, when the relator learned of the fraud is immaterial for statute of limitations purposes.” (more…)
Eleventh Circuit Rules That Reasonable Interpretations of Ambiguous Regulations Can Trigger FCA Liability
Noncompliance with ambiguous regulations often presents a weak case for an FCA suit. A growing number of courts (as discussed here and here) have held that reasonable interpretations of regulations, absent contrary guidance from the government, reflect a mens rea inconsistent with the requisite “knowing” misconduct under the FCA. However, the Eleventh Circuit recently reached a contrary conclusion, holding that defendants who articulate reasonable interpretations of ambiguous regulations can nonetheless be liable under the FCA. See United States ex rel. Phalp v. Lincare Holdings, Inc., No. 16-10532 (May 26, 2017). (more…)
DOJ Has Substantial Discretion To Settle Cases Over Relator’s Objection, Eleventh Circuit Holds
In United States ex rel. Christiansen v. Everglades College, Inc., Nos. 16-10849/16-11839, — F.3d —, 2017 U.S. App. LEXIS 7842, 2017 WL 1658478 (11th Cir. May 3, 2017), the Eleventh Circuit recently determined that the United States is not required to satisfy the good-cause intervention standard in 31 U.S.C. § 3730(c)(3) when settling a qui tam action brought under the False Claims Act (“FCA”) over a relator’s objections. The Court also articulated the standard for determining when a settlement between the United States and an FCA defendant is “fair, adequate, and reasonable” under 31 U.S.C. § 3730(c)(2)(B). (more…)
DOJ Contends That Differences in Medical Opinion Can Support False Claims, Seeking Reversal in AseraCare Appeal
As we previously reported here, DOJ is appealing its defeat in AseraCare, in which the district court concluded that “expressions of opinion, scientific judgments, or statements as to conclusions about which reasonable minds may differ cannot be false,” and that the government had marshaled nothing more than a difference of opinion between its own expert and the defense’s. On appeal to the Eleventh Circuit, DOJ is arguing forcefully for rejection of the view that disputes about medical necessity cannot serve as the basis for an FCA claim.
New Cert Petition Asks Supreme Court to Weigh in on FCA Pleading Standards
As we previously reported, the Supreme Court last year declined an invitation to resolve a circuit split regarding how much detail about particularized false claims must be pleaded in an FCA case in order to satisfy Rule 9(b)’s particularity requirement. A new cert petition filed this month asks the Court to take up the issue this term. Last year, in an opinion we wrote about here, the 11th Circuit affirmed in part and overruled in part the dismissal of an FCA complaint under Rule 9(b). The court held that while the relator had not pleaded, and was not required to plead facts regarding specific false claims, he had pleaded other facts that provided sufficient “indicia of reliability” with respect to his claims based on conduct allegedly occurring during his employment by the defendants. By contrast, the court held, the relator had failed to plead sufficient “indicia of reliability” that the conduct continued after his employment ended, and therefore affirmed the dismissal of the post-employment claims. It is the latter ruling with which the cert petition, filed by the relator, takes issue. The question presented in the cert petition is “[w] hether, under Rule 9(b), it is sufficient for a relator under the False Claims Act to plead “particular details of a scheme to submit false claims paired with reliable indicia that lead to a strong inference that claims were actually submitted” to the government, or whether Rule 9(b)’s particularity requirement precludes the drawing of reasonable inferences that claims were actually submitted”
In the petition considered last year, the Supreme Court requested the Solicitor General’s views. The SG’s brief, while recognizing a circuit split, encouraged the Court to deny cert, and the Court did just that. It remains to be seen whether the Solicitor General will, or will be asked to by the Court, weigh in on the petition. In any event, we will continue to monitor this case and report on important developments.