When the government moves to dismiss a qui tam action, it must satisfy two procedural requirements: it must first notify the relator that the government has filed a motion to dismiss, and second, it must provide the relator an opportunity for a hearing on the motion. 31 U.S.C. § 3730(c)(2)(A). In the year since the issuance of the Granston Memo, which we have written about, here, here, here, and here, both relators and courts have grappled with the breadth of the government’s discretion to dismiss qui tam actions.
Clinical laboratories stand in a position of tension: although laboratory tests must be medically necessary to be reimbursable by federal healthcare programs, laboratories often do not directly engage with patients in a way that would permit them to assess medical necessity. A district court recently corrected its ruling regarding the extent to which laboratories can be held liable under the FCA when the tests for which they submit claims are not medically necessary. United States ex rel. Groat v. Boston Heart Diagnostics Corp., No. 15-cv-487 (D.D.C. Dec. 11, 2017). (more…)
The question of when an overpayment becomes “identified” for purposes of False Claims Act liability has generated significant uncertainty, and one district court just added more fodder for debate. See UnitedHealthcare Ins. Co. v. Price, No. 16-cv-157 (D.D.C. Mar. 31, 2017). The Affordable Care Act (“ACA”) requires persons to report and return overpayments from Medicare or Medicaid within 60 days of identification, and the failure to do so can trigger FCA liability. The ACA delegated to CMS the task of defining when an entity has “identified” an overpayment. CMS promulgated two rules (in May 2014 for Medicare Advantage (“MA”) plans and Part D Sponsors and in February 2016 for Medicare Part A/B providers), which equate “identification” to circumstances in which a person “has, or should have through the exercise of reasonable diligence, determined that the person has received an overpayment.” The “should have identified” standard generated concerns that CMS was using a simple negligence standard. The FCA, however, requires proof of at least “reckless disregard,” which courts have equated to gross (not merely simple) negligence.
On February 13, 2017, the District Court for the District of Columbia rejected motions for summary judgment filed by cyclist Lance Armstrong and his agents Capital Sports and Entertainment Holdings Inc. (CSE) in an FCA suit alleging the defendants violated the FCA by issuing payment invoices to the United States Postal Service (USPS) under sponsorship agreements while actively concealing Armstrong’s use of performance enhancing drugs (PEDs). The Court rejected Armstrong’s motion because it found that the government raised genuine issues of fact regarding the applicability of two of its three theories of FCA liability, its common-law claims, and the issue of actual damages. As a result, the Court will set the case for trial, where Armstrong may face nearly $100M in damages. A copy of the court’s order can be found here.
Earlier this year, we wrote about a case in which a district court disqualified an attorney, Donald Holmes, from serving as a relator based, in part, on his use of information in violation of a protective order in a related case in another district court. See “Court Disqualifies Attorney Relator for Ethical Violations” (June 15, 2015). With Holmes’s appeal of that decision pending in the Fifth Circuit, he filed a motion in the District Court for the District of Columbia—the court that originally issued the protective order that Holmes violated—requesting that the court sanction him $1,000 and modify the protective order to permit disclosure of the confidential information to the DOJ and the qui tam court. The court characterized Holmes’s motion as “a likely attempt to show the Fifth Circuit that he has already been sanctioned by this Tribunal in the hopes of having the dismissal there overturned” but explained that it had no power to alter sanctions levied by another court.
On October 6, 2015, the U.S. District Court for the District of Columbia allowed relator Stephen Shea to refile his case against Verizon in order to avoid the False Claims Act’s first-to-file bar. See U.S. ex rel. Shea v. Verizon Business Network Services et al., No. 09-1050-GK (D.D.C. Oct. 6, 2015). By allowing Shea to refile, the District Court took an important stance on the FCA’s public disclosure bar that may make it more difficult for future defendants to advance the bar.
As we previously reported, the DOJ’s recent “Yates Memo” signals a renewed focus by DOJ on individual culpability for corporate wrongdoing. This focus applies to DOJ’s view of what is required to invoke the FCA’s “Cooperation Clause,” 31 U.S.C. § 3729(a)(2), which states that an FCA defendant may be eligible for double damages (rather than treble damages) if: (1) the person committing the violation furnished U.S. officials responsible for investigating the false claims action “with all information known to such person about the violation within 30 days after the date on which the defendant first obtained the information,” (2) the person cooperated fully with the government’s investigation, and (3) at the time the person provided information on the violation, no action had commenced with respect to the violation and the person did not have actual knowledge of any investigation into the violation. The Yates Memo states that “the Department’s position on ‘full cooperation’ under the False Claims Act, 31 U.S.C. § 3729(a)(2), will be that, at a minimum, all relevant facts about responsible individuals must be provided.” “To be eligible for any cooperation credit, corporations must provide to the Department all relevant facts about the individuals involved in corporate misconduct.” If a company “declines to learn of such facts” or to disclose all facts about individual wrongdoers, the company is barred completely from eligibility for reduced damages.
On September 4, 2015, the District Court for the District of Columbia granted partial summary judgment in favor of a government contractor, finding that the plain language of an applicable commercial warranty could not render claims for defective products false under the FCA because the warranty simply required the contractor to replace any products that did not live up to the warranty. U.S. ex rel. Westrick v. Second Chance Body Armor, Inc., et al., Nos. 04-280, 07-1144 (D.D.C. Sept. 4, 2015). A copy of the court’s decision can be found here. The district court rejected partial summary judgment motions filed by both the contractors and the government for claims that concerned a revised commercial warranty that expressly included a measurable quality guarantee, finding a material fact in dispute based on multiple reasonable interpretations of the revised warranty.
On July 13, 2015, the District Court for the District of Columbia sided with cyclist Lance Armstrong and his former attorneys, Williams & Connolly, LLP, in their efforts to oppose relator Floyd Landis’ attempt to compel Williams & Connolly to comply with a subpoena for communications among the firm, Armstrong, and Armstrong’s agents, Capital Sports and Entertainment Holdings Inc. (CSE). A copy of the court’s order can be found here.
Posted by Kristin Graham Koehler, Monica Groat, and Hilary Hoffman (Summer Associate)
In June 2010, relator Floyd Landis (Lance Armstrong’s former cycling teammate) brought a False Claims Act lawsuit against Armstrong, Armstrong’s agents Capital Sports and Entertainment Holdings Inc. (CSE), and Tailwind, Armstrong’s former employer. We have previously discussed the Armstrong litigation on this blog here, here, here, here, and here.