Department of Justice Closes Two Pharmacies In Connection With Opioid FCA Investigation

DOJ recently took the unusual step of obtaining a temporary restraining order (“TRO”) to shut down two healthcare providers in conjunction with the filing of a False Claims Act lawsuit based on the dispensing of medically unnecessary prescriptions.

On October 26, 2017, the Secretary of the Department of Health and Human Services (“HHS”) declared the opioid epidemic a national public health emergency.  As further detailed in the Complaint, according to the Center for Disease Control and Prevention (“CDC”), retail opioid prescriptions were dispensed in 2017 at a national rate of 58.7 prescriptions per 100 persons, and Tennessee’s dispense rate is nearly double the national rate, according to the United States.  See Complaint, at ¶15.  In Clay County, in particular, the United States contends that opioids were dispensed “at a rate sufficient for every man, woman, and child in the county to get their own prescription – twice.”  See Complaint, at ¶16. (more…)

Federal District Court Bars Repeat Relator’s “Opportunistic” Action

Posted by Gordon Todd and Jeff Beelaert

The United States District Court for Middle District of Tennessee recently dismissed a qui tam action with prejudice after finding that the relator’s “opportunistic” claims were barred by the public disclosure provision of the FCA. In Osheroff v. HealthSpring, Inc., No. 3:10-1015 (M.D. Tenn. April 5, 2013), the Court granted the defendant’s motion to dismiss after finding that the allegations were “substantially the same as the allegations or transactions exposed by the Miami Herald and found on the [company’s] website.” Slip Op. at 14.

The relator was a self-described “entrepreneur” who has business experience in a variety of fields, ranging from motorcycles, to electronics, to commercial real estate and medical clinics for cosmetic surgery and MRIs. He is no stranger to qui tam actions; indeed, the Court cited two other qui tam actions that he filed in Florida federal court. Id. at 8. In this case, Osheroff alleged that HealthSpring—one of the largest managed-care companies in the United States—had devised a “scheme” to secure Medicare payments by doling out lavish inducements to patients.

Specifically, Osheroff alleged that HealthSpring’s medical clinics in South Florida provided “luxurious” Cuban-style healthcare, where “patients are chauffeured in free limousine-class vehicles to enjoy free meals, take-away food, personal pampering, bingo, dominoes, raffles, music and dance as part of an expense-free social or entertainment outing of great cost to the clinics and significant value to their patrons.” Id. at 4. Osheroff allegedly discovered these activities through his own “research” and “investigation.”

The Court disagreed and found that his claims were based on publicly disclosed knowledge. While public disclosure would not necessarily bar the suit if Osheroff had been the original source of the claims, there is nothing to suggest that he presented his information to the Government before the media reports appeared. Moreover, there is nothing to suggest that he added any independent or material information to what was already disclosed. Consequently, the Court dismissed the action with prejudice, noting that “the FCA abjures parasitic lawsuits, that is, suits in which ‘would-be relators merely feed off a previous disclosure of fraud.'” Id. at 12 (quoting Walburn v. Lockheed Martin Corp., 431 F.3d 966, 970 (6th Cir. 2005)).