Posted by Brian P. Morrissey and Kristin Koehler
A. Brian Albritton at the False Claims Act and Qui Tam Law blog discusses an interesting interview recently published in the Corporate Crime Reporter with Joseph E.B. “Jeb” White of the firm Nolan & Auerbach, P.A., which focuses its practice exclusively on representing qui tam relators in healthcare fraud suits. The interview discusses White’s view on the types of cases in which the Department of Justice is most likely to intervene. In a particularly notable passage, White briefly mentions DOJ’s practice of “deferring” its decision on whether to intervene in a qui tam suit when the deadline for that decision comes due. That topic warrants a bit of exploration here because, as readers may have observed in their own practice, DOJ appears to be relying on this practice with increasing frequency.
The FCA provides that, once a relator files a complaint, the complaint “shall remain under seal for at least 60 days,” affording DOJ a window within which to investigate the relator’s claims. 31 U.S.C. § 3730(b)(2). At the end of that period (which is routinely extended for months or even years), DOJ is required to either intervene and take over the action, or decline and allow the relator to conduct the litigation instead. Id. § 3730(b)(4). Even if DOJ declines, the FCA grants the Department the right to join the case at a later time, provided it can show “good cause.” Id. § 3730(c)(3).
It is increasingly common for DOJ prosecutors to file a statement with the court indicating that the DOJ has made “no decision” on intervention, but reserving its right to intervene at a later time. In light of the FCA provisions discussed above, these “no decision” statements have the very same effect as a statement declining intervention. After DOJ files its “no decision” statement, the relator proceeds with the litigation alone, and DOJ preserves the same statutory right to intervene later, just as it would if it had formally declined to intervene.
Yet DOJ may achieve some benefits in labeling its choice on intervention as a “no decision” rather than a declination. White suggests one. He observes that, in some cases, a “no decision” statement allows the DOJ to signal to relator’s counsel that DOJ is, in fact, interested in the case, but simply cannot intervene at the moment because of resource constraints or because the relator has not yet fully fleshed out his or her allegations. By making “no decision,” DOJ sends a message to the relator saying “please keep this case alive, we are going to come back later.” But a second consideration may motivate “no decision” statements in other cases. Sometimes, DOJ may conclude that a relator’s allegations are unlikely to establish a violation of the FCA, but may also be aware that DOJ’s failure to intervene in the relator’s case could prompt a negative reaction from certain politicians or members of the media. The scores of recent qui tam complaints filed against participants in the mortgage securitization industry provide an example of this phenomenon. Some such complaints have merit, some do not, but the default presumption among certain sectors of the general public is that the DOJ should be actively pursuing all forms of fraud in that industry. By styling its choice on intervention as a “no decision” rather than a “declination,” the Department provides itself with some public relations cover, emphasizing to the public that while it is not formally joining the relator’s suit, it is retaining its right to do so later, which the FCA would have provided to the Department anyway, even if it had formally declined to intervene.
Whatever the reasons for DOJ’s “no decision” statement in a particular case, it is clear that DOJ’s practice of using such statements is on the rise and likely to continue in the future.
Posted by Jaime L.M. Jones and Nirav Shah
In a report released last month, the federal government announced that it had recovered nearly $4.1 billion last fiscal year as a result of its escalated fight against health care fraud. Spearheaded by the Department of Health and Human Services and the Department of Justice, the government recouped approximately $2.4 billion in civil health care fraud via the False Claims Act as well as $1.3 billion in criminal fines and forfeitures under the Federal Food, Drug and Cosmetic Act. The number of new cases also rose, with the DOJ opening more than 1,100 new criminal health care fraud cases in addition to the more than 1,800 already pending. The number of civil cases is growing, too, with nearly 1,000 new cases being filed on top of over 1,000 existing actions.
In a blog post announcing the report, HHS Secretary Kathleen Sebelius credits recent tools, including the Affordable Care Act’s $350 million funding of the Health Care Fraud and Abuse Control Program, to help in the fight against fraud. A government fact sheet released on the same day also highlights these efforts, with particular focus on Health Care Fraud Prevention and Enforcement Action Teams (“HEAT”). These teams, created in 2009, are designed to encourage coordination and intelligence sharing among HHS and DOJ. The report also praises the work of the Medicare Strike Force, an “interagency team of analysts, investigators, and prosecutors who can target emerging or migrating fraud schemes, including fraud by criminals masquerading as health care providers or suppliers.” Secretary Sebelius cites these specialized anti-fraud teams and notes that, before their creation, “a fraudster could swindle Medicare for millions of dollars in Florida, close up shop, move to Detroit, and attempt to reestablish the same scheme without ever being noticed. Now, CMS and Department of Justice officials are tracking fraud scams as they move across the country, so that criminals are spotted when they try to re-enroll into Medicare or Medicaid.”
Administration officials noted that the recovery figures are nearly double the $2.14 billion recouped in 2008. Likewise, the number of fraud prosecutions increased 75 percent during the same period. Secretary Sebelius and Attorney General Holder both credited the Obama Administration’s revamped efforts at fighting fraud for these statistics.
The U.S . Department of Health and Human Services has released its Fiscal Year 2013 “Budget in Brief,” an overview of how HHS proposes to spend the close to $1 billion in budget authority for HHS requested in President Obama’s 2013 budget request. Program integrity is a top priority, with HHS noting that over the last three years, Health Care Fraud and Abuse Control (which comprises $610 million of the budget request) has produced a “return on investment” of $7.20 for every dollar spent. Among the key initiatives these funds will support are a continued emphasis on improper fee-for-service payments by Medicare, expansion of the Health Care Fraud Prevention and Enforcement Action Team (HEAT) task forces, and “an increased focused on civil fraud, such as off-label marketing and pharmaceutical fraud.” (page 62).
On December 19, the Department of Justice announced that during the fiscal year ended September 30, 2011, it obtained over $3 billion in settlements and judgments under the False Claims Act. A few items of note:
- Over 90% of the amount recovered resulted from whistleblower suits. According to DOJ, a record 638 qui tam suits were filed in FY2011.
- 80% of the total recoveries involved alleged healthcare fraud, with the bulk ($2.2 billion) directed toward the pharmaceutical industry.
- DOJ obtained $358 million from “non-war related procurement and consumer-related financial fraud” cases, a category that includes grant, housing and mortgage fraud that emerged in the wake of the financial crisis.
- In addition to FCA recoveries, DOJ secured $1.3 billion in criminal fines, forfeitures, restitution, and disgorgement under the federal Food, Drug and Cosmetic Act (FDCA).
A December 3 article in the Daily News Journal (Murfreesboro, TN) reporting on the recent indictment of the owners of an ambulance company for Medicare fraud discusses the increasing focus on healthcare fraud cases by the U.S. Attorney’s Office in the Middle District of Tennessee. According to the article, Jerry Martin, the current U.S. Attorney, said in a recent speech that his office is “absolutely looking for [FCA} business,” and recently has doubled the number of prosecutors working on FCA cases. While the U.S. Attorney’s Office for the Middle District of Tennessee is not as well-known as its counterparts in other locales (such as Boston and Philadelphia) for its FCA work, it has announced a number of healthcare FCA verdicts or settlements in 2011 relating to medical devices, diagnostic testing, and nursing homes.