April 2015

On April 6, 2015, the Sixth Circuit delivered a costly blow to the United States government to the tune of $657 million when it issued its opinion in United States v. United Technologies Corporation and remanded the case back to the district court to review the damages award, yet again.

This was the second time that the Sixth Circuit heard arguments deriving from the United States False Claims Act case against Pratt & Whitney (“Pratt”), now owned by United Technologies, for false statements the company made when competing against GE Aircraft for contracts to build F-15 and F-16 jet engines. In 1983, in an attempt to outbid GE Aircraft and make it hard for the government to issue a split-award contract, Pratt misstated its projected costs and certified that the company’s bid included its “best estimates and/or actual costs.” After uncovering Pratt’s overstated costs projections, the government filed both an administrative action against the company in the Armed Services Board of Contract Appeals (“ASBCA”) under the Truth in Negotiations Act and a lawsuit in district court alleging violations of the False Claims Act.Continue Reading United Technologies is Saved from $657 million False Claims Act Verdict by the Sixth Circuit

In recent months, relators’ qui tam complaints have been subject to increased scrutiny by criminal prosecutors. In addition to civil FCA liability, individuals doing business with the federal government face potential criminal liability under various criminal fraud-related statutes. Potential charges for fraudulent activities are not limited to a criminal fraud charge, but also include bribery, false statements, conspiracy to defraud, wire fraud, mail fraud, and identity theft, among others. Most of these crimes are felonies and carry substantial penalties, including fines, freezing of assets and imprisonment. Especially in the healthcare industry and defense procurement space, many criminal investigations originate as civil qui tam filings only later adopting a criminal component. These parallel investigations typically involve the DOJ and may include other enforcement agencies.

Recent DOJ rhetoric encourages an increased use of such parallel investigations. In September 2014, Assistant Attorney General for the Criminal Division of the DOJ, Leslie Caldwell, announced that the Criminal Division would be “stepping up” its review to look for potential criminal liability in qui tam complaints, noting that such complaints “are a vital part of the Criminal Divisions’ future efforts.”[1] Consistent with this message, Caldwell encouraged the relator’s bar to notify the Criminal Division directly when a complaint is filed instead of coordinating only with the local U.S. Attorney’s Office. As part of the new process, the Criminal Division will receive and review new complaints so that prosecutors may determine the nature and extent of any criminal exposure.Continue Reading New DOJ Qui Tam Protocols Likely to Lead to Increased Parallel Criminal Investigations

On March 31, 2015, in United States v. Robinson, the U.S. District Court for the Eastern District of Kentucky issued the latest opinion approving the use of statistical sampling by the government and relators to establish FCA liability.  In Robinson, the government has asserted that an optometrist provided medically unnecessary optometric services to nursing home residents over a five-year period and subsequently billed Medicare for these services.  As support for its medical necessity argument, the government submitted an expert witness opinion based on an examination of a sample of 30 of the 25,779 claims at issue.

In moving for summary judgment, the defendant argued in part that the government should not be permitted to utilize statistical sampling to extrapolate FCA liability and damages to the 25,779 claims at issue.  The government contended that requiring a claim-by-claim review in FCA cases involving this magnitude of claims would enable many defendants to evade prosecution and that other courts have found statistical sampling appropriate in establishing FCA liability in similar cases.Continue Reading Trend of Using Statistical Sampling to Support FCA Liability Continues

On March 31, 2015, DOJ announced a $10 million settlement with Robinson Health System Inc. (Robinson), a nonprofit operator of 10 Northeast Ohio healthcare facilities, including Robinson Memorial Hospital.

The settlement, announced a day before Robinson finalized a transaction involving its flagship hospital, stems from a June 2014 self-disclosure to the U.S. Attorney for the Northern District of Ohio, in which Robinson disclosed questionable financial relationships under Stark and the AKS, some dating back nearly 10 years, with more than 30 referring physicians. This self-disclosure stemmed from a due diligence review conducted while searching for a partner health system.Continue Reading Ohio Health System’s Self-Disclosure Leads to $10 Million FCA Settlement

From the Bass, Berry & Sims Blog Network
From the Bass, Berry & Sims Blog Network

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