In U.S. ex rel. Poehling v. UnitedHealth Group, Inc., the U.S. District Court for the Central District of California partially granted UnitedHealth’s motion to dismiss the government’s FCA claims, which were based on the allegation that UnitedHealth’s attestations as to the truth and accuracy of the risk adjustment data submitted were false because the district court found that the government had failed to plead the attestations were material to the payment decision, as required by the Supreme Court’s decision in Escobar. The district court declined to dismiss the remaining claims, including an FCA claim added by the government after its complaint in the similar Swoben case was dismissed (which we discussed here), which alleged a violation of the reverse false claims provisions due to failure to delete invalid diagnosis codes without reference to the attestation. The district court did grant the government leave to amend, with the second amended complaint to be filed by February 26, 2018.
Continue Reading Government Survives Dismissal of Remaining FCA Claims in Managed Care Case
February 2018
DOJ Intervention in Healthcare Fraud Case Highlights Potential Risks for Private Equity Firms
By Bass, Berry & Sims on
The Department of Justice’s recent decision to intervene in a False Claims Act case against not only a compounding pharmacy but also the private equity firm that owns a controlling stake in it, underscores the potential risks private equity firms face when operating in the highly regulated healthcare space. On February 16, 2018, the United States filed a complaint in intervention in Medrano v. Diabetic Care Rx, LLC, Case No. 15-62617-CIV-BLOOM, alleging the compounding pharmacy, Patient Care America (“PCA”), paid illegal kickbacks to marketing firms who targeted military members and their families for prescriptions for compounded drugs the pharmacy then created not to meet individual patient needs, but rather to maximize reimbursement from Tricare, the federal military health care program. In a somewhat unique move, the government also named as a defendant the private equity company Riordan, Lewis & Haden Inc. (“RLH”), which manages and controls PCA through a general partner.
Continue Reading DOJ Intervention in Healthcare Fraud Case Highlights Potential Risks for Private Equity Firms