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Jeff Gibson co-authored an article for the American Bar Association (ABA) outlining some of the tools a company may use in response to a False Claims Act (FCA) investigation. Jeff co-authored the article with Greg Russo, managing director at Berkeley Research Group, for the ABA’s Health Law Section. As the authors point out, the government has been very successful in recent years in pursuing allegations against healthcare companies accused of submitting false claims under the FCA.
Continue Reading Jeff Gibson Outlines Investigative Tools in FCA Cases

As highlighted in a previous post, the $348 million judgment against the owners and operators of skilled nursing facilities in U.S. ex rel. Ruckh v. Genoa Healthcare, LLC, made serious waves in the FCA world.  The judgment, which included a trebling of the jury’s damages verdict and fines of $5,500 for each of over 400 claims, far surpassed any settlement or judgment previously entered in a long-term care or skilled nursing case.  However, on January 11, 2018, nearly a year after entering the landmark judgment, the Middle District of Florida overturned it.  In doing so, the court reiterated some of the more stringent requirements a relator must meet in order to prevail on an FCA claim.
Continue Reading Ruckh Court Overturns $350 Million False Claims Act Judgment

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

A recent jury verdict in an FCA lawsuit pending in the United States District Court for the Middle District of Florida resulted in a not-so-subtle reminder of just how high the stakes can be in such litigation.  On February 15, 2017, in U.S. ex rel. Ruckh v. Genoa Healthcare, LLC, a case in which both the United States and the state of Florida declined to intervene, the jury returned a verdict finding that the operators of 53 skilled nursing facilities(SNFs) had committed FCA violations resulting in more than $115 million in damages.  The FCA violations resulted from the submission of false claims to Medicare and Medicaid stemming from the inflation and upcoding of Resource Utility Group (RUG) levels for patients and false certifications that the SNFs had created timely and adequate patient care plans.

The jury’s verdict represented only actual damages.  On March 1, 2017, the district court assessed a statutory penalty of $5,500 per claim to 446 false claims and trebled the jury’s damages number, the result being a staggering judgment of almost $348 million.  This dwarfs even the largest of the long-term care settlements that have preceded it.Continue Reading False Claims Act Dangers on Display in Ruckh

A number of recent FCA decisions have grappled with the question of objective falsity, particularly in the context of FCA claims where the alleged falsity is premised on a lack of medical necessity in connection with the medical services provided.  The most recent in this line of cases considered whether a relator alleging nothing more than a difference of medical opinion regarding medical necessity of a particular cardiac procedure failed to plead objective falsity as required to state an FCA claim as a matter of law.

In U.S. ex rel. Polukoff v. St. Mark’s Hospital, 2017 WL 237615 (D. Utah Jan. 19, 2017), the relator alleged that a cardiologist and two Utah hospitals fraudulently billed the government for medically unnecessary cardiac procedures involving the surgical closure of a patent foramen ovale (PFO), which is a “a small opening in the wall separating the two upper chambers of the heart” that exists in about 25% of the population and is typically asymptomatic.  Adults with a PFO have an increased risk of suffering a stroke; although, according to the district court, “[o]pinions regarding the use of a PFO closure to prevent strokes have varied over the past decade.”Continue Reading Failure to Plead Objective Falsity Dooms Cardiologist’s FCA Complaint

In one of the few cases to apply the Supreme Court’s recent decision in Universal Health Services v. Escobar, the Seventh Circuit recently revisited and affirmed its prior rejection of an implied certification claim under the FCA.  Whether this is a window into how other circuit courts might implement Escobar remains to be seen.

In United States ex rel. Nelson v. Sanford-Brown, Ltd., 788 F.3d 696 (7th Cir. 2015), the relator brought several claims, one of which was an implied certification claim, alleging that Sanford-Brown College (the “College”), which receives federal subsidies, violated the FCA by maintaining recruiting and retention practices that ran afoul of Title IV.  In particular, the College entered into a Program Participation Agreement (PPA) with the federal government to receive subsidies under the Higher Education Act, and the PPA contained boilerplate language requiring the College to affirm that it would comply with Title IV’s mandates.  The relator claimed that because the College’s practices in actuality violated Title IV, its representations in the PPA, and its attendant subsidy claims, were false.Continue Reading Seventh Circuit Revisits Sanford-Brown, Rejects Implied Certification Claim

In a question of first impression, the Eleventh Circuit recently examined whether a relator’s secondhand knowledge of his employer’s billing practices was sufficient to make him an original source relative to the FCA’s public disclosure bar. Following several other circuits, the Eleventh Circuit answered that question by concluding that such knowledge would not render a relator an original source.
Continue Reading Eleventh Circuit Holds Secondhand Knowledge Does Not Make Relator an Original Source

The United States District Court for the Northern District of Texas recently released a noteworthy FCA opinion, one that includes a key ruling on the use of statistical sampling and extrapolation. In United States v. Vista Hospice Care, Inc., No. 3:07-CV-00604-M, 2016 WL 3449833 (N.D. Tex. June 20, 2016), the relator brought claims alleging, among other things, that the defendant violated the False Claims Act by certifying patients as eligible for hospice, when the patients were not terminally ill or their records lacked documentation supporting the requisite six-month life expectancy prognosis.  In deciding a motion to strike and a motion for summary judgment, the district court issued two very favorable defense rulings.

Statistical Sampling/Extrapolation

The relator relied on the expert testimony of a hospice physician, who reviewed 291 patient files and concluded that a large portion of the patients were not eligible for hospice for at least some of the days. An expert statistician, in turn, extrapolated from the physician’s testimony to conclude that defendants had submitted false claims on approximately 12,000 patients.Continue Reading Court Rejects Relator’s Use of Statistical Sampling

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