Causation

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On May 2, the U.S. Court of Appeals for the Seventh Circuit affirmed a False Claims Act (FCA) trial verdict in part, holding that the judgment was not constitutionally excessive under the Eighth Amendment. Continue Reading Seventh Circuit Upholds FCA Judgment Against Constitutional Challenge, Avoids Causation Circuit Split

A qui tam False Claims Act (FCA) complaint was recently unsealed against Cerebral, a telehealth startup that provides virtual mental-health therapy, in the U.S. District Court for the Northern District of Iowa.  Continue Reading False Claims Act Case Unsealed Against Cerebral, Showing Continued Scrutiny of Telehealth Prescriptions

Two Massachusetts federal district courts recently addressed—and disagreed about—an important False Claims Act (FCA) issue that has also divided the federal circuit courts: when an alleged FCA violation is based on an underlying violation of the Anti-Kickback Statute (AKS), what kind of causal link must the government or a relator show between the alleged AKS violation and the allegedly false claim for payment?
Continue Reading District Courts Wrestle with Causation in Kickback Cases While Circuit Courts Remain Divided

On March 28, the Sixth Circuit issued an important decision on the meanings of “remuneration” and “causation” under the Anti-Kickback Statute (AKS), holding that remuneration “covers just payments and other transfers of value” and not “any act that may be valuable to another,” and that to establish False Claims Act (FCA) liability based on AKS violations, a relator or the government must prove a causal link between the alleged kickback scheme and the alleged false claim. Continue Reading Sixth Circuit Reins In Anti-Kickback Statute

The False Claims Act, 31 U.S.C. § 3729, et seq. is the federal government’s primary and most effective tool for fighting fraud. This post provides an overview of the elements that plaintiffs must satisfy to establish liability under the False Claims Act and common defenses related to the elements.
Continue Reading False Claims Act Fundamentals: Elements of the False Claims Act

The roller coaster ride of U.S. ex rel. Ruckh v. Genoa Healthcare, LLC continues.  In a previous post, we wrote about the staggering $348 million judgment entered following a jury verdict against a management company and skilled nursing facilities (SNFs) owned by Consulate Health Care.  The jury found the defendants committed False Claims Act (FCA) violations by artificially inflating Resource Utility Group (RUG) levels for Medicare therapy patients and falsely certifying that the SNFs had created timely and adequate patient care plans required by Medicaid.  Following the judgment, defendants filed a motion for judgment as a matter of law under Federal Rule of Civil Procedure 50(b), and as we noted here, the district court judge took the extraordinary step of overturning the judgment on materiality grounds.

In the latest turn, the Eleventh Circuit reversed the district court’s decision in part and reinstated most of the jury verdict.  While the district court, in applying Escobar’s materiality standard, had found “an entire absence of evidence” of materiality, the Eleventh Circuit reached the opposite conclusion, holding that “plain and obvious” evidence of materiality supported a jury verdict of $85 million in single damages.  The appellate court ordered the district court to enter judgment in treble that amount, plus per-claim statutory penalties under the FCA.  That comes to over $255 million.Continue Reading Eleventh Circuit Reinstates Massive FCA Judgment in Ruckh

Congress amended the Anti-Kickback Statute (AKS) in 2010 to confirm that a claim “resulting from” an AKS violation constitutes a false or fraudulent claim for purposes of the FCA.  42 U.S.C. 1320a-7b(g).  However, Congress did not define the phrase “resulting from.”  That question is immaterial in a criminal AKS case because the offer or receipt of the payment completes the crime.  But in order to prevail in a civil FCA case, a relator or the government must prove the submission of a false claim to a federal healthcare program.  In recent civil FCA cases, courts have struggled to articulate the precise link that is required in order to establish that a claim “result[s] from” an illegal kickback, often relying on traditional causal concepts to help articulate the required link.  This developing area of the law is one to watch as courts continue to grapple with the interplay between the link required by the plain language of the AKS and the body of case law related to FCA causation.

U.S. ex rel. Greenfield v. Medco Health Sys., Inc.

In U.S. ex rel. Greenfield v. Medco Health Sys., Inc., the relator alleged that the defendants illegally donated to certain charities in order to receive patient referrals and then allegedly falsely certified compliance with the AKS when seeking reimbursement.  The U.S. District Court for the District of New Jersey granted summary judgment for the defendants, reasoning that the relator had not shown a causal link between the defendants’ donations and any claims for payment.  Although discovery revealed that the defendants submitted claims for 24 federally insured patients during the relevant time period, the district court concluded that this evidence alone did not provide “the link between defendants’ 24 federally insured customers and defendants’ donations to [the charities].”  Instead, it explained that the relator was required to show that the federally insured patients were referred to the defendants as a result of the defendants’ donations to the charities.  “Absent some evidence … that those patients chose Accredo because of its donations,” the relator could not carry his burden on his claim.Continue Reading Courts Grapple with Causation Requirement in FCA Cases Based on Violations of Anti-Kickback Statute

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

In a recent opinion, the Seventh Circuit joined its sister circuits in holding that under the FCA, a defendant’s conduct must proximately cause injury to the government in order to incur liability for that injury.  United States v. Luce, No. 16-4093, 2017 WL 4768864 (7th Cir. Oct. 23, 2017).  This decision resolves a circuit split that arose in 1992 when the Seventh Circuit parted company with the Third Circuit—the only other circuit at that time to have addressed the issue.  At that time, the Seventh Circuit held that the FCA required only a “but-for” standard of causation, meaning that a defendant could be held liable under the FCA even if the Government’s loss was not caused directly by the defendant’s conduct so long as the government would not have suffered the loss if not for the defendant’s conduct.  In addition to the Third Circuit, the other circuits that have since addressed this issue—the Fifth, D.C., and Tenth Circuits—have held that the higher standard of “proximate causation” applies to FCA cases.
Continue Reading Seventh Circuit Resolves Circuit Split on Causation in FCA Cases

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From the Bass, Berry & Sims Blog Network

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