The False Claims Act, despite its name, does not define what it means for a claim to be “false” or “fraudulent.” This post examines the primary ways courts have interpreted the False Claims Act’s falsity element and discusses common issues that arise concerning falsity.

Continue Reading False Claims Act Fundamentals: What Is a False Claim?

On March 24, the U.S. Court of Appeals for the Fifth Circuit affirmed the criminal healthcare fraud convictions of two individuals who ran a network of home health and hospice centers in Texas. According to the Fifth Circuit, the defendants operated a “reimburse-first-verify-later system” for nearly ten years, under which an estimated 70 to 85 percent of patients were ineligible for the care they received. The Fifth Circuit provided colorful examples to show that “many certifications were not borderline cases”:

Continue Reading Fifth Circuit Affirms Criminal Healthcare Fraud Convictions of Hospice and Home Health Executives

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

For several years, courts have wrestled with the question of whether subjective clinical decisions regarding the type and amount of treatment patients may need can be false for purposes of establishing False Claims Act (FCA) liability.  The question of whether the FCA requires a showing of objective falsity has divided appellate courts in a number of recent high-profile cases.

For their part, practitioners have kept a close eye on whether the Supreme Court might bring much-needed clarity to this issue.  On February 22, the Supreme Court declined to do so, denying a petition for certiorari with respect to the Third Circuit’s opinion in U.S. ex rel. Druding v. Care Alternatives.

In Druding, the relators, who were former employees of a hospice provider, filed a qui tam action alleging that the hospice provider submitted false claims by routinely certifying patients who were not terminally ill for hospice care.  During the litigation, the relators’ expert examined the medical records of nearly 50 patients and concluded that the documentation did not support a certification of terminal illness for approximately 35% of those patients.  The hospice provider produced its own expert who testified a physician could have reasonably concluded that the patients at issue were terminally ill and needed hospice care.

Continue Reading Supreme Court Declines to Weigh in on Key Falsity Question

As 2020 draws to a close, we take a look back at a number of the most significant False Claims Act (FCA) cases of the prior 12 months.  Although no blockbuster cases emerged, such as the Supreme Court’s 2016 decision in Escobar, there were a number of noteworthy cases that will have lasting impact on future FCA litigation.  We discuss those cases briefly below.  We expect to cover these cases and much more in our Healthcare Fraud and Abuse Review, which we will release in early 2021.

Materiality

U.S. ex rel. Janssen v. Lawrence Memorial Hospital, 949 F.3d 533 (10th Cir. 2020)

Background.  In 2016, the Supreme Court held in Escobar that whether a defendant can be held liable under the FCA for violating a statute, rule, regulation, or contract provision turns, in part, on the elements of materiality and scienter, which the Court said are “rigorous” and “demanding.”  Post-Escobar, courts have grappled with specific applications of these standards, with some courts appearing to apply them less “rigorously” than others.

Allegations.  In U.S. ex rel. Janssen v. Lawrence Memorial Hospital, the relator primarily alleged that the defendant hospital falsified patient arrival times associated with certain CMS pay-for-reporting and pay-for-performance programs.  The relator introduced proof that the hospital had knowingly falsified arrival times in patient records by recording actual arrival times on patient triage sheets but then entering later times in the medical record or delaying patient registration until after the administration of some tests.

Continue Reading Key False Claims Act Cases in 2020

In recent years, healthcare providers have increasingly faced civil and criminal enforcement actions premised on the allegation that services billed to government healthcare programs were not medically necessary. As a result, those claims allegedly have constituted fraud in violation of the civil False Claims Act (FCA) and/or various criminal statutes.

These actions – whether brought by the government in civil or criminal proceedings or qui tam relators in civil FCA cases – pose significant issues for providers. Often, disputing clinical judgments related to care or services provided many years in the past can be particularly challenging when efforts are made by the government or relators to use statistical sampling to establish civil liability and/or damages across a vast universe of claims. Given the risks associated with these cases, it is not surprising that there have been a number of high-dollar civil settlements involving medical necessity allegations against providers, including hospitals, physicians and providers of hospice, home health and therapy services. In criminal cases, the government likewise has secured a number of high-profile convictions and guilty pleas in cases challenging billing associated with allegedly unnecessary medical procedures.

Continue Reading FCA Medical Necessity Cases May Stand on Firmer Footing After Recent Appellate Decisions

The FCA continues to be the federal government’s primary civil enforcement tool for investigating allegations that healthcare providers or government contractors defrauded the federal government. In the coming weeks, we will continue to take a closer look at recent legal developments involving the FCA. This week, we examine recent court decisions that considered the question of objective falsity in connection with FCA cases based on an alleged lack of medical necessity of the healthcare services provided to beneficiaries of federal healthcare programs.

Continue Reading FCA Deeper Dive: Objective Falsity and Medical Necessity Cases

Earlier this month, DOJ filed its complaint-in-intervention alleging FCA claims in the long pending Medicare Advantage case U.S. ex rel. Swoben v. Secure Horizons.  The U.S. Court of Appeals for the Ninth Circuit revived this matter last year when it held that the design of a retrospective review to avoid discovery of unsupported diagnoses submitted for risk adjustment can give rise to FCA liability resulting from false certifications.   DOJ intervened in March 2017 only as to the UnitedHealth Group parties in the case.  DOJ had intervened previously as to the SCAN defendants, who settled their portion of the case for $322 million in August 2012.

Continue Reading DOJ Complaint Alleges One-Way Chart Review Renders Medicare Advantage Risk Adjustment Certifications False

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

On September 1, 2016, the U.S. Court of Appeals for the Seventh Circuit reversed the dismissal of an FCA lawsuit by the U.S. District Court for the Eastern District of Wisconsin, and in doing so, evaluated the particularity required to survive a motion to dismiss under Rule 9(b) as it relates to both a relator’s obligation to plead specific claims and the specifics of the underlying fraudulent conduct at issue.

Continue Reading Seventh Circuit Rejects Specific Claims Requirement for 9(b), Maintains a High Bar for Medical Necessity Allegations