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

A recent piece of federal legislation intended to address the opioid crisis across the United States may have some unintended consequences. In attempting to prohibit “patient brokering” in the narrow context of addiction treatment and recovery centers, Congress may have unwittingly passed an unprecedented expansion of federal prosecutorial authority over payment arrangements between providers and referral sources for private-pay patients. For the reasons discussed in this blog post, any individual or entity who provides services relating to addiction treatment or recovery (as well as all clinical laboratories, regardless of whether they provide any addiction treatment or recovery services) should examine their arrangements with all referral sources for private-pay patients, even those who do not refer patients for addiction treatment or recovery services.

On October 24, 2018, the President signed into law the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment (SUPPORT) for Patients and Communities Act (the “SUPPORT Act”), as discussed here. The SUPPORT Act consolidated a number of opioid-related bills, including the Eliminating Kickbacks in Recovery Act of 2018 (EKRA), which was intended to address the problem of “patient brokering” in the context of treatment centers and sober homes.Continue Reading The Eliminating Kickbacks in Recovery Act: An Unprecedented Expansion of Anti-kickback Liability to Private-Pay Referrals?

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

In June 2018, Healogics, Inc., the nation’s largest provider of advanced chronic wound care services, agreed to pay to up to $22.51 million to resolve False Claims Act (FCA) allegations that, from 2010 to 2015, it caused wound care centers to submit claims to Medicare for medically unnecessary and unreasonable hyperbaric oxygen (HBO) therapy. Healogics manages almost 700 hospital-based wound care centers where HBO therapy is provided. HBO therapy is a modality wherein a patient’s full body is enclosed in a pressurized chamber and exposed to high concentrations of oxygen. Medicare covers the therapy only when used to treat certain conditions (e.g., diabetic foot ulcers) and only when administered in certain circumstances (e.g., after no measurable signs of healing for prior 30 days of treatment with standard wound therapy).

Pursuant to the settlement agreement, Healogics paid $17.5 million and could pay an additional $5.01 million if its earnings exceed certain levels over the next five years. Healogics also agreed to enter into a five-year Corporate Integrity Agreement with the U.S. Department of Health and Human Services, Office of Inspector General (HHS-OIG) as part of the resolution.Continue Reading FCA Settlement Regarding Provision of Hyperbaric Oxygen Therapy

After years of investigation and litigation, and on the eve of a highly anticipated trial, the government abandoned its FCA case against ManorCare, the nation’s second-largest operator of skilled nursing homes and assisted living centers.  In a joint motion filed on November 8, 2017, the government announced that it would move for dismissal with prejudice of U.S. ex rel. Ribik v. HCR ManorCare Inc., No. 1:09-cv-00013 (E.D. Va.).  The move marks an unexpected victory for ManorCare and a significant defeat for the government, which was seeking to recover over $500 million in damages and fines in the case.
Continue Reading DOJ Bows Out of ManorCare FCA Case

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

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 recent years, civil enforcement efforts involving the FCA have grown significantly. Today, the FCA impacts a vast array of businesses, as it is commonly used to redress false claims for government funds involving everything from government contracts to Medicare and Medicaid to federally insured mortgages.  The versatility and reach of the FCA has enabled DOJ to use this powerful enforcement tool to recover more than $20 billion during the last five years alone.

A review of several recent FCA settlements indicates that the DOJ continues to actively pursue FCA claims for a wide range of conduct and in a wide variety of industries.Continue Reading Recent Settlements Demonstrate the Reach and Versatility of the FCA