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

Recently, the DOJ intervened in one of several currently pending qui tam cases involving Medicare Advantage (MA) and the Risk Adjustment process used to determine the amount of payments to Medicare Advantage Organizations (MAO).  The government filed its notice of election to intervene in US ex rel. Poehling v. UnitedHealth Group, a case that has been pending in the U.S. District Court for the Central District of California, and which is now unsealed.

Continue Reading DOJ Intervenes in Risk Adjustment FCA Case

After granting the relators’ petition for an interlocutory review of the district court’s rejection of the use of statistical sampling to establish FCA liability, the Fourth Circuit ultimately declined to reach that issue in its opinion recently issued in U.S. ex rel. Michaels v. Agape Senior Community, Inc.  This conclusion comes as no surprise based on the comments and questions posed by the panel during the course of oral argument, as we covered here.

Continue Reading Fourth Circuit Takes a Pass on Statistical Sampling, Finds DOJ’s Settlement Veto Authority Unreviewable

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

A recent Sixth Circuit opinion in U.S. ex rel. Hirt v. Walgreen Co. should come as welcome news for FCA defendants concerned about the implications of the Sixth Circuit’s application last year, for the first time, of a “relaxed” standard for pleading false claims under Rule 9(b) in U.S. ex rel. Prather v. Brookdale Senior Living Communities, Inc.

Continue Reading Relax, Sixth Circuit Opinion Indicates Rule 9(b) Pleading Requirement Still Has Bite

Bass, Berry & Sims and the Tennessee Hospital Association recently sponsored the Nashville Healthcare Fraud Conference, a day-long CLE program designed to provide insight into the most significant fraud and abuse issues facing the healthcare industry. Panel discussions were focused on providing practical tips and takeaways for preparing for, responding to and resolving a healthcare fraud investigation. A variety of topics were covered including:

  • Year in Review: Looking Back on Healthcare Fraud Issues in 2016 (or Everything You Wanted To Know about Escobar in 50 Minutes)
  • Developments Regarding Whistleblowers
  • Quick Hits – Session 1: Yates One Year Later
  • Quick Hits – Session 2: Effective Use of Your Own Data – Mining Your Own Data for Compliance
  • Quick Hits – Session 3: Mitigating Business Partner Risks in Healthcare
  • View From the U.S. Attorneys
  • Quick Hits – Session 4: Physician Compensation
  • Role of Legal and Compliance in an Era of Heightened Enforcement
  • Anatomy of a Data Breach – An Interactive Case Study
  • Ethics of a Healthcare Fraud Investigation

Keynote remarks were offered by the U.S. Attorneys for the Middle, Eastern and Western Districts of Tennessee, who offered practical tips to healthcare providers navigating an increasingly challenging enforcement environment.

The Nashville Healthcare Fraud Conference Brochure and the 2016 Nashville Healthcare Fraud Conference Presentation are both available online.

The Supreme Court held that a relator’s breach of the seal in a qui tam case does not require mandatory dismissal of the complaint, but the Court declined to articulate what factors are appropriate to consider in determining whether dismissal is appropriate.  The Court wrote only that appropriateness of dismissal in a given case should be left to the sound discretion of the district court. The district court in this case had not abused its discretion in declining to dismiss the case, and the appropriate test could be taken up in future cases.

Continue Reading Supreme Court Rejects Mandatory Dismissal for an FCA Seal Breach

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 June, the Supreme Court issued Universal Health Services, Inc. v. U.S. ex rel. Escobar, a landmark opinion in which the Supreme Court addressed the standard for pleading materiality in FCA implied certification cases.  The Supreme Court ultimately remanded the case to the First Circuit to resolve in the first instance whether the alleged violations met that standard, and last week, the First Circuit gave its answer: the violations were material.

Continue Reading On Remand, First Circuit Finds Violations in Escobar Were Material

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

From the Bass, Berry & Sims Blog Network
From the Bass, Berry & Sims Blog Network

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