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 take a closer look at recent legal developments involving the FCA.  This week, we examine the requirement that a relator plead and prove that a defendant acted with the requisite level of knowledge to establish an FCA claim and evaluate how courts have evaluated this issue in recent cases.

Continue Reading FCA Deeper Dive: Meeting the FCA’s Intent Requirement

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 take a closer look at recent legal developments involving the FCA. This week, we examine recent court decisions considering relators’ efforts to plead and prove falsity under the FCA by relying on a worthless services theory of liability.

The Seventh Circuit’s decision in U.S. ex rel. Absher v. Momence Meadows Nursing Center, Inc., 764 F.3d 699 (7th Cir. 2014), casts significant doubt on the “worthless services” theory of FCA liability. Following the Seventh Circuit’s ruling in Momence, courts have reaffirmed the high hurdle that relators must surmount in order to plead a “worthless services” claim under the FCA.

Continue Reading FCA Deeper Dive: Worthless Services as a Theory of Falsity

Healthcare_Fraud_2015Bass, Berry & Sims is pleased to provide its annual Healthcare Fraud and Abuse Review, which highlights significant enforcement trends and legal developments, discusses recent cases and settlements affecting the healthcare industry, and provides an outlook on what lies ahead in 2016.

During the previous year, Bass, Berry & Sims attorneys have represented virtually every type of provider in the healthcare industry in civil and criminal healthcare fraud investigations and related litigation. We have incorporated this experience into our Healthcare Fraud and Abuse Review for the benefit of our clients and friends and hope that the Review will be a valuable resource for healthcare providers facing complex compliance and fraud and abuse-related issues.

The Healthcare Fraud and Abuse Review offers a concise discussion and analysis of such topics as:

  • Noteworthy Healthcare Settlements
  • Issues to Watch
  • False Claims Act Update (“FCA”)
  • Stark Law/Anti-Kickback Statute Developments
  • Pharmaceutical and Medical Device Developments

Click here to view the Review.

The Sixth Circuit recently became the first appellate court to consider and reject FCA liability based on a healthcare provider’s alleged false attestation of compliance with the Health Information Technology for Economic and Clinical Health Act (HITECH) Act’s meaningful use objectives. U.S. ex rel. Sheldon v. Kettering Health Network, 2016 WL 861399 (6th Cir. March 7, 2016). The HITECH Act was designed to encourage the adoption of Electronic Health Record (EHR) technology by healthcare providers through the creation of incentive payments for eligible providers.  As a condition of receiving those incentive payments, the HITECH Act requires healthcare providers to meet meaningful use objectives and compliance measures concerning the adoption of EHR technology.

Continue Reading Sixth Circuit Affirms Dismissal of FCA Action Related to HITECH Meaningful Use Payments

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 take a closer look at recent legal developments involving the FCA. This week, we examine recent court decisions considering the requirement that a relator plead and prove falsity to establish an FCA claim and evaluate the different theories of falsity that have emerged during the last several years.

Use of Statistical Sampling to Establish Falsity

Following last year’s landmark ruling in U.S. ex rel. Martin v. LifeCare Centers of America, Inc., 2014 U.S. Dist. LEXIS 142657 (E.D. Tenn. Sept. 29, 2014), statistical sampling has become an increasingly important issue in FCA cases. This year, decisions by the district court in U.S. ex rel. Paradies v. AseraCare, Inc., 2015 WL 8486874 (N.D. Ala. Nov. 3, 2015), reiterated this fact. AseraCare faced allegations that it falsely billed the government for hospice patients that failed to satisfy requirements that patients be terminally ill and have a life expectancy of six months or less. Anticipating lengthy trial testimony concerning the statistical sample of 233 claims, the district court bifurcated the trial for the FCA’s falsity element from trial for all other elements. In arriving at its novel decision, the district court rejected the government’s objections that bifurcation would result in juror confusion and duplicative evidence.

Continue Reading FCA Deeper Dive: Pleading and Proving Falsity under the FCA

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 take a closer look at recent legal developments involving the FCA. This week, we examine recent court decisions considering the level of specificity required of a relator under Rule 9(b) in pleading the alleged FCA fraud scheme.

While analyzing the circumstances of fraud is necessarily a case-by-case analysis, courts have applied decidedly different approaches to examining certain components of a fraudulent scheme, including the “who” and “when” requirements.

Continue Reading FCA Deeper Dive: Rule 9(b) and the Pleading of the Alleged Fraud Scheme

For the first time since August 2011, the Sixth Circuit examined the standard for pleading False Claims Act (FCA) violations with particularity under Federal Rule of Civil Procedure 9(b)—in particular, when the requirement that a relator plead an actual false claim submitted to the government can be “relaxed,” if at all. The case, U.S. ex rel. Eberhard v. Physicians Choice Laboratory Services, LLC (PCLS), No. 15-5691 (6th Cir. Feb. 23, 2016), involved allegations that PCLS, a medical testing services provider, submitted false claims to Medicare and Medicaid as a result of a purported scheme by PCLS to pay kickbacks—in the form of a commission on sales of PCLS products and services—to an independent sales force to induce them to solicit the referral of samples to PCLS for testing, in violation of the Anti-Kickback Statute. The relator, a former sales employee of PCLS, appealed the district court’s dismissal of his complaint for failure to plead any actual false claims submitted to the government with particularity under Rule 9(b), arguing that the district court should have applied a “relaxed” Rule 9(b) standard because of the relator’s purported “personal knowledge” of the false claims.

In affirming the district court’s ruling, the Sixth Circuit explained at the outset that unlike “some circuits hold[ing] that it is sufficient for a plaintiff to allege particular details of a scheme to submit false claims paired with reliable indicia that lead to a strong inference that claims were actually submitted, we have joined the Fourth, Eighth, and Eleventh Circuits in requiring ‘representative samples’ of the alleged fraudulent conduct.” Solely based on the relator’s failure to plead any false claims submitted in connection with the alleged kickback scheme, the Sixth Circuit ruled that the relator could not meet the pleading requirements of Rule 9(b).

Continue Reading No Time to Relax: Sixth Circuit Reviews Rule 9(b) Standard in FCA Case for First Time in Nearly Five Years

On February 11, 2016, the Centers for Medicare & Medicaid Services (CMS) published a final rule on the reporting and return of overpayments within 60 days, an obligation commonly known as the “60-day rule.” The final CMS rule, which relates to Medicare Part A and Part B only, eases some of the requirements for healthcare providers and suppliers compared to what CMS originally proposed four years ago. Given that the failure to timely report an overpayment can lead to False Claims Act (FCA) exposure, the final rule has significant FCA implications for healthcare providers.

Under the “reverse false claim” provision of the FCA, 31 U.S.C. § 3729(a)(1)(G), liability can exist when a provider or supplier “knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay or transmit money or property to the Government.” An “obligation” includes the retention of any overpayment. The Affordable Care Act explicitly states that the 60-day rule is an “obligation” for purposes of the FCA.

Continue Reading FCA Implications of the CMS Final Rule on Overpayments

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 take a closer look at recent legal developments involving the FCA. This week, we examine recent court decisions that have required a relator only to plead a reliable indicia of the submission of false claims to satisfy Rule 9(b).

Relators in a pair of cases from the Middle District of Florida succeeded in satisfying Rule 9(b) under a relaxed pleading standard. In U.S. ex rel. Space Coast Medical Associates, LLP, 94 F. Supp. 3d 1250 (M.D. Fla. Feb. 6, 2015), the district court held relators had pleaded “sufficient indicia of reliability that claims were submitted” by alleging “particularized knowledge of the Defendants’ billing process and of alleged fraudulent bills,” as well as “individual Medicare patients who received treatment.”

Continue Reading FCA Deeper Dive: Rule 9(b) and the Pleading of Actual Claims Under a Relaxed Standard

There are a number of key issues that will drive the government’s enforcement efforts in the coming year and that will have a significant impact on how healthcare fraud matters are pursued by relators asserting FCA claims and are defended on behalf of healthcare providers.  In the previous weeks, we have examined these issues in greater depth and why healthcare providers should keep a close eye on these issues.  This week, we examine the Fourth Circuit’s upcoming appellate consideration of the use of statistical sampling to establish falsity under the FCA.

In 2014, the district court’s opinion in U.S. ex rel. Martin v. Life Care Centers of America rejected a motion to exclude the government’s expert testimony regarding the intended use of statistical sampling to establish liability over an extrapolated universe of claims.  Since that time, a number of other district courts have considered the issue of whether such evidence may be used to establish liability by either the government or relators.  See U.S. ex rel. Paradies v. Aseracare, Inc., 2014 U.S. Dist. LEXIS 167970 (N.D. Ala. Dec. 4, 2014) (denying motion for summary judgment and noting that “[t]he Government has statistical evidence regarding all of the Government’s universe of 2,181 claims. Statistical evidence is evidence.”); U.S. ex rel. Guardiola v. Renown Health, 2015 WL 5123375 (D. Nev. Sept. 1, 2015) (issuing discovery ruling regarding the underlying data universe relevant to relator’s use of statistical sampling); U.S. ex rel. Ruckh v. Genoa Healthcare, LLC, 2015 WL 1926417 (M.D. Fla. Apr. 28, 2015) (granting relator’s motion to admit expert testimony based on statistical sampling that had not been undertaken by relator as of the date of the motion).

Continue Reading FCA Issues to Watch: Appellate Consideration of Statistical Sampling

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

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