Recent Developments in False Claims Act Law. Norman G. Tabler, Jr. Faegre Baker Daniels

Transcription

1 Recent Developments in False Claims Act Law Norman G. Tabler, Jr. Faegre Baker Daniels

2 False Claims Act 31 USC 3729 creates liability for knowingly submitting false or fraudulent claim. Each request for reimbursement by Medicare or Medicaid is a claim. Liability can be Three times amount of entire claim Plus penalty of $10,957 to $21,916 per claim Plus whistleblower s attorneys fees and expenses.

3 Whistleblower Concept 31 USC 3730(b): A citizen may sue in the name of the government. 31 USC 3730(d)(1): If government intervenes, whistleblower gets 15% to 25%, plus attorneys fees and expenses. 31 USC 3730(d)(2): If government doesn t intervene, 25% to 30%, plus fees and expenses.

4 Hypothetical Example Medicaid clinic codes 100 $90 claims at $100. Contract law liability: $10 X 100 = $ 1,000 liability FCA liability: 100 X 100 X 3 = $ 30,000 Plus 100 X $21,916 = 2,191,600 Equals 2,221,600 Plus attorneys fee and expenses

5 Stark Law & Anti-Kickback Statute Interplay All Medicare or Medicaid claims arising out of a relationship that violates the Stark Law (prohibiting self-referral ) or the Anti-Kickback Statute (prohibiting remuneration for referrals) are False Claims.

6 Stark Law FCA Interplay If hospital provides physician with below-market parking for staff and patients & one motive is to induce referrals, Then hospital & physician have a financial relationship that varies with volume of referrals (i.e., more referrals = more value to physician). Therefore, Stark violation. Therefore, FCA violation with every Medicare or Medicaid claim. See U.S. ex rel. Bingham v. BayCare Health (M.D. Fla. 2014) U.S. ex rel. Bingham v. HCA (S.D. Fla. 2016). U.S. ex rel. Bingham v. HCA, 2016 BL (S.D. Fla. 2016). In 2012 HCA settled whistleblower case for $16.5 M, with Bingham getting $2.9 M.

7 Reverse False Claims A knowingly retained Medicare or Medicaid overpayment is a false claim. Affordable Care Act. How long before an overpayment becomes a false claim? 60 days. 42 USC 1320a-7k(d)(4)(B).

8 FRCP 9(b) Rule 9 Pleading Special Matters (b) Fraud or Mistake; Conditions of Mind. In alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake.. [emphasis added].

9 Recent Cases Universal Health Services v. US ex rel. Escobar (U.S. 2016). Behavioral care clinic failed to comply with numerous Medicaid regulations, such as proper licensure of personnel. Deceased patient s parents sued under FCA. Decision upholds implied certification theory, under which a provider s false certification of compliance with regulations makes the claim false. Rejects argument that reg. must be expressly designated condition of payment. But the false certification must be a specific representation about the goods or services. Failure to disclose noncompliance with material requirements can/must turn representations into misleading half-truths.

10 Recent Cases, Continued U.S. ex rel. Phalp v. Lincare (11 th Cir. 2017). Ignorance of the law as a defense. Ambiguous regulation may preclude the scienter element of an FCA violation. U.S. ex rel. Leysock v. Forest Labs (D. Mass. 2017). Relator s attorneys may be liable for defendant s attorneys fees in a frivolous FCA case. $6 Million.

11 Recent Cases, Continued U.S. ex rel. Petratos v. Genentech (3d Cir. 2017) Fact that government declined to intervene on behalf of a relator is evidence that the alleged violation was not material and therefore cannot survive defendant s motion for summary judgment. Government had filed 43-page brief stating that it takes no position on whether the allegations are sufficient to survive dismissal. Note: Government intervenes in only 20% to 25% of all cases.

12 Recent Cases, Continued U.S. ex rel. Ruchk v. Salus Rehab (M.D. Fla. 2017). Government declined to intervene. After six years of litigation realtors won a $348 million judgment. Government moved to submit a statement of interest. Motion denied: understanding a party s interest in money requires no additional briefing.

13 Recent Cases, Continued U.S. ex rel. Lutz v. Berkeley HeartLab (D. S. Car. 2017). Defendants asserted advice-of-counsel reliance as defense against scienter. In discovery government sought all information relating to advice and counsel solicited or received. Defendants refused, invoking attorney-client privilege. Held: defendants had waived the privilege.

14 U.S. ex rel. Lutz v. BlueWave Heartlab (4 th Cir. 2017). Qui tam action filed in Court grants gov t motion to freeze $17 M in assets. Defendants move to quash the attachment. Court denies motion. Defendants appeal. Circuit Court rules that subject to two inapplicable exceptions, Article III of Constitution gives Circuit Courts jurisdiction over only final judgments. Denial of motion to quash affirmed.

15 Recent Cases, Continued U.S. ex rel. v. Shepard v. Grand Junction Airport (D. Colo. 2017). Relators file qui tam case re construction costs, seeking $ 500 K. Government intervenes and proposes settlement for no damages. Relators invoke FCA right to fairness hearing. Government argues for highly deferential standard. Realtors argue for class action standard, giving less deference. Held: government entitled to highly deferential standard; class action standard inapplicable.

16 Recent Cases, Continued Walker v. Bio-Rad Labs (N.D. Calif.) SEC (i.e., non-fca) whistleblower case. Fired general counsel files retaliation case against Bio-Rad Lab. In defending, Bio-Rad revealed information that could have been privileged or protected. GC sought to reveal normally privileged and protected information. Bio-Rad filed motion to exclude on the eve of trial. Motion denied. GC wins $3 M in back pay plus $5 M in punitive damages.

17 Recent Cases, Continued U.S. ex rel. Chorches (2d Cir. 2017) Whistleblower EMT may sue ambulance co. employer, alleging on information and belief that it submitted false Medicare claims, because facts are peculiarly within the opposing party s [i.e., defendant s] knowledge.

18 Recent Cases, Continued U.S. ex rel. Wall v. Circle C Construction (6 th Cir. 2017) Contractor defendant may recover half a million in attorneys fees. Subcontractor underpaid two electricians $9,900 & settled for $15,000. Government sought $1.66M from contractor & eventually recovered $14,700. Contractor recovered attorneys fees under Equal Access to Justice Act. $500K+.

19 Questions? Questions?