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The Coronavirus Aid, Relief, and Economic Security (CARES) Act provided trillions in economic relief in response to the COVID-19 pandemic, including hundreds of billions of dollars in aid for the healthcare industry.  Regulators in the healthcare industry have also adjusted regulations and procedures in response to the changing landscape caused by the pandemic.  While the CARES Act and regulatory changes provide much-needed help, accepting funds and navigating the regulatory changes can add many legal pitfalls to an already cluttered regulatory scheme.  As the government prepares to prosecute fraud and abuse by recipients of CARES Act funds, healthcare entities—the top payors of government enforcement and qui tam dollars—should take care to avoid claims of misconduct under the CARES Act. …
Continue Reading Tips for the Unwary: Precautions Against Liability for Healthcare Businesses Receiving CARES Act Funds

Introduction

Federal and state governments are ready to roll out over one trillion dollars in funding in response to the novel coronavirus (COVID-19) pandemic.  As past is often prologue, we expect this new round of massive government spending to someday be subjected to strict government oversight, targeted audits and investigations, and whistleblowers all searching for potential fraud, waste and abuse.  Economic downturns and the unfortunate necessity of layoffs may also lead to an increased risk of whistleblower claims by former employees.  Flooding the healthcare industry and other negatively impacted industry streams with hundreds of billions in aid will no doubt prove too tempting for the ever-present fraudsters in society who are always looking to take advantage.  As we have learned from past crises, however, when government enforcement eventually gets around to casting its False Claims Act (FCA) nets far and wide in search of potential fraud and abuse, many unwary businesses may be ensnared along with the usual fraudsters because of their sloppy or reckless practices. Deficient practices today could trigger an FCA investigation or enforcement action tomorrow along with all of its draconian treble damages and penalties.  This article details the risks businesses face under the FCA when responding to COVID-19, and provides guidance on how to guard against them now.

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Continue Reading Guard Against False Claims as Massive Government Spending Rolls Out to Combat COVID-19

The “Granston Memo” has proven to be a boon again in 2019 for False Claims Act (“FCA”) defendants.  In a January 15, 2019 Sheppard Mullin FCA Defense Blog article, we highlighted a growing movement by the Department of Justice (“DOJ”) to utilize its dismissal power on meritless and burdensome qui tam FCA cases following an internal policy memorandum issued in early 2018, now dubbed the “Granston Memo.”  The Granston Memo encouraged DOJ attorneys to seek dismissal of such cases where it served one or more important policy objectives.  The DOJ has met with almost uniform success in its continued focus on this effort: since the Memo issued, the DOJ has sought dismissal in 36 cases and been unsuccessful only twice. …
Continue Reading The Granston Memo in 2019: Recent Cases Highlight the Granston Memo’s Effectiveness as a Tool to Dismiss False Claims Act Cases

In a highly anticipated opinion in the AseraCare case, issued on September 9, 2019, the Eleventh Circuit Court of Appeals affirmed the district court’s holding that “a clinical judgment of terminal illness warranting hospice benefits under Medicare cannot be deemed false, for the purposes of the False Claims Act, when there is only a reasonable disagreement between medical experts as to the accuracy of their conclusion, with no other evidence to prove the falsity of the assessment.” U.S. v. AseraCare, Inc., No. 16-13004, at *3 (Sept. 9, 2019 11th Cir.) (“Op.”). Although the Court remanded the case to the district court to consider any such “other evidence” the Government might identify in the record, it also made clear that such evidence would need to “link” to specific claims submitted for payment, creating a substantial practical impediment to the Government’s ability to prove falsity in this and similar cases. See Op. at 56.…
Continue Reading The Eleventh Circuit Remands AseraCare, But Affirms High Hurdle for Proving Falsity

On July 31, 2019, the U.S. Court of Appeals for the Eleventh Circuit affirmed a lower court’s decision to grant summary judgment to hospital operator HCA and dismiss relator Thomas Bingham’s allegations. Bingham v. HCA (S.D. Fla. July 31, 2019) (“Op.”). In a well-reasoned opinion, the Court affirmed several key holdings:

  • There is no “remuneration”, for Federal health care program anti-kickback statute (“AKS”) purposes, unless a benefit is conferred for less than fair market value. In other words, as long as compensation to or from a referral source is consistent with fair market value, the AKS is not implicated.
  • With respect to the Stark Law, showing that a space lease arrangement effectuates an “indirect compensation arrangement” between a hospital and a referring physician requires a showing that the space, rental rates, or benefits under the lease correlate with the volume of the physician’s referrals to the hospital.
  • It may be appropriate for a court to strike allegations from an amended False Claims Act complaint if they are based on information uncovered by a relator during discovery.

These holdings should be welcomed by defendants of alleged AKS, Stark Law, and False Claims Act violations.…
Continue Reading Eleventh Circuit Affirms Key Kickback Statute, Stark Law, and False Claims Act Principles in Dismissing Allegations Against HCA

On May 14, 2019, the Supreme Court issued a decision in the case of Cochise Consultancy, Inc. v. United States ex rel. Hunt, No. 18-315, 2019 WL 2078086 (U.S. May 13, 2019). In its decision, the Supreme Court essentially added four years on the time available for private suits to be brought by whistleblowers/relators under the False Claims Act (“FCA”), regardless of whether the Government decides to intervene. As a result of this decision, entities that submit claims to the Government for payment – including Medicare, Medicaid and other Federal healthcare program-participating providers and suppliers – may find themselves facing a private whistleblower complaint more than six years after the alleged conduct took place. As described in the following article, “Supreme Court Addresses False Claims Act Statute of Limitations,” that was previously posted on the Sheppard Mullin False Claims Act Defense Blog on May 14, 2019, the Court decision now allows for the possibility that a whistleblower could inform an appropriate U.S. official of material facts relating to an alleged FCA violation after the whistleblower’s own six-year statute of limitations has already tolled, so long as the action is brought within 10 years of the alleged violation.…
Continue Reading Supreme Court Addresses False Claims Act Statute of Limitations

Federal prosecutors announced yesterday the Government’s settlement with electronic health records (“EHR”) vendor Greenway Health, LLC (“Greenway”) of False Claims Act (“FCA”) allegations for a payment of $57.25 million and Greenway’s acceptance of a Corporate Integrity Agreement (“CIA”). The Government’s FCA complaint was filed by the U.S. Attorney’s Office for the District of Vermont, the same office that handled the May 2017 civil settlement with EHR company eClinicalWorks for $155 million. The Greenway settlement is the second largest civil settlement in the District of Vermont’s history, topped only by the eClinicalWorks settlement.…
Continue Reading Government Puts Electronic Health Records Companies “on Notice” of Vigorous False Claims Act Enforcement

Summer is almost here. For some, that means planning vacations to the beach, hitting the gym to shed that winter weight, or perhaps hitting the golf course—but for us at the Sheppard Mullin Healthcare Law Blog and the False Claims Act Defense Blog, summer signals the anniversary of the Supreme Court’s seminal decision in Universal Health Services, Inc. v. United States ex rel. Escobar. …
Continue Reading What Have We Learned About False Claims Act Litigation in the Two Years Since Universal Health Services, Inc. v. United States ex rel. Escobar? Quite a Lot, Actually

As described in an April 17, 2018 article originally posted on the Sheppard Mullin Richter and Hampton, LLP False Claims Act Defense Blog, Kmart Corporation and the U.S. Department of Justice entered into a False Claims Act settlement agreement dated March 8, 2018, to end an investigation that was conducted jointly by the United States Attorney’s Office for the Eastern District of California and California’s Bureau of Medicaid Fraud and Elder Abuse.

In a March 8, 2018 Press Release issued by the Department of Justice, the Department reported that the settlement was the result of a whistleblower lawsuit against Kmart in which the whistleblower, a Pharmacist-in-Charge at a California Kmart location in Lakeport, California, alleged that Kmart violated the federal False Claims Act by knowingly submitting claims for reimbursement to California’s Medi‑Cal program that were not supported by applicable diagnosis and documentation requirements.  As described in the March 8, 2018 Press Release, Kmart paid $525,000, as required by the Settlement Agreement; of this amount, $96,500 went to the whistleblower.…
Continue Reading In Case Alleging Nationwide Pharmacy Fraud, Kmart Scores Narrow Settlement

The False Claims Act contains numerous requirements that are designed to prevent meritless cases from proceeding to discovery and trial. Among these provisions is the rule that, to establish liability, the government or a relator must show that an actual claim was submitted to federal Medicare or state Medicaid for reimbursement. In some Circuits, such as the Eleventh, the government or a relator must identify claims at the pleading stage. Failure to do so will result in dismissal.…
Continue Reading Healthcare Industry Beware: The Use of Statistical Sampling to Establish Damages and Liability Under the False Claims Act Remains a Viable Option for Plaintiffs

On January 19, 2018, the United States Court of Appeals for the Third Circuit affirmed a district court’s ruling granting summary judgment to a specialty pharmacy that was accused of violating the Anti-Kickback Statute and the federal False Claims Act (United States ex rel. Greenfield v. Medco Health Solutions, Inc. et al., No. 17-1152.). The court held that the relator, a former vice president of the specialty pharmacy, failed to link the pharmacy’s alleged kickback scheme to the actual submission of claims to Medicare. The decision is important because it stands for the proposition that to be liable under the False Claims Act a relator must allege more than the defendant was submitting claims for federal health care program beneficiaries while engaging in kickbacks. Rather, it must allege that at least one claim was submitted for services that were provided in violation of the Anti-Kickback Statute.…
Continue Reading Temporal Proximity Is Not Enough: Third Circuit Nixes FCA/Anti-Kickback Suit For Failure To Link Alleged Scheme to Claims