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

A Florida federal court threw out a $350 million jury verdict against a nursing facility, citing the Supreme Court’s landmark decision in Universal Health Services, Inc. v. United States ex rel. Escobar. The court explained that the relators had failed to establish that the alleged violations were material to the federal Medicare and state Medicaid programs’ decision pay claims.

The ruling is another piece of welcome news to the healthcare community, which is historically the primary target of the government’s False Claims Act enforcement efforts. The ruling demonstrates that under Escobar, it is one thing to proclaim that a violation was material to the government’s decision to pay, but it is another thing to prove it.
Continue Reading Escobar’s Demanding Materiality Standard Nixes $350 Million Verdict Against Florida Nursing Facility

The DOJ is empowered under the FCA to seek dismissal of unmeritorious qui tam suits brought in its name. The DOJ has historically used this power sparingly. We are happy to report, however, that more dismissals may be on the horizon.

On January 10, 2018, Michael Granston, Director of the Commercial Litigation Branch of the Fraud Section of the U.S. Department of Justice circulated an internal memorandum that was published last week in the legal press. The memorandum collects cases in which the Department sought dismissal of unmeritorious qui tams. It categorizes these cases into seven factors that DOJ attorneys should consider when evaluating whether the government should seek to dismiss a qui tam.

Nearly all FCA recoveries against healthcare entities in the last three years came from cases filed by qui tam relators. In other words, of $7.3 billion recovered from healthcare entities in 2015-17, $6.9 billion of that originated from qui tam suits. The Department of Justice’s guidance is welcome news for healthcare entities as it will likely further stymie unmeritorious qui tam litigation.

The following article, “DOJ Formalizes Guidance for Government Dismissal of Unmeritorious Qui Tam Suits,” by Michael Paddock, David T. Fischer and Matthew Turetzky was previously posted on January 25, 2018, on the Sheppard Mullin False Claims Act Defense Blog.
Continue Reading The Department of Justice Delivers Some Good News to the Healthcare Industry: New False Claims Act Guidance Predicts More Challenges to Qui Tam Plaintiffs

In a year when the Department of Justice recovers $2.5 billion from the healthcare industry in False Claim Act judgements and settlements, can there really be a silver lining?

Every December, the Department of Justice (DOJ) releases its annual False Claims Act (FCA) recovery statistics for the preceding fiscal year. The recovery statistics, as they have for the past several years, indicate the DOJ considers the healthcare industry to be the number one target for FCA enforcement activity. Of the $3.7 billion in judgments and settlements recovered by the DOJ in 2017, $2.5 billion of that came from the healthcare industry. That is a tremendous number and indicates that the DOJ’s enforcement priority continues to be healthcare—as it has been for the last several years. In 2016, the DOJ recovered $2.6 billion from the healthcare industry. And in 2015, the DOJ recovered $2.2 billion from the healthcare industry. Healthcare has been a focus of DOJ’s FCA enforcement strategy for several years—and it shows no signs of changing any time soon. 
Continue Reading The 2017 Department of Justice False Claims Act Recovery Statistics:

On October 5, 2017, the Honorable Judge John Walter of the United States District Court, Central District of California, granted the Defendants’ Motion to Dismiss the Medicare Advantage (“MA”) Federal False Claims Act (“FCA”) case of United States of America ex rel. Swoben v. Scan Health Plan, et al. (CV 09-5013-JFW (JEMx)) (the “Swoben Case”) (brought by qui tam relator James M. Swoben and joined by the Department of Justice (“DOJ”)). [1]

Although the ruling was undoubtedly well received by UnitedHealthcare (“UHC”), its parent company, UnitedHealth Group Inc. (“UHG”), and the other Swoben Case defendants, the defendants’ happiness with the dismissal may have been tempered because the ruling gives the DOJ an opportunity to amend and refile its complaint with the Court. Given the DOJ’s recent history of aggressively pursuing cases of potential fraud in the MA space, it is very likely that the DOJ will amend and refile its complaint in the near future.
Continue Reading Alert: In a Surprise Decision Issued on October 5, 2017, Honorable John Walter, United States District Judge, Dismissed a Medicare Advantage Risk Adjustment Fraud Suit Against UnitedHealthcare

In our prior blog post, we reported that, at the request of the federal Department of Justice, the FCA qui tam whistleblower lawsuit in the case of United States ex rel Benjamin Poehling v. United HealthGroup, Inc., et. al. was unsealed on February 15, 2017.  The complaint alleges that United HealthGroup, as well as a number of other defendants, had fraudulently collected “hundreds of millions—and likely billions—of dollars” in Medicare Advantage risk payments by claiming patients were sicker than they really were.  At the time of the unsealing, the Department of Justice partially intervened in the lawsuit against only two of the defendants – UnitedHealth Group and WellMed Medical Management, Inc. – and declined to intervene against the other defendants.
Continue Reading The Siege Continues: The Justice Department is Investigating Four Additional Medicare Advantage Plans

On February 8th, the U.S. Department of Justice (DOJ) quietly issued new guidance on how the agency evaluates corporate compliance programs during fraud investigations. The guidance, published on the agency’s website as the “Evaluation of Corporate Compliance Programs,” lists 119 “sample questions” that the DOJ’s Fraud Section has frequently found relevant in determining whether to bring charges or negotiate plea and other agreements. The February 8th issuance is the agency’s first formal guidance under the new presidential administration, and the latest effort by the DOJ’s “compliance initiative,” which launched at the hiring of compliance counsel expert Hui Chen in November 2015. The new guidance is particularly valuable for healthcare organizations in light of the agency’s heightened efforts to prosecute Medicare Advantage plans for fraudulent reporting under the False Claims Act.
Continue Reading DOJ Issues New Guidance on the Evaluation of Corporate Compliance Programs in Federal Fraud Investigations

The U.S. Department of Justice (DOJ) has joined a whistleblower lawsuit, United States of America ex rel Benjamin Poehling v. Unitedhealth Group Inc., No. 16-08697 (Cent. Dist. Cal. Sep. 17, 2010), ECF No. 79, against UnitedHealth Group (United) and its subsidiary, UnitedHealthcare Medicare & Retirement—the nation’s largest provider of Medicare Advantage (MA) plans. The suit accuses United of operating an “up-coding” scheme to receive higher payments under MA’s risk adjustment program called the HCC-RAF Program (see below). The complaint alleges that United fraudulently collected “hundreds of millions—and likely billions—of dollars” by claiming patients were sicker than they really were. The suit was originally filed in 2011 by a former United finance director under the False Claims Act (FCA), which allows private citizens to sue those that commit fraud against government programs. Pursuant to the FCA, the case was sealed for five years while the DOJ investigated the claims.
Continue Reading Justice Department Joins Whistleblower Suit Accusing UnitedHealth Group of Overcharging Medicare by “Hundreds of Millions”

In 2010, the Affordable Care Act (“ACA”) enacted new rules governing overpayments made by the Medicare and Medicaid programs. Under these rules, providers have 60 days from the date that the overpayment has been identified to return the overpayment or face penalties and treble damages under the False Claims Act (“FCA”).  As described below, recent regulations have clarified some of the issues surrounding the ACA obligation to refund overpayments, at least for overpayments under Medicare Parts A and B.  But, determining whether a provider has “identified” an overpayment – and thus started the 60 day countdown – can still be nuanced and complex.  Diligent providers that have proactive and robust compliance and audit functions in place may find some comfort, since such providers are presumably able to respond quickly to credible information that there has been a potential overpayment, as required by the new regulations, and thereby have a reasonable period of time to conduct an investigation and quantify the amount of any overpayment before the 60 day clock begins to run.
Continue Reading The Overpayment Rule and the Implied False Claims Theory: “What You Don’t Know Can Still Hurt You”