Companies regularly are required to interpret ambiguous and vague regulatory provisions. Today, the United States Supreme Court heard oral arguments in a pair of consolidated cases to determine whether a defendant’s subjective interpretation of an ambiguous regulation is relevant to determining the knowledge (or scienter) element of the False Claims Act or, as the Seventh Circuit held in the case below, that once a defendant can articulate an objectively reasonable interpretation its contemporaneously held subjective belief is irrelevant to the knowledge inquiry. The issue is a significant one for both the government and relators on one side, and potential defendants on the other, as False Claims Act (FCA) liability imposes treble damages and penalties exceeding $20,000 per claim as well as relators’ attorneys’ fees and costs.
Arguments were heard in the case of United States ex rel. Polansky v. Executive Health Resources, Inc., No. 21-1052 to determine whether and on what statutory grounds, the government, after initially declining to intervene, may subsequently intervene and dismiss a qui-tam False Claims Act (“FCA”) suit. The Court’s decision will resolve a dispute regarding the balance of power between an individual whistleblower and the Department of Justice (“DOJ”).…
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
The healthcare industry is exposed to False Claims Act liability more so than other industries because of the federal government’s unique role as both a regulator and payor. Universal Health …
Continue Reading Escobar: Year One
Recent activities of the Department of Justice (“DOJ”) and Qui Tam whistleblowers reveal that Medicare Advantage Plans remain at the forefront of investigations for violations of the federal False Claim Act (“FCA”) for allegedly engaging in improper risk adjustment practices and other improper or fraudulent practices. In addition to the pending FCA enforcement cases in the Swoben and Poehling cases, as well as reports of ongoing federal investigations, the recent federal settlement in May in Florida with Freedom Health, Inc., and Optimum HealthCare, Inc. – both Medicare Advantage-participating managed care plans that are subsidiaries of America’s 1st Choice Holdings of Florida, LLC – demonstrates that the DOJ, the Office of the Inspector General of the United States Department of Health and Human Services (“OIG”) and Qui Tam whistleblowers are not only interested in large players, such as UnitedHealth Group and others, but also in smaller and regional Medicare Advantage organizations.
Continue Reading The Enforcement Risks for Medicare Advantage Plans Continue: A New False Claims Act Settlement in Florida
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”
On June 16, 2016, the Supreme Court issued its opinion (“Op.”) in Universal Health Services v. U.S. ex rel. Escobar (“Escobar”), a case testing the viability and scope of the implied certification theory of False Claims Act (“FCA”) liability. Under the implied certification theory, a defendant may be liable under the FCA based on the its failure to comply with certain statutory, regulatory, or contractual provisions, even if the defendant did not expressly certify compliance.. The circuits have split, both on whether an implied certification theory is viable at all and, if so, when non-compliance can trigger FCA liability.
Continue Reading Supreme Court Preserves But Significantly Changes “Implied Certification” Theory of False Claims Act Liability