Hospices and the False Claims Act Series

The False Claims Act (FCA) is the government’s most serious weapon to combat fraud in the healthcare community, and hospices are increasingly the target of FCA investigations and lawsuits. The United States Supreme Court is, for the first time, considering FCA cases involving hospices and certifications of terminal

Success in False Claims Act Lawsuits

In this third episode of the Husch Blackwell Hospice Team’s “Hospice and the False Claims Act” series, Meg Pekarske, Bryan Nowicki, Jody Rudman and Brian Flood discuss the process and path of a False Claims Act (FCA) lawsuit. FCA cases are a test of endurance as much as they

On January 10, 2018, citing costs associated with record increases in the number of qui tam actions filed under the False Claims Act, the Department of Justice issued a memorandum[1] to certain DOJ attorneys, strongly signaling the Department’s intent to liberalize its use of section 3730(c)(2)(A) to seek dismissal of qui tam actions.

In the recently leaked memo, Michael Granston, Director of the Fraud Section of DOJ’s Commercial Litigation Branch, outlines “a general framework for evaluating when to seek dismissal” by identifying seven factors that have supported DOJ’s previous successful dismissal requests and emphasizes that the Department views its dismissal authority as one subject only to “highly deferential” review by the courts. The memo suggests DOJ will seek dismissal of these actions more often, making use of its authority to seek dismissal as “an important tool to advance the government’s interests, preserve limited resources, and avoid adverse precedent.” As further indication that the Department intends to pursue aggressively any available means of dismissal of these cases, the Director also recommends asserting in the alternative other independently available grounds for dismissal or requesting partial dismissal where appropriate, and the memo reminds attorneys that dismissal may occur at any stage of the proceedings, depending on the circumstances. The Director also stresses the importance of communication between the DOJ, the affected agency, and relators as a means of encouraging voluntary dismissal.
Continue Reading DOJ Signals More Liberal Exercise of Power to Dismiss Qui Tam Actions under the FCA

Warning signThe Department of Justice (DOJ) recently announced a $155 million settlement agreement with an electronic health records (EHR) vendor, eClinicalWorks (ECW), to settle False Claims Act allegations against the company initially brought by a whistleblower/qui tam relator.  The whistleblower was a software technician for the City of New York City who was implementing ECW software in a prison healthcare system.  The DOJ subsequently intervened and filed suit.  The May 31, 2017 announcement is the first of its kind, holding an EHR vendor accountable for claims made about their certifications.

Provider clients of ECW relied on the assertions made by ECW that their EHR software met the criteria of the Office of the National Coordinator of Health Information Technology (ONC) certification program.  Based on ECW’s software and the assertion of EHR certification, providers believed they had achieved “meaningful use” and received incentive payments under the Medicare and Medicaid EHR Incentive Programs. 
Continue Reading Warning EHR Vendors: Evaluate Certifications and Sales/Marketing Activities to Avoid Millions in Liability

dollar-signiStock_000013001848_LargeRoughly $2.95 for each $1 overpaid (plus legal costs and the overpayment) based on an August 24, 2016, U.S. Attorney’s Office press release regarding settlement of State of New York, ex rel. Robert P. Kane v. Healthfirst, Inc. et al case in the U.S. District Court for the Southern District of New York. Defendants previously lost a motion to dismiss this case based, in part, on the fact that defendants actually identified and repaid the overpayments. Specifically, about $1 million in overpayments were presented to the defendants in the form of a spreadsheet in February 2011. Subsequently, defendants repaid the overpayments in more than 30 installments from April 2011 to March 2013. Notwithstanding, the government took the position that, under the False Claims Act, repayment should have been made within 60 days of the date of the claims were identified in the spreadsheet. Defendants argued, among other things, that there was ambiguity about the term “identify” as used in the False Claims Act and that the spreadsheet was merely the first component of an investigation into the overpayments that was ongoing through the repayment process. Almost a year after losing the motion to dismiss, defendants settled the case for $2.95 million.
Continue Reading How much does it cost to identify and repay federal health plan overpayments late?

flag_160540827The Supreme Court’s unanimous decision in Universal Health Services, Inc. v. United States ex rel. Escobar, No. 15-7 (U.S. June 16, 2016) upholds the viability of the implied certification theory of False Claims Act liability. But it also makes cases arising from minor instances of noncompliance much harder to prove. The Court held that a knowing failure to disclose a violation of a material statutory, regulatory, or contractual requirement can create False Claims Act liability. The requirement need not be an express condition of payment, but it must be material to the government’s decision to pay.
Continue Reading New standard of proof for implied certification liability under FCA

gavel2-touched upIn some courts in the United States today, a government contractor or a healthcare provider seeking reimbursement from a federal program can violate the False Claims Act even when its work is satisfactory and its invoices are correct. Under the theory of “implied certification,” a minor instance of non-compliance with one of the thousands of applicable statutes, regulations, and contract provisions can be the basis for a federal investigation, years of litigation, as well as fines, penalties, suspension and debarment, even imprisonment of company personnel.
Continue Reading How the Supreme Court will limit False Claims Act liability for implied certification

Due diligence is often perceived as a mundane part of the mergers & acquisitions (M&A) process, but its importance in healthcare transactions is critical. Due diligence is one of the first steps of any transaction and involves a buyer undertaking an in-depth examination of the target to evaluate the business and uncover potential issues or liabilities. In the healthcare industry, diligence is especially important considering the heavy regulation of the industry, the unique areas of risk, and the significant liabilities that could be imposed upon a buyer if issues and liabilities are not identified before the transaction closes.
Continue Reading Unique Considerations in Healthcare M&A Part 1 – Due Diligence

The U.S. District Court for the Eastern District of Tennessee answered what it acknowledged was a novel question: whether statistical sampling and extrapolation are appropriate to establish liability under the False Claims Act (FCA). The court found the government could extrapolate from a sample of patient records to prove FCA liability. While the court’s decision approved the use of sampling, it emphasized the defendant could challenge the government’s methodology and that the government was not using sampling to prove all of the elements of the alleged FCA violations.
Continue Reading Tenn. federal court OKs extrapolation to establish liability in False Claims Act case

The line between “white collar crime” and “street crime” is often blurred as prosecutors and investigators deploy all of the tools at their disposal against white collar and regulatory offenses. Principal among these tools is the search warrant. While the execution of a lawfully obtained search warrant cannot be stopped, a company’s reaction to the search and to the agents conducting it can have a significant impact on the course of a government investigation. A well-executed response may yield intelligence about the nature and scope of the investigation and may limit the amount of information the government obtains.

In this post, we present an overview of the search warrant process and offer some basic guidelines that may be used in preparing for and responding to a search warrant.
Continue Reading A five-part action plan for responding to a federal search warrant