Tag Archives: False Claims Act

An Ever Widening Gap: Circuit Split on the Applicable Pleading Standard for the False Claims Act

Many areas of the False Claim Act are subject to legal interpretation and have been subject to Circuit splits, sometimes resulting in rulings from the Supreme Court.  In the United States, there are thirteen federal circuit courts that provide intermediate appellate review of the federal district courts in several states.  The decision by a circuit court has binding authority on the district courts within its jurisdiction.  When there is a conflict between circuit courts on an important issue it creates the basis for review by the Supreme Court.

One such area that is currently subject to a Circuit split is the standard to which a relator or the government must plead their case for the False Claims Act.  The Federal Rules of Civil Procedure, Rule 9(b), requires that when alleging fraud or mistake, “a party must state with particularity the circumstances constituting fraud or mistake.” F.R.C.P. Rule 9(b). Continue reading

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Filed under False Claims Act, Federal Case Updates, Fraud and Abuse

Absher v. Momence: A Mixed Decision—Limiting and Expanding the False Claims Act

In the ever-expanding area of the federal False Claims Act, the recent decision by the 7th Circuit in Absher v. Momence Meadows Nursing Center Inc., limited pursuing a False Claims Act violation under the worthless services theory but potentially expanded what administrative reports do not trigger the public disclosure bar of the False Claims Act.

Former nurses of the nursing home brought a qui tam suit against Momence Meadows Nursing Center, Inc. (“Momence”), an Illinois nursing home, alleging that Momence had submitted “‘thousands of false claims to the Medicare and Medicaid program”.  U.S. ex rel. Absher v. Momence Meadows Nursing Center, Inc., 2014 WL 4092258, *3 (7th Cir. 2014).    The case went to trial and earlier in February 2014, a jury found that Momence had violated the False Claims Act and provided worthless services, with the court entering a verdict of $9 million.  Momence appealed to the 7th Circuit, which issued its ruling on August 20, 2014.  The 7th Circuit addressed several issues including public disclosure, the scope of the worthless services theory, and scope of false certification under the False Claims Act.  The 7th Circuit ultimately vacated the decision and remanded.  Continue reading

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Cardiology Group to Pay More than $1.33 Million to Settle Allegations of Stark Law and False Claims Act Violations

According to United States Attorney Richard Hartunian of the Northern District of New York, Cardiovascular Specialists, P.C., has agreed to pay the federal government $1,336,636.98 plus interest to settle allegations that it violated the federal Physician Self-Referral Law (also known as the Stark Law) and the federal False Claims Act by knowingly compensating its physicians in a manner that violated federal law. Cardiovascular Specialists is a group practice of cardiologists with offices throughout upstate New York does business as New York Heart Center (NYHC).

USDOJ alleges that NYHC used a compensation system that violated the Stark Law, and thereby the False Claims Act, by compensating each NYHC partner-physician using a formula that took into account the volume or value of that physician’s referrals for nuclear scans and CT scans.   Continue reading

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Filed under False Claims Act, Stark Law

Attention Medicaid and Medicare Providers: US DOJ Sues Providers for Failing to Return Overpayments Within 60 Days

On June 27, 2014, in the case of United States ex rel. Kane v. Healthfirst, Inc., et al., No. 11-2325 (S.D.N.Y.), the United States Department of Justice (USDOJ), via the United States Attorney’s Office for the Southern District of New York, sued several Medicaid providers under the federal False Claims Act for failing to return Medicaid overpayments within 60 days of identifying them. Continue reading

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Filed under False Claims Act, Federal Case Updates, Fraud and Abuse, Medicaid, Medicaid Fraud, Medicare, Medicare Fraud

Fourth Circuit Decision Addresses Constitutionality of Per-Claim Penalty under Federal False Claims Act

The decision delivered just before Christmas by the United States Court of Appeals for the Fourth Circuit in US ex rel. Kurt Bunk, et al., v. Gosselin Worldwide Moving, N.V., et al. is of value and of interest to all healthcare providers subject to the reach of the Federal False Claims Act (hereafter “FCA”). Although not dealing with the healthcare market, the decision serves as another illustration of the potential scope of per-claim civil penalties under the FCA and the vitality of such penalties when  analyzed under the United States Constitution’s bar on excessive fines via the Eighth Amendment. Continue reading

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Filed under False Claims Act, Federal Case Updates, Fraud and Abuse, Uncategorized

Applicability of Fraud and Abuse Rules to the Marketplace Clarified … Somewhat

One of the lingering questions about the Health Insurance Marketplace created under the Affordable Care Act is whether plans on the Marketplace are considered part of a Federal health care program, thus opening up potential liability under the Anti-Kickback Statute. There was concern that the broad language defining a “Federal health care program” would apply to the Exchanges because of the federal tax subsidizes provided to individuals on the private market.  Under 42 U.S.C. 1320a-7b(f)(1), a “Federal health care program” is defined as “any plan or program that provides health benefits, whether directly, through insurance, or otherwise, which is funded directly, in whole or in part, by the United States Government.”  This presented the possibility that, by virtue of the inclusion of federal subsidy payments, even private insurance plans on the Marketplace and the state Exchanges would constitute Federal health care programs and necessitate compliance with the entire array of federal legal requirements.    Continue reading

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Filed under False Claims Act, Fraud and Abuse, PPACA

Proposed Rule to Extend and Amend the Exception to Donate Electronic Health Records Items and Services

The Office of Inspector General for the Department of Health and Human Services (OIG) and the Centers for Medicare and Medicaid Services (CMS) published on April 10, 2013 proposed rules to extend and amend the Electronic Health Records (EHR) donation exceptions under the Anti-Kickback Statute and Stark Law, respectively.

The proposed rules would extend the exceptions until the end of 2016, but both the OIG and CMS are seeking comments on extending the sunset date to December 31, 2021, which corresponds to the end of the EHR Medicaid incentives program.  Under the current law, both exceptions are set to sunset on December 31, 2013 .

In addition, the OIG and CMS propose to amend the conditions of the EHR donation exceptions by removing the electronic prescribing requirement and redefining (i.e. limiting) the type of entities that can donate.   The current EHR donation exceptions permit donations by any individual or entity that provides patients with health care items or services covered by a Federal health care program, based on a public policy initiative to expedite adoption and use of EHR systems.  The proposed rules would remove, among other entities, clinical laboratories and pharmacies from the definition of a protected donor.

Finally, the OIG and CMS propose to address a critical issue identified as “data and referral lock-in,” in which EHR technology that appears to support the interoperable exchange of information on its face, in practice restricts the recipient provider to transmit data and communicate only with the donor entity to control referrals.  In response, the OIG and CMS propose to require that the donated EHR software is certified in accordance with the definition of Certified EHR Technology applicable on the date of the donation. Under the current law, both exceptions require only that the EHR software is interoperable.

Comments on the proposed rules will be accepted for 61 days from the date of publication, which is June 10, 2013.

This post is contributed by Charles Dunham.


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Filed under Anti-Kickback Statute, Electronic Health Records, False Claims Act, Fraud and Abuse, Laboratories, Medicaid, Medicaid Fraud, Medicare Fraud, Stark Law

False Claims Act: Payment vs. Participation Regulations

In U.S. ex rel. Williams v. Renal Care Group, Inc. (Case No. 11-5779) (October 5, 2012), the Sixth Circuit Court of Appeals reversed a grant of summary judgment in favor of the United States on two main False Claims Act (FCA) claims relating to Medicare reimbursement of dialysis supplies. In doing so, the Court issued an important decision distinguishing the applicability of the FCA between noncompliance with payment and participation regulations.

The United States alleged, inter alia, that defendants violated the FCA by submitting claims which they knew were not in compliance with DME supplier standards set forth by statute and regulation relating to conditions of participation (i.e. to honor warranties, fill orders, and maintain an appropriate place of business), which impose independent sanctions and potential exclusion.

The Sixth Circuit reasoned that “[t]he False Claims Act is not a vehicle to police technical compliance with complex federal regulations.” As such, the Court agreed with the defendants that noncompliance with participation regulations does not render a claim materially false, irrespective of the whether the regulation is violated, because payment is not expressly or impliedly conditioned upon compliance with participation conditions.

This decision could have a further relevance in the context of Medicare and Medicaid provider audits for improper payments. In opposing audit tactics, our firm has always maintained that disallowances based on noncompliance with conditions of participation are unwarranted and inconsistent with the structure and purposes of the Medicare and Medicaid program. This decision adds support and justification to the validity of this argument in suggesting that payment is not expressly or impliedly conditioned upon compliance with participation conditions.

This post is contributed by Charles Dunham

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Legal Hurdles Mount for Lab Corp and Quest

The U.S. Department of Justice (DOJ) and the Federal Trade Commission (FTC) recently released their Annual Report for Fiscal Year 2011 under the Hart-Scott-Rodino Antitrust Act. In brief, the Hart-Scott-Rodino Act allows the DOJ and FTC to block transactions believed to be harmful to competition and consumers. The Annual Report reviews the enforcement activities undertaken by these federal agencies during the prior year.

Under the power granted by the Hart-Scott-Rodino Act, the DOJ and FTC identify and intervene early in transactions viewed as anticompetitive. This means that a relatively small number of challenged transactions require litigation. For instance, of the 17 transactions challenged in 2011 by the FTC, only three matters required court action.  While healthcare transactions are becoming an increasingly common target for these challenges, the number of hospital mergers reviewed last year under the Hart-Scott-Rodino Act were essentially the same as the prior year. Thus, it appears that the DOJ and FTC are now reviewing a wider array of transactions in the healthcare industry. Continue reading

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Filed under Anti-Kickback Statute, False Claims Act, Laboratories, Medicare Fraud, Uncategorized

HHS OIG Identifies $332 Million in Uncollected Medicare Overpayments

On Friday the Office of Inspector General (“OIG”) of the Department of Health and Human Services (“HHS”) made public a report which revealed that the Centers for Medicare and Medicaid Services (“CMS”) had failed to collect over $332 million in Medicare overpayments, for the 30-month period ending March 31, 2009.

During that time, OIG had issued reports recommending that CMS collect approximately $418 million in Medicare overpayments.  CMS delegates this responsibility to Medicare contractors.  However, OIG found that CMS efforts at recapturing these overpayments were hindered by two factors in particular.  First, OIG found that the statute of limitations in the Federal Claims Collection Act of 1966, which bars recovery from providers that are “without fault” at any time and deems providers to be “without fault” 3 years after the year payment is made unless there is “evidence to the contrary,” had precluded recovery of a large amount of the overpayments, which OIG now deems unrecoverable. Continue reading

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Filed under False Claims Act, Health Care Reform, Medicaid Fraud, Medicare Fraud, PPACA