On April 6, 2018, the U.S. District Court for the Eastern District of Pennsylvania granted a motion for summary judgment filed by a waste company in an implied certification case under the False Claims Act (FCA), holding that the relator failed to satisfy the Supreme Court’s materiality standard announced in the landmark Escobar case.

The claims in U.S. ex rel. Cressman v. Solid Waste Services, Inc. arose from waste company employees discharging leachate, a liquid that passes through or is generated by trash, onto a grassy area at a transfer station, rather than sending the leachate to a treatment plant.  The relator reported the leachate discharge to the Pennsylvania Department of Environmental Protection (DEP), which conducted an investigation.  The waste company cooperated in the investigation, conducted its own investigation, and took corrective steps in response to the allegations.  The company also entered into a consent decree in connection with which it paid a civil penalty.

The relator then filed his qui tam action under the FCA, in which the government declined to intervene.  The relator asserted that the defendant waste company was liable under the FCA because it submitted claims for payment to federal agencies without disclosing its violation of environmental regulations arising from the leachate discharge incident. Continue Reading Another Court Grants Summary Judgment to FCA Defendant Based on Escobar’s Materiality Standard

On March 13, 2018, the United States District Court for the Eastern District of Oklahoma dismissed U.S. ex rel. Montalvo v. Native American Servs. Corp. In this case, the relators alleged that the defendants performed substandard work at a US Army ammunition plant. Specifically, the relators alleged that the defendant oversaw a construction project in which a subcontractor was ordered to pour concrete into areas that contained tree roots and stems, which allegedly damaged the quality of the concrete.

At summary judgment, the only evidence offered by the relator was an affidavit setting forth the facts above. The only disputed fact was whether the defendant knew about the tree roots and stems when ordering the subcontractor to pour the concrete. Regardless of that factual dispute, the court concluded that the plaintiff had failed to offer sufficient evidence that the defendant had knowingly caused the submission of false claims and granted summary judgment in the defendant’s favor. Continue Reading District Court Rejects FCA Claim Based on “Substandard” Product

Earlier this week, the US Department of Justice (DOJ) launched a new front in its effort to combat the opioid crisis and explicitly stated that it will deploy the False Claims Act (FCA) as part of its offensive. In a press release and parallel speech delivered by Attorney General Jeff Sessions on February 28, 2018, DOJ announced the creation of the Prescription Interdiction & Litigation (PIL) Task Force.

According to DOJ, the PIL Task Force will combat the opioid crisis at every level of the distribution system, from manufacturers to distributors (including pharmacies, pain management clinics, drug testing facilities and individual physicians). DOJ will use all available civil and criminal remedies to hold manufacturers accountable, building on its existing coordination with the US Food and Drug Administration (FDA) to ensure proper labeling and marketing.  Likewise, DOJ will use civil and criminal actions to ensure that distributors and pharmacies are following US Drug Enforcement Administration (DEA) rules implemented to prevent diversion and improper prescribing. Finally, DOJ will use the FCA and other enforcement tools to pursue pain-management clinics, drug testing facilities and physicians that make opioid prescriptions. Continue Reading New DOJ Task Force to Take on Opioid Crisis Using the FCA and Other Enforcement Tools

On February 6, 2018, the US District Court for the Middle District of Florida granted a motion to dismiss a non-intervened False Claims Act (FCA) suit concerning electronic billing practices for anesthesiology services. As with another recent dismissal, the court found that Relator had failed to present sufficient allegations to meet the particularity requirement of Federal Rule of Civil Procedure 9(b).

The operative complaint alleged that Relator was a compliance review specialist and supervisor of physician coding at a health care provider, and that she utilized the defendant, Epic System’s Corp.’s, medical e-billing software. Relator alleged that she was trained for a week on the software, and then allegedly identified a software issue that resulted in double-billing for the time of anesthesiologists. Specifically, Relator referenced a January 1, 2012, change in Medicare practices which adjusted “units to be billed” for anesthesia services to be measured in actual minutes rather than 15-minute increments. Relator asserted that the e-billing software allowed hospitals to “double-charge” 15-minute increments plus the precise number of minutes of service. Relator alleged that she raised this issue with the defendant repeatedly and that Defendant implemented a very narrow adjustment which would only fix the issue at Relator’s employer’s office, allegedly leaving the “double-charge” error in effect at other users’ offices. Continue Reading FCA Whistleblower’s Deficient Anesthesia E-Billing Suit Dismissed with Prejudice by Florida District Court

In a two-page memorandum, the US Department of Justice (DOJ) announced a broad policy statement prohibiting the use of agency guidance documents as the basis for proving legal violations in civil enforcement actions, including actions brought under the False Claims Act (FCA). The extent to which these policy changes ultimately create relief for health care defendants in FCA actions is unclear at this time. That said, the memo provides defendants with a valuable tool in defending FCA actions, either brought by DOJ or relator’s counsel, that attempt to use alleged noncompliance with agency sub-regulatory guidance as support for an FCA theory.

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The government’s focus on the US opioid crisis has been consistently expanding over the past year beyond manufacturers to reach prescribers and health care providers who submit claims to federal health care programs for opioid prescriptions. These efforts increasingly include investigations under the False Claims Act and administrative actions, in addition to the more traditional criminal approach to these issues.

With the Trump administration’s public health emergency orders, it is expected for the government’s enforcement activities, including those instigated by relators and their counsel, to grow in this area.

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On January 23, 2018, the same judge who two weeks ago set aside a $350 million jury verdict against a nursing home operator denied a new emergency motion by relator to freeze the defendant’s assets pending the relator’s appeal of the court’s order granting judgment as a matter of law.

The relator argued that the defendant should be enjoined from engaging in transactions outside the ordinary course of business during the pendency of the appeal to protect “Relator’s, the United States’, and the State of Florida’s interests during the time the appeal is pending.”  Relator asserted that she has a “strong likelihood of success” on appeal and that the defendant could attempt to “thwart judgment” by transferring assets to related parties while the appeal is pending. Continue Reading Update: Judge Denies Relator’s Attempt to Freeze Nursing Home’s Assets Pending Appeal

As first reported in the National Law Journal, the US Department of Justice (DOJ), Civil Division, recently issued an important memorandum to its lawyers handling qui tam cases filed under the False Claims Act (FCA) outlining circumstances under which the United States should seek to dismiss a case where it has declined intervention and, therefore, is not participating actively in the continued litigation of the case against the defendant by the qui tam relator. Continue Reading DOJ Issues Memorandum Outlining Factors for Evaluating Dismissal of Qui Tam FCA Cases in Which the Government Has Declined to Intervene

On January 11, 2018, a federal court in Florida overturned a $350 million False Claims Act (FCA) jury verdict against a nursing home operator, finding “an entire absence of evidence of the kind a disinterested observer, fully informed and fairly guided by Escobar, would confidently expect on the question of materiality.”

In United States ex. rel. Ruckh v. CMC II LLC et al., the relator claimed that a skilled nursing facility and its management company failed to maintain “comprehensive care plans” ostensibly required by Medicare regulations as well as a “handful of paperwork defects” (for example, unsigned or undated documents). In addition, the relator alleged a corporate-wide scheme to bill Medicare for services that were not provided or needed. Continue Reading Escobar Upends $350 Million FCA Verdict

On December 21, the US Department of Justice (DOJ) obtained more than $3.7 billion in settlements and judgments from civil cases involving fraud and false claims against the government in the fiscal year ending Sept. 30, 2017. Recoveries since 1986, when Congress substantially amended the civil False Claims Act (FCA), now total more than $56 billion.

Of the $3.7 billion in settlements and judgments, $2.4 billion involved the health care industry, including drug companies, hospitals, pharmacies, laboratories and physicians. This is the eighth consecutive year that the department’s civil health care fraud settlements and judgments have exceeded $2 billion. In addition to health care, the False Claims Act serves as the government’s primary avenue to civilly pursue government funds and property under other government programs and contracts, such as defense and national security, food safety and inspection, federally insured loans and mortgages, highway funds, small business contracts, agricultural subsidies, disaster assistance and import tariffs. Continue Reading Justice Department Recovers More Than $3.7 Billion from FCA Cases in Fiscal Year 2017