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Rebecca C. Martin has broad experience in investigations, litigations and settlements involving the False Claims Act and other civil health care and financial fraud matters. Read Rebecca C. Martin's full bio.

On September 19 and 27, 2016, the US Department of Justice announced two False Claims Act settlements that required corporate executives to make substantial monetary payments to resolve their liability. In the first, announced on September 19, North American Health Care Inc. (NAHC) and two individuals—its chairman of the board and a senior vice president of reimbursement—agreed to settle potential False Claims Act liability for a total of $30 million. The second settlement involves the former CEO of Tuomey Healthcare, who, a year after the $72.4 million corporate FCA resolution and two years after his departure from Tuomey as CEO, is now settling his own liability for $1 million, has been required to release any indemnification claims he may have had against the company, and has agreed to a four-year period of exclusion from participating in federal health care programs. Coinciding with the Tuomey CEO settlement announcement, Bill Baer, Principal Deputy Associate Attorney General of the US Department of Justice (DOJ), gave a speech in Chicago discussing company cooperation and “individual accountability” in the context of federal civil enforcement. This new guidance, as well as the two settlements, come a little over a year after DOJ Deputy Attorney General, Sally Yates, issued what is now known as the “Yates Memo,” which sets forth guidance to be used by DOJ civil and criminal attorneys “in any investigation of corporate misconduct” in order to “hold to account the individuals responsible for illegal corporate conduct.” Since then, corporate resolutions like these have been watched for telltale signs of whether the Yates Memo is really changing the way federal enforcement does business. Given the timing of the speech and the settlements, and the high level of the officers involved, that change may be here.

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One of the more concerning trends for the defense bar in False Claims Act cases is an uptick in parallel criminal and civil proceedings. While the pursuit of parallel proceedings is long-standing DOJ policy, the last few years have seen a “doubling down” by the government on the use of these proceedings — for instance, the 2014 Department of Justice policy requiring an automatic criminal division review of each qui tam complaint and the 2015 Yates Memorandum’s requirement for defendants to identify all culpable individuals to obtain “cooperation” credit in reaching a resolution with the government. From the defense side, parallel proceedings raise important and troublesome issues, including protecting the defendant’s Fifth Amendment rights while mounting a robust defense in the civil case. But, as shown in recent decisions from the Eastern District of Kentucky and Southern District of New York, parallel proceedings may also prove challenging to DOJ when a judge is impatient with the progress of case on its docket or when the relator is not on board with how the government would like the case to proceed.

Continue Reading The Perils of Parallel Proceedings: To Stay or Not to Stay