Bingham v. HCA, Inc., a recent Eleventh Circuit case, highlights the centrality of fair market value to Anti-Kickback Statute (AKS) analyses. This decision is significant for several reasons and we expect to see Bingham cited by many defendants in future False Claims Act cases. The case is also a reminder that the current regulatory and enforcement environment can result in litigation over arrangements with fair market value payments that involve little, or no, compliance concerns.

One of the most fundamental elements of managing risk under the federal Anti-Kickback Statute (AKS) is ensuring remuneration is consistent with fair market value. A recent Eleventh Circuit case highlights the centrality of fair market value to AKS analyses. See Bingham v. HCA, Inc., Case No. 1:13-cv-23671 (11th Cir. 2019). In Bingham, the court held that proving fair market value is an essential element for a relator to survive summary judgment and that relators must plead a lack of fair market value consistent with the Rule 9(b) particularity requirement to allege improper remuneration exists in the first place. The court’s holding is significant for two reasons: (1) it underscores that the plaintiff bears a burden in pleading and proving lack of fair market value, and (2) it suggests that fair market value compensation may be an absolute defense to an AKS allegation. We expect to see Bingham cited by many defendants in future False Claims Act cases, and we will be watching to see how the Eleventh Circuit and other courts continue to evaluate these concepts.

Case Background and Procedural History

We note that it took five years of costly litigation for HCA to reach this decision. Relator, who has filed a number of cases against hospital systems over the years concerning real estate deals, filed his first amended complaint on August 15, 2014. Relator alleged that HCA, through its Centerpoint Medical Center and Aventura Hospital facilities, violated the FCA due to improper space rental arrangements with physicians. Relator alleged that HCA allegedly paid a medical office building developer improper subsidies and that the developer passed the value of these subsidies onto physician tenants who signed 10-year leases through low initial lease rates, restricted use waivers, operating cash-flow shares and free office improvements. Relator also alleged HCA provided direct remuneration to physician tenants at the Aventura facility, including free parking, subsidized common area maintenance, free use permissions and below market rent.


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Over the last several months, a handful of federal court decisions—including two rulings this summer on challenges to the admissibility of proposed expert testimony—serve as reminders of the importance of (and parameters around) fair market value (FMV) issues in the context of the Anti-Kickback Statute (AKS) and the False Claims Act (FCA).

First, a quick level-set.  The AKS, codified at 42 U.S.C. § 1320a-7b(b), is a criminal statute that has long formed the basis of FCA litigation—a connection Congress made explicit in 2010 by adding to the AKS language that renders any claim for federal health care program reimbursement resulting from an AKS violation automatically false/fraudulent for purposes of the FCA.  42 U.S.C. § 1320a-7b(g).  Broadly, the AKS prohibits the knowing and willful offer/payment/solicitation/receipt of “remuneration” in return for, or to induce, the referral of federal health care program-reimbursed business.  Remuneration can be anything of value and can be direct or indirect.  In interpreting the “in return for/to induce” element, a number of federal courts across the country have adopted the “One Purpose Test,” in which an AKS violation can be found if even just one purpose (among many) of a payment or other transfer of value to a potential referral source is to induce or reward referrals—even if that clearly was not the primary purpose of the remuneration.
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We reported back in March on the US District Court for the District of Columbia’s summary judgment decision in the Lance Armstrong/Floyd Landis/US Postal Service (USPS) False Claims Act (FCA) litigation, centered on Lance Armstrong’s use of performance enhancing drugs (PEDs) while he was leading a professional cycling team sponsored by the USPS. A pack of motions in limine (MILs) filed by the parties over the past few weeks suggest that the case may well be headed to trial this fall, and raise some notable legal issues to watch as it continues to unfold, including:
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This April, providers cheered when a federal district court in the Middle District of Florida found insufficient evidence to support a relator’s theory that a hospital had provided free parking to physicians, in violation of the Stark Law and Anti-Kickback Statute (AKS). In the Report and Recommendation for United States ex rel. Bingham v. BayCare Health Systems, 2017 WL 126597, M.D. Fla., No. 8:14-cv-73, Judge Steven D. Merryday of the Middle District of Florida endorsed magistrate judge Julie Sneed’s recommendation that Plaintiff Thomas Bingham’s Motion for Partial Summary Judgment be denied and that Defendant BayCare Health System’s Motion for Summary Judgment be granted. However, as we discussed in a previous FCA blog post regarding these allegations, this type of case encapsulates a worrying and costly trend where courts allow thinly pleaded relator claims in which the government opted not to intervene, to survive past the motion to dismiss stage into the discovery phase of the litigation.

Bingham is a serial relator who practices as a certified real estate appraiser in Tennessee and was unaffiliated with BayCare. In his latest attempt, Bingham alleged that BayCare Health System had violated the Stark Law and the AKS by providing affiliated physicians free parking, valet services and tax benefits to induce physicians to refer patients to the health system.
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Last month, the US District Court for the District of Columbia delivered another blow to the “tainted claims” theory of False Claims Act (FCA) damages frequently espoused by the government and qui tam relators.

From the 1990s through 2004, the US Postal Service sponsored a professional cycling team led by Lance Armstrong, who won the Tour de France seven consecutive times during that span shortly after surviving metastatic cancer. It was later revealed that Armstrong and his teammates had used performance enhancing drugs (PEDs) during the relevant time period. Armstrong ultimately was stripped of his titles and banned from the sport permanently. After years of denials, Armstrong publicly admitted his PED use in a 2013 interview with Oprah Winfrey.

In 2010, former Armstrong teammate Floyd Landis filed a qui tam FCA suit under seal against Armstrong, the team’s owner (Tailwind Sports Corporation) and others. United States ex rel. Landis v. Tailwind Sports Corp., et al., No. 1:10-cv-00976 (CRC) (U.S. Dist. Ct. D.D.C.). The government intervened against certain defendants, including Armstrong, shortly after the 2013 interview aired. The government and Landis seek to recover as damages the entire $32 million the Postal Service paid to Tailwind during the last four years of the sponsorship, trebled to nearly $100 million, on the grounds that the defendants sought payment while actively concealing Armstrong’s and his teammates’ PED use, which violated both the rules of the sport and the Postal Service’s sponsorship agreement—thereby violating the FCA.
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On April 6, 2015, the Sixth Circuit reversed a $657 million judgment previously labeled by the Justice Department as “the largest judgment in the history of the False Claims Act,” because the government failed to prove damages.  For the second time in U.S. v. United Technologies Corp., the Sixth Circuit remanded to the district court