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The Third Circuit Rejects the Anti-Kickback Statute “Tainted Claims” Theory

A key area of dispute in False Claims Act (FCA) cases based on Anti-Kickback Statute (AKS) violations is what degree of connection plaintiffs must allege between alleged kickbacks and “false claims.” The AKS states that “a claim that includes items or services resulting from a violation of this section constitutes a false or fraudulent claim for purposes of [the FCA].” The government and relators typically argue that the mere fact that claims were submitted during the period of alleged kickbacks is sufficient. Defendants argue that the law requires plaintiffs to specifically identify claims “resulting from” an alleged kickback – i.e., that there is proof that the alleged kickback caused the referral or recommendation of the item or service contained in the claim. The Third Circuit’s recent decision in United States ex rel. Greenfield v. Medco Health Systems, Inc. articulated a middle of the road approach.  In affirming summary judgment for the defendants, the...

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“Operation Spinal Cap” Sees Former Hospital Executive, Physicians Charged for Their Roles in Kickback Scheme

Last week, the Department of Justice (DOJ) announced charges against a former hospital CFO, two orthopedic surgeons, a chiropractor, and a health care marketer for their alleged roles in a series of fraudulent referral and billing schemes.  According to the DOJ, these referral schemes paid illegal kickbacks to physicians for spinal surgery referrals and caused “nearly $600 million in fraudulent billings over an eight-year period.”  These charges underscore the federal government’s recent emphasis on greater individual accountability for fraudulent healthcare schemes and the potential for those involved to face significant liability. According to a statement from the U.S. Attorney’s Office, the schemes generally involved paying tens of millions of dollars in kickbacks for referrals to two California hospitals, Pacific Hospital in Long Beach and Tri-City Regional Medical Center in Hawaiian Gardens, for spinal surgeries.  Those hospitals then billed those...

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