The FCA Insider

The FCA Insider

Insights and updates on False Claims Act Litigation


Gleanings From DOJ’s 2021 Healthcare Takedown Announcement

On Sept. 17, the U.S. Department of Justice released the results of its 2021 Healthcare Takedown — an annual announcement aggregating months of investigations and indictments across the country involving fraud in the healthcare and life sciences industries.

Read on for details and analysis of criminal charges against 138 defendants, including 42 medical professionals, related to schemes involving about $1.4 billion in alleged losses to federal healthcare programs.

FCA Litigation

Federal Court Permits Government Intervention in FCA Case After Seven Years After Finding “Good Cause”

The Western District of New York recently allowed the government to intervene in an FCA action brought months after the government’s initial notice of declination and more than seven years after the government initiated its investigation. U.S. ex rel. Teresa Ross v. Indep. Health Corp., et al., 12-cv-299, 2021 WL 3492917 (W.D.N.Y. Aug. 9, 2021). While the Government’s motion was filed more than seven years after the FCA action was initially filed under seal, the court allowed the Government to intervene, finding that it had satisfied each of the factors required to demonstrate “good cause” for intervening at a later date.

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Attorney-Client Privilege

Fifth Circuit Orders Return of Privileged Property After Government Seizure

The Fifth Circuit recently reversed a district court’s dismissal of a motion to return property after the government’s seizure of protected attorney-client information in Harbor Healthcare Sys., L.P. v. United States, 5 F.4th 593 (July 15, 2021).   Harbor Healthcare System, L.P. (“Harbor”) was the subject of two qui tam lawsuits—filed in 2014 and 2016—alleging violations of the False Claims Act (“FCA”).  The Civil Division of the Department of Justice shared the allegations in the qui tam actions with its prosecutors to investigate possible criminal activity.  Prosecutors obtained warrants authorizing it to search Harbor locations and offices and seize twenty-two broad categories of documents as well as smart phones, iPads, and other mobile electronic devices.  Harbor asserted that the materials seized by the government contained a wealth of information protected by the attorney-client privilege, and that the government did not inform the magistrate judges who authorized the search warrants that the government had seized privileged material from Harbor.

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Anti-Kickback Statute, FCA Litigation

District Court Embraces Expansive View of “Referrals” to include Accessing Records

In Stop Illinois Health Care Fraud, LLC v. Sayeed, No. 12-CV-09306, 2021 WL 2331338 (N.D. Ill. June 8, 2021), an Illinois district court issued an order after a recent bench trial finding that the defendants violated the False Claims Act (FCA), Illinois False Claims Act (IFCA), and the Anti-Kickback Statute (AKS) when they paid a community care organization for access to the organization’s raw client data, and then used that data to solicit clients for Medicare reimbursed healthcare services. Although this arrangement consisted of no direct referrals, the district court – following the 7th Circuit’s instructions on remand – held that such arrangements constitute prohibited, indirect referrals under what the court called a “file access theory.” Under this theory, the district court found that AKS liability attached because the payments were intended as remuneration for access to records that leads to the solicitation of additional healthcare services. This case is important as it illustrates once again how broadly the government and courts define “referral” in the AKS context.

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Defense Arguments, DOJ, FCA Defenses, FCA Litigation

Tide Is Turning Against FCA Case Dismissals

According to a July 28 article in Law360 by McGuireWoods lawyers Michael J. Podberesky, John S. Moran, Todd R. Steggerda, David Pivnick and Cassandra M. Burns, the U.S. Supreme Court’s recent decision declining to review an appeal of a Seventh Circuit case that could have resolved a three-way circuit split regarding the proper standard for deciding government motions to dismiss whistleblower suits is a Pyrrhic victory for potential defendants, given bipartisan pressure in the Senate and from the White House to reign in such dismissals.


New Georgia Statute Prohibits Patient Brokering for Substance Abuse Providers

A new Georgia anti-kickback statute seeks to halt a recently identified pattern of substance abuse treatment centers seeking patient referrals from healthcare providers in exchange for fees.

Read on for details about this law, which prohibits such “patient brokering.” Violations may result in criminal liability, including potential imprisonment.

DOJ, OIG, Regulatory

Increasing OIG and DOJ Telehealth Fraud Enforcement Likely on Horizon

Three McGuireWoods’ attorneys, partners Andrea Lee Linna and Michael Podberesky, and associate Amanda Ray, have co-authored an article on the likely forthcoming increase in OIG and DOJ telehealth fraud enforcement that was published in the July issue of Compliance Today.   The article examines recent enforcement actions against individuals alleged to have committed telehealth fraud as well as Office of Inspector General and Medicare Payment Advisory Commission pronouncements on telehealth oversight and reimbursement policies, respectively.  The article concludes with a list of telehealth compliance best practices that providers should consider adopting to decrease the risk of facing OIG or DOJ scrutiny of telehealth claims.  Questions about the article or about how to reduce the risks associated with telehealth claims should be directed to the authors.

Defense Arguments, FCA Defenses

Sixth Circuit Affirms Dismissed FCA Case against Walmart involving Opiate Prescription Allegations

U.S. 6th Circuit Court Room with LogoThe U.S. Court of Appeals for the Sixth Circuit dismissed a relator-pharmacist’s False Claim Act (FCA) case, holding that the pharmacist claims, largely based on a stolen Medical Expenses Summary, lacked merit. In U.S. ex. rel. Sheoran v. Wal-Mart Stores East, Case No. 20-2128 (6th Cir. June 4, 2021), the court dismissed all claims brought by a pharmacist against his former employer Walmart, including alleged violations of the FCA, the Michigan Medicaid False Claims Act (MMFCA), and the retaliation provisions of the FCA.  The opinion contains several key insights about the pleading standard required for FCA claims.

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District Court Greenlights Potential Pro Tanto FCA Liability Offset

On June 18, 2021, the United States District Court for the District of Columbia certified an interlocutory appeal in favor of Honeywell in a case involving FCA common liability. The appeal will concern the question of whether the court properly calculated Honeywell’s common damages liability in the case; Honeywell argued that its liability should be calculated using the pro tanto method, while the United States argued that the proportionate share method applies. Because the Government has already obtained more in settlements from the other defendants than it could obtain from Honeywell, if the pro tanto method applies, Honeywell would owe $0 after offsets to its common damages. By contrast, under the proportionate share method, the court would calculate Honeywell’s comparative liability, which could amount to millions.

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CMS Guidance, DOJ, FCA Defenses, FCA Litigation, Investigations, OIG, Regulatory, Settlements, Stark Law

2021’s First-Half Notable Themes on The FCA Insider

As vaccination rates rise, the COVID-19 pandemic continues to reverberate through 2021. These reverberations also impacted the healthcare fraud and abuse landscape that is the basis of The FCA Insider’s coverage. To-date, 2021 has seen more than three dozen posts on topics ranging from False Claims Act (FCA) court opinions, U.S. Department of Justice (DOJ) investigations, and changes to regulatory guidance under both the federal Anti-Kickback Statute (AKS) and the physician self-referral law (the Stark Law). Yet it is the fraud enforcement related to COVID-19 that we could never have planned to cover when we launched the site but led our coverage these past six months. Halfway through the year, here are six notable themes in FCA litigation and healthcare fraud and abuse covered on The FCA Insider.

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