The FCA Insider

The FCA Insider

Insights and updates on False Claims Act Litigation

Defense Arguments, FCA Defenses, FCA Litigation

Seventh Circuit Clarifies Pleading Standard for Anesthesiologist’s False Claims Action

The Seventh Circuit recently reversed a lower court’s ruling that an amended complaint in a qui tam lawsuit filed under the False Claims Act (FCA) alleging fraudulent anesthesiology billing practices failed to meet the pleading standard under Rule 9(b) of the Federal Rules of Civil Procedure. In U.S. ex. rel. Mamalakis vs. Anesthetix Management LLC, — F.4th —-, 2021 WL 5818476 (Dec. 8, 2021), the Seventh Circuit reversed the district court’s dismissal and held that the amended complaint included enough detail to satisfy Rule 9(b)’s pleading benchmark, allowing the case to move forward.

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CMS Guidance, OIG, Regulatory

Will 2022 Be The Year? OIG’s 25 Top Recommendations to Reduce Healthcare Fraud

Every year the U.S. Department of Health and Human Services’ (HHS) Office of Inspector General (OIG) releases an annual Solutions to Reduce Fraud, Waste, and Abuse in HHS Programs: OIG’s Top Unimplemented Recommendations. HHS released its most recent in Nov. 2021, outlining OIG’s top 25 unimplemented recommendations that, in OIG’s view, would most positively affect HHS programs in terms of cost savings, program effectiveness and efficiency, and public health and safety. These recommendations stem from OIG audits and evaluations through the end of 2020 and suggest changes coming to the federal healthcare programs that may impact healthcare facilities in the future. OIG’s recommendations outline where providers could focus their own compliance program to prepare for any further government scrutiny.

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DOJ

Court Allows Superseding Indictment Twelve Days Before Trial, Failing to Find Prosecutorial Vindictiveness

In U.S. v. Georges, 2021 WL 3887183 (S.D. Oh. Aug. 30, 2021), a federal court recently dismissed a defendant’s motion to dismiss a superseding indictment, denying her claim of prosecutorial vindictiveness related to multiple alleged violations of the Federal Anti-Kickback Statute. The defendant, Nicole Georges, was a pharmaceutical representative who coordinated speaking arrangements with physicians that allegedly induced increased drug prescriptions.  Ms. Georges was initially indicted on a single count for her participation in a single speaking event, however, the government later filed a superseding incitement alleging an additional violation of the Anti-Kickback Statute after plea negotiations failed twelve days before trial.  Despite her due process claims of prosecutorial vindictiveness, the court allowed the superseding indictment to stand.

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FCA Litigation

Another Circuit Weighs in on the Standard for Evaluating Government Motions to Dismiss False Claims Act Actions

In a recent opinion, the U.S. Court of Appeals for the Third Circuit weighed in on what standard to apply in reviewing government motions to dismiss False Claims Act (FCA) actions.  As discussed in detail in a July 2021 Law360 article titled “Tide Is Turning Against FCA Case Dismissals,” a three-way circuit split has developed regarding the standard governing a government motion to dismiss a whistleblower’s non-intervened qui tam case, but the varying approaches in the courts may be less important to the viability of government dismissals than the actions of the executive and legislative branches.[1]

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DOJ

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.

Regulatory

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.

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