From the category archives:

False Claims Act

D.C. Circuit: Courts Must Hold Fairness Hearing When Relator Challenges Adequacy of False Claims Act Settlement

by Nolan and Auerbach on May 18, 2012

The highly influential D.C. Circuit Court of Appeals recently held that courts must hold fairness hearings when a relator challenges the adequacy of a False Claims Act settlement. See United States ex rel. Schwizer v. Océ N.V., No. 11-7030 (D.C. Cir. April 20, 2012). The Court simply applied the explicit statutory language of the Act:

The settlement agreement here falls squarely within § 3730(c)(2)(B): the government reached an agreement with the defendant to “settle the action . . . notwithstanding the objections of the person initiating the action.” In that circumstance, the statute required the district court to “determine, after a hearing, [whether] the proposed settlement [was] fair, adequate, and reasonable under all the circumstances.” 31 U.S.C. § 3730(c)(2)(B)

Id. at 10.

In turn, the D.C. Circuit followed the mandates of Congress and determined that it could not simply tune out the voiced concerns of the relator when it comes to adequacy of a False Claims Act settlement.

As for the constitutional concerns, the D.C. Circuit noted the courts regularly play a role in scrutinizing settlement agreements. For example, in the criminal context, under Federal Rule of Criminal Procedure 48(a), the government can only “dismiss an indictment, information, or complaint” “with leave of the court.” Moreover, the Court noted that in this particular case, the government invoked the court’s supervisory powers by urging the district court to “retain jurisdiction to . . . enforce the terms of the settlement agreement by and between the parties.”

More information for healthcare fraud whistleblowers is located at the Nolan & Auerbach, P.A. website.

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U.S. Department of Justice and Qui Tam Attorneys Celebrate the 25th Anniversary of the Modern False Claims Act

by Nolan and Auerbach on March 6, 2012

Recently, Nolan & Auerbach, P.A. partners and nearly three hundred government and qui tam attorneys gathered at the United States Department of Justice, in Washington, D.C., to celebrate the twenty-fifth anniversary of the modern False Claims Act. This celebration included presentations by Attorney General Eric Holder, Assistant Attorney General Tony West, and congressional fraud-fighting champions Senator Patrick Leahy and Congressman Howard Berman. This special event also included a panel discussion that spotlighted the benefits of the False Claims Act’s public-private law enforcement partnership.

Since the False Claims Act was modernized in 1986, the federal government has used the Act to return over $30 billion to the US Treasury. Attorney General Holder noted that of that figure, $20 billion in recoveries were reported as the result of qui tam whistleblower actions, including Medicare fraud and Medicaid fraud.

Assistant Attorney General West highlighted the tremendous recent success of the Act, which was recently updated in 2009. Specifically, West noted that over 25% of all dollars recovered under Act have been realized since 2009. Notably, during this three-year span, 84% of the recoveries were the result of whistleblower-initiated False Claims Act actions.

Senator Leahy and Congressman Berman, co-sponsors of the recent False Claims Act Amendments of 2009, echoed their support for the Act’s public-private partnership. They encouraged the audience to continue the fight against government fraud, especially as the country faces mounting fiscal concerns.

More information for healthcare fraud whistleblowers is located at the Nolan & Auerbach, P.A. website.

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Government Leverages Three-Year Tolling Provision to Reach Actions from the 1990s

by Nolan and Auerbach on February 27, 2012

In 2009, after two decades of divergent readings of the False Claims Act’s statute of limitations provision, Congress considered adopting a straightforward 10-year statute of limitations period for all False Claims Act actions. Unfortunately, this amendment was removed from the legislation before it reached President Obama’s desk. Thus, courts continue to wrestle with the application of this convoluted language.

Under 31 U.S.C. 3731(b), the statute of limitations for the False Claims Act provides that a civil action may not be brought more than six years after the date on which the violation is committed or more than three years after the date when facts material to the right of action are known or reasonably should be known by a Department of Justice official charged with responsibility to act, whichever occurs last.

Most of the confusion surrounding this statute of limitations language involves the application of the three-year tolling provision. This uncertainty recently played out in a Middle District of Tennessee courthouse, where the government attempted to use the tolling provision to reach actions from the late 1990s.

In this case, United States v. Carrell, No. 3:09-cv-00445 (M.D. Tenn. Dec. 19, 2011), the court denied a defendant’s summary judgment motion, for there were genuine issues of material fact as to when the government knew or should have known that eight cost reports from a home health management company were false or fraudulent.

Medicare reimburses the total amounts that a home health management company charges in cases involving unrelated parties, but for related parties Medicare reimburses only the management company’s actual costs, without profits. Here, the government alleged that the defendants submitted false and fraudulent claims in their 1999, 2000, and 2002 cost reports to Medicare because it failed to disclose the related party status of their home health agencies and the management company that provided services to those agencies.

The defendants maintained that the government’s related party allegations were known to it as far back as 1989 and were repeatedly investigated and pursued by government agents. For example, the defendants alleged, the fiscal intermediary received an anonymous letter in 1989 that raised the possibility of Medicare fraud with regard to the ownership and operation of their home health care agencies.

The court, in rejecting this argument, found that the material fact of which the government needs to be aware prior to taking any action was not simply the alleged related party relationship, but the filing of fraudulent and falsified cost reports that failed to disclose the relationship. According to the court, this information was not fully revealed to the government until the government’s fiscal intermediary conducted a comprehensive final audit of the cost reports and issued a written notice of program reimbursement (NPR). Here, the first NPR was not issued until 2004 and the remaining cost reports were not suspended until 2009. Thus, the court concluded that genuine issues of fact remained as to when the government knew or reasonably should have known that they were false and/or fraudulent.

For more information about qui tam law and healthcare fraud, contact Nolan & Auerbach, P.A.

 

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Only “Pending” False Claims Act Actions Bar Later-Filed Qui Tam Suits

by Nolan and Auerbach on February 16, 2012

When Congress enacted the first-to-file bar, within the False Claims Act, 31 U.S.C. 3730(b)(5), it provided for jurisdiction only to the first qui tam action to raise specific allegations. In doing so, Congress sought to preclude a flood of duplicitous lawsuits. Unfortunately, some courts have misread the statutory text of the first-to-file bar, thus erroneously precluding actionable qui tam suits.

The most common mistake involves courts overlooking the “pending” language found in 31 U.S.C. 3730 (b)(5). The False Claims Act only bars qui tam actions when a separate, related qui tam case, based on the same facts, is still “pending.” By removing “pending” from the first-to-file bar, courts have permitted previously dismissed, barebones allegations to derailed later-file meritorious suits.

Recently, however,in United States ex rel. Sonnier v. Allstate Ins. Co., Civ. No. 09-1038-JJB (M.D La. Jan. 10, 2012), a Louisiana district court correctly read the Act, when it determined that earlier-filed qui tam suits do not trigger the first-to-bar unless the earlier actions were still pending when the later qui tam suit was filed. Other courts would be well-served to review this decision before instinctually triggering the first-to-file bar.

For more information about qui tam law and healthcare fraud, contact Nolan & Auerbach, P.A.

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