From the category archives:

Legal

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.

{ 0 comments }

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.

 

{ 0 comments }

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.

{ 0 comments }

Filing a Qui Tam Case Because Nobody Is Listening

by Nolan and Auerbach on January 11, 2012

Oftentimes, qui tam relators first raise their concerns publicly. However, whether it is on the public pulpit or up the chain of command of a dishonest employer, their voices are, too often, tuned out to the detriment of the public fisc.

Thankfully, federal and state False Claims Acts provide a viable avenue for exposing fraud. By deputizing private citizens, the qui tam provisions of the False Claims Act empower individuals in their fight against corporate fraudsters.

A recent $70 million False Claims Act settlement involving New York City is a perfect example of why we need the False Claims Act. In this case, Dr. Gabriel Feldman, a board-certified preventive medicine physician, was employed by the New York County Health Services Review Organization (NYCHSRO) as a local medical director, and he was tasked with determining whether Medicaid patients qualified for 24-hour personal care services (PCS) under Medicaid’s PCS program. However, time and time again, the City of New York overruled his PCS determinations, improperly authorizing PCS for thousands of New York Medicaid beneficiaries.

Since 1993, Dr. Feldman voices his concerns, both internally and externally. For example, Dr. Feldman testified publicly before the New York City Council in 1993, stating that the City’s PCS program was causing the government to make unjustified payments representing, “…hundreds of millions of dollars in Medicaid waste.”  He also complained repeatedly to his supervisors at the NYCHSRO. However, each time, his concerns fell on deaf ears.

Finally, in 2009, Dr. Feldman filed a qui tam action against the City, laying out the allegations of fraud and detailing the City’s complete disregard for the applicable Medicaid regulations.

Recently, the City of New York finally listened, when it inked a check for $70 million. For his courageous efforts, Dr. Feldman received a handsome reward of $14.5 million.

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

{ 0 comments }

← Previous Entries