false claims act

Published on: February 22, 2018

DOJ False Claims Act Policy Memo

Chicago – The Department of Justice issued an internal memorandum on January 10, 2018, which was soon released publicly and can be found here. The memorandum was quickly praised by the False Claims Act defense bar, but a reasoned review of the memorandum shows that the plaintiff bar should also welcome the policy statements outlined in the memorandum.

First, let’s establish a little background. The FCA is a statute that allows people to file a lawsuit on behalf of the government alleging that someone submitted a false claim or false or fraudulent demand for payment. These are typically Medicare or Medicaid claims, Department of Defense claims, or infrastructure projects. A person filing the lawsuit is known as a “relator” and is eligible to receive an award if the claim is successful. A relator is generally entitled to an award of between 15 and 30% of the amount the government recovers.

After a claim is filed the government conducts an investigation and decides whether to join the lawsuit by intervening or not join the lawsuit and file a declination in which case the person who filed the lawsuit can pursue the lawsuit on the government’s behalf without the government’s assistance. Either way, the government is always the real party in interest and must approve all settlements or dismissals and has the ability to seek dismissal of a case under 31 U.S.C. 3730(c)(2)(A).

Published on: February 25, 2017

False Claims Act case against Lance Armstrong Cycle’s On

by Michael Rosenblat

Back in 1995, the United States Postal Service (USPS) sponsored the cycling team headed by Lance Armstrong, its top rider. In 2000 Lance Armstrong won the Tour de France and the USPS renewed its sponsorship of the team so long as Armstrong remained part of it. The USPS paid about $32 million to the team from 2000 to 2004. Problems arose however after it was revealed that the riders used performance-enhancing drugs (PEDs) which was contrary to the contract with the USPS which required the riders to comply with the rules of professional cycling and be drug free.

In 2010, Armstrong’s former USPS teammate Floyd Landis filed a False Claims Act lawsuit against Armstrong[i] and others accusing them of violating the False Claims Act because of their PED use and their failure to disclose it.

In 2013, Armstrong admitted to his use of PEDs. The United States is now seeking almost $100 million in damages. Continue reading

Published on: January 27, 2017

Medicare Abbreviations

by Michael Rosenblat

Medicare and its regulation are replete with abbreviations, acronyms, and content specific phrases. The link below contains a list of 75 and growing. I hope you find this list helpful. If you have any additions, please contact me and I will include them. Mike

Abbreviations – Health Care

Published on: August 25, 2016

HHS-OIG Issues Alert to Home Health Agencies and Doctors

by Michael Rosenblat

Chicago – Not surprisingly in light of the recent charges and convictions of home health agencies (HHA) and related entities in the Chicago area and throughout the country, the Department of Health and Human Service, Office of Inspector General, (HHS-OIG) issued an Alert reporting that the OIG found home health services susceptible to fraud.

HHAs have been accused of violating the anti-kickback statute by paying for referrals, while doctors have been accused of receiving kickbacks for these referrals. The government may consider any payment arrangement a kickback if the payment is not fair and reasonable. Another area of concern for the HHS-OIG was the billing of home health services for patients who were not homebound, as defined in the regulations, billing for care plan oversight services that were not performed, and upcoding patient encounters. One key factor found by the HHS-OIG was that doctors participating in these schemes were usually not the Medicare beneficiary’s primary care physician.

If you have information about fraud, waste, or abuse of a government program, including Medicare/Medicaid click here, or if you need representation as a result of a government audit or investigation, click here. Mike Rosenblat, at 847-480-2390, or mike@rosenblatlaw.com

Published on: June 16, 2016

Supreme Court up holds Implied False Certification under the False Claims Act

by Michael Rosenblat

In a resounding victory for whistleblowers, the Supreme Court, in Universal Health Services, Inc. v. United States et al. ex rel Escobar et al., found that a defendant could be liable for violating the False Claims Act under a theory of implied false certification. This holding supports the proposition that when a defendant submits a claim for payment, but fails to disclose its non-compliance with a law, rule, or regulation, that defendant can be found liable under the False Claims Act, if the failure to disclose is misleading and material. The Court found that the government’s decision whether or not to make a requirement a condition of payment is not a prerequisite to liability. If it was, the Court reasoned, the government could simply make all rules and regulation a condition of payment. Instead the Court in a well-reasoned opinion, focused on materiality, and in doing so rejected the Seventh Circuit’s holding in United States v. Sanford-Brown, Ltd.

The Supreme Court first held that the implied false certification theory can create liability when a defendant makes misleading omissions, such as its violation of a regulation, if that omission relates to the goods or services provided. The court went on to explain that under common-law fraud, half-truths, not providing an important fact, is a misrepresentation, and a defendant must prevent his words from being misleading. However, the Court also held that to create liability, a defendant’s omission must be material, and a defendant must have the required knowledge or scienter. Knowledge is defined as actual knowledge, deliberate ignorance, or reckless disregard of the truth.

Materiality and fraud are closely aligned and the False Claims Act is a fraud statute. The False Claims Act itself defines materiality as “having a natural tendency to influence, or be capable of influencing.” 31 U.S.C. § 3729(b)(4). Materiality means that the omission, or misrepresentation, of compliance with a regulation must be important to the government’s decision to pay the claim. The Supreme Court gave the following examples of materiality:

Published on: February 3, 2016

Stericycle agrees to $29m settlement in False Claims Act case – MassDevice

by Michael Rosenblat

A federal judge in Illinois yesterday approved a settlement agreement between Stericycle (NSDQ:SRCL) and the plaintiff in a whistleblower lawsuit accusing the medical waste disposal company of overbilling federal and state governments to the tune of some $13.6 million. Jennifer Perez, a government customer relations specialist at YY-based Stericycle from 2004 until March 2008, filed a qui tam lawsuit in 2008 alleging […]

Source: Stericycle agrees to $29m settlement in False Claims Act case – MassDevice

Published on: January 23, 2016

Judge Rejects Chrysler’s effort to get False Claims Act suit Dismissed

by Michael Rosenblat

Chicago – Federal District Court Judge Robert M. Dow, Jr., rejected Chrysler’s attempt to get a False Claims Act, qui tam, lawsuit alleging that Chrysler defrauded the United States by wrongfully denying powertrain warranty coverage on government owned vehicles dismissed.

The lawsuit was filed on behalf of the United States by the relator in federal court in Chicago under the qui tam provisions of the False Claims Act in 2012. The relator, or qui tam plaintiff/whistleblower, is represented by Michael Rosenblat, of Michael C. Rosenblat, P.C., Northbrook, Illinois and Ken Goldstein of Krislov & Associates, Ltd. Chicago, Illinois.

The judge found that the complaint adequately alleged that Chrysler made false statements that powertrain warranty coverage on certain vehicles had expired when in truth the warranties were still valid. This caused the government to pay for repairs that should have been covered under the warranty.

Published on: December 7, 2015

U.S. Supreme Court agrees to hear False Claims Act Case

by Michael Rosenblat

The Supreme Court agreed to hear a case involving Universal Health Services who is accused of violating the False Claims Act. The Court agreed to decide whether an implied certification theory is viable cause of action under the FCA. The Seventh Circuit Court of Appeal, which reviews district court cases including those out of the Northern District of Illinois, which includes Chicago, has found that a theory of implied certification is not a viable theory under the False Claims Act, even though other circuits such as the First Circuit have permitted such theories. The Supreme Court also agreed to decide, if an implied certification theory is viable, if claim can be false if the defendant failed to comply with a rule or regulation even if that rule or regulation does not state that compliance with it is a condition of payment.

The Seventh Circuit in United States v. Sanford-Brown found that an implied certification theory cannot be pursued under the False Claims Act since those types of claims are best left up to the agency to enforce. While the First Circuit, which heard the case against Universal Health Services, United States, ex rel. Escobar et al. v. Universal Health Services, Inc., permits cases based on an implied certification theory to proceed.

According to Universal Health Services’ Petition of Writ of Certiorari to the Supreme Court, the jurisdictions that have recognized the theory of implied certification differ on whether compliance with the rule has to be a condition of payment of whether the rule can be a condition of payment even it does not expressly state that payment will not be made unless there is compliance with the rule.

Published on: November 13, 2015

False Claims Act Penalties to Increase

by Michael Rosenblat

The False Claims Act 31 U.S.C. 3729 imposes treble damages and civil penalties for submitting false or fraudulent claims to the government. The FCA statute states that the defendant is subject to a penalty of between $5,000 and $10,000 for each false claim submitted. This amount is, according to the FCA, adjusted pursuant to the Federal Civil Penalties Inflation Adjustment Act of 1990, which increased the civil penalties to $5,500 and $11,000. Earlier this month, the Bipartisan Budget Act of 2015 was passed which will again raise federal civil penalties, and penalties under the False Claims Act.

Although the penalties may increase into the $15,000 range, few False Claims Act cases are settled which include a designated portion of the settlement amount to penalties. Most False Claims Act cases that do settle and the majority do not go to trial, will settle for around double damages. Only after a trial is a defendant likely to be subject to the increase penalties.

The Bipartisan Budget Act of 2015 is copied below.

Published on: November 7, 2015

DRUG PRICE FRAUD – Cheaters Gonna Cheat

by Michael Rosenblat

According to the Wall Street Journal, once again the Department of Justice is investigation drug companies for lying about the price of their drugs to the Medicaid program, a federal and state funded health care program for the poor. The United States Attorney’s Office for the Eastern District of Pennsylvania and the United States Department of Justice are now requesting information from Eli Lilly and Company, and Valeant Pharmaceuticals International, Inc. Valeant has also been in the news recently after it was questioned over its drug pricing and accounting practices concerning its relationship with a specialty pharmacy Warner Chilchot that distributed its drugs. (See blog post US Charges Pharma President.)

Pharmaceutical companies pay a rebate to the Medicaid program based on the average wholesale price of the drug known as AWP. The average wholesale price is supposed to be the average price that a wholesaler pays for the drug from the manufacturer. However this has been an area that has seen extensive litigation under the False Claims Act with many suits resulting in substantial payments to the government. Pharmaceutical companies are required to pay rebates between 17.1 % and 23.1% of the average price on most drugs, or they are required to rebate the between the difference between the average price and the best price that the drug is sold to private, non-government, customers.

The Department of Justice is conducting an investigation into the pricing of the Protonix, a heartburn medication sold by Pfizer, the pricing of Humalog, a type of insulin, and Cialis, sold by Lilly. Valeant also received a letter from the DOJ that it is being investigated for violations of the False Claims Act, concerning conduct of Biovail Pharmaceutical’s, the company that acquired Valeant in 2010. The False Claims Act creates liability for submitting false claims to the government. Fraudulent manipulation of the AWP creates liability under a fraudulent claim theory or based upon a violation of the Anti-Kickback statute. If found liable a company can be subject to treble damages and $5,500 to $11,000 for each false claim submitted.