After granting the relators’ petition for an interlocutory review of the district court’s rejection of the use of statistical sampling to establish FCA liability, the Fourth Circuit ultimately declined to reach that issue in its opinion recently issued in U.S. ex rel. Michaels v. Agape Senior Community, Inc. This conclusion comes as no surprise based on the comments and questions posed by the panel during the course of oral argument, as we covered here.
A number of recent FCA decisions have grappled with the question of objective falsity, particularly in the context of FCA claims where the alleged falsity is premised on a lack of medical necessity in connection with the medical services provided. The most recent in this line of cases considered whether a relator alleging nothing more than a difference of medical opinion regarding medical necessity of a particular cardiac procedure failed to plead objective falsity as required to state an FCA claim as a matter of law.
In U.S. ex rel. Polukoff v. St. Mark’s Hospital, 2017 WL 237615 (D. Utah Jan. 19, 2017), the relator alleged that a cardiologist and two Utah hospitals fraudulently billed the government for medically unnecessary cardiac procedures involving the surgical closure of a patent foramen ovale (PFO), which is a “a small opening in the wall separating the two upper chambers of the heart” that exists in about 25% of the population and is typically asymptomatic. Adults with a PFO have an increased risk of suffering a stroke; although, according to the district court, “[o]pinions regarding the use of a PFO closure to prevent strokes have varied over the past decade.”
A recent Sixth Circuit opinion in U.S. ex rel. Hirt v. Walgreen Co. should come as welcome news for FCA defendants concerned about the implications of the Sixth Circuit’s application last year, for the first time, of a “relaxed” standard for pleading false claims under Rule 9(b) in U.S. ex rel. Prather v. Brookdale Senior Living Communities, Inc.
Bass, Berry & Sims and the Tennessee Hospital Association recently sponsored the Nashville Healthcare Fraud Conference, a day-long CLE program designed to provide insight into the most significant fraud and abuse issues facing the healthcare industry. Panel discussions were focused on providing practical tips and takeaways for preparing for, responding to and resolving a healthcare fraud investigation. A variety of topics were covered including:
- Year in Review: Looking Back on Healthcare Fraud Issues in 2016 (or Everything You Wanted To Know about Escobar in 50 Minutes)
- Developments Regarding Whistleblowers
- Quick Hits – Session 1: Yates One Year Later
- Quick Hits – Session 2: Effective Use of Your Own Data – Mining Your Own Data for Compliance
- Quick Hits – Session 3: Mitigating Business Partner Risks in Healthcare
- View From the U.S. Attorneys
- Quick Hits – Session 4: Physician Compensation
- Role of Legal and Compliance in an Era of Heightened Enforcement
- Anatomy of a Data Breach – An Interactive Case Study
- Ethics of a Healthcare Fraud Investigation
Keynote remarks were offered by the U.S. Attorneys for the Middle, Eastern and Western Districts of Tennessee, who offered practical tips to healthcare providers navigating an increasingly challenging enforcement environment.
The Nashville Healthcare Fraud Conference Brochure and the 2016 Nashville Healthcare Fraud Conference Presentation are both available online.
The Supreme Court held that a relator’s breach of the seal in a qui tam case does not require mandatory dismissal of the complaint, but the Court declined to articulate what factors are appropriate to consider in determining whether dismissal is appropriate. The Court wrote only that appropriateness of dismissal in a given case should be left to the sound discretion of the district court. The district court in this case had not abused its discretion in declining to dismiss the case, and the appropriate test could be taken up in future cases.
In one of the few cases to apply the Supreme Court’s recent decision in Universal Health Services v. Escobar, the Seventh Circuit recently revisited and affirmed its prior rejection of an implied certification claim under the FCA. Whether this is a window into how other circuit courts might implement Escobar remains to be seen.
In United States ex rel. Nelson v. Sanford-Brown, Ltd., 788 F.3d 696 (7th Cir. 2015), the relator brought several claims, one of which was an implied certification claim, alleging that Sanford-Brown College (the “College”), which receives federal subsidies, violated the FCA by maintaining recruiting and retention practices that ran afoul of Title IV. In particular, the College entered into a Program Participation Agreement (PPA) with the federal government to receive subsidies under the Higher Education Act, and the PPA contained boilerplate language requiring the College to affirm that it would comply with Title IV’s mandates. The relator claimed that because the College’s practices in actuality violated Title IV, its representations in the PPA, and its attendant subsidy claims, were false.
In June, the Supreme Court issued Universal Health Services, Inc. v. U.S. ex rel. Escobar, a landmark opinion in which the Supreme Court addressed the standard for pleading materiality in FCA implied certification cases. The Supreme Court ultimately remanded the case to the First Circuit to resolve in the first instance whether the alleged violations met that standard, and last week, the First Circuit gave its answer: the violations were material.
In a question of first impression, the Eleventh Circuit recently examined whether a relator’s secondhand knowledge of his employer’s billing practices was sufficient to make him an original source relative to the FCA’s public disclosure bar. Following several other circuits, the Eleventh Circuit answered that question by concluding that such knowledge would not render a relator an original source.
This summer, the Northern District of California issued an opinion in an intervened case that expanded the theory of express false certification to a startling degree. Ruling on a motion to dismiss, the court in U.S. ex rel. Dresser v. Qualum Corp. (No. 5:2012-cv-01745, N.D. Cal.) held that the defendants, owners and operators of a sleep clinic and a DME company, could be subject to express false certification liability for submitting CMS-1500 claim forms in which they certified their compliance “with all applicable Medicare and/or Medicaid laws, regulations, and program instructions for payment.” According to the court, this general legal certification was sufficient to support an express false certification claim because “by submitting the CMS-1500, Defendants falsely certified that they had complied with Medicare regulations, even though they were not complying with the personnel qualification requirement, and they made this certification knowingly.”
In an article for Law360, Bass, Berry & Sims attorney Matt Curley provided an analysis of the oral arguments in U.S. ex rel. Michaels v. Agape Senior Community Inc., the Fourth Circuit case closely watched by False Claims Act practitioners. The Fourth Circuit agreed to consider an interlocutory appeal of the district court’s rulings in the case on both the use of statistical sampling and the reviewability of the government’s consent to the settlement of FCA claims after the government declined to intervene in a qui tam action.
As Matt concludes in his analysis:
The questions posed by the panel suggest that the most likely outcome of this interlocutory appeal will reflect a decision by the Fourth Circuit that affirms the conclusion by the district court that the government enjoys an unfettered statutory right to object to a settlement reached between a relator and a defendant in a declined qui tam action, while determining that the Fourth Circuit does not have jurisdiction to reach the question of whether the district court abused its discretion in denying the relators’ motion seeking permission to rely upon statistical sampling.
The full article, “FCA At The 4th Circ.: Contemplating 2 Key Issues,” was published by Law360 on October 27, 2016, and is available online.