The Tenth Circuit recently affirmed the dismissal of a declined qui tam False Claims Act lawsuit filed against Lawrence Memorial Hospital (LMH) by a former LMH employee, reasoning that the materiality inquiry focuses on the likely reaction of the Government. In U.S. ex rel. Janssen v. Lawrence Memorial Hospital, 949 F.3d 533 (10th Cir. 2020), the relator alleged that over a period of years LMH engaged in two fraud schemes:

  1. LMH falsified patient arrival times submitted to Medicare under certain programs that tied compensation to quality-of-care metrics; and,
  2. LMH falsely certified compliance with a requirement under the Deficit Reduction Act that it educate employees with detailed information about the False Claims Act.


Continue Reading Tenth Circuit Strictly Enforces Materiality Requirement to Nix FCA Lawsuit

On January 14, 2019, Intermountain Healthcare, Inc. and Intermountain Medical Center (Intermountain) filed a petition for writ of certiorari with the U.S. Supreme Court.  Intermountain’s petition comes after the U.S. Court of Appeals for the Tenth Circuit reversed a district court’s grant of Intermountain’s motion to dismiss.  In relevant part, the district court concluded that the relator failed to identify any company employees with knowledge of the alleged fraud or when any employees knew about the fraud.  The Tenth Circuit reversed, holding that the relator need not allege those facts because they were in the defendant’s exclusive control and that allegations of knowledge need only be pleaded generally.

Intermountain’s petition raises two questions:

  • Can a plaintiff avoid Federal Rule of Civil Procedure 9(b)’s pleading requirements by asserting that only the defendant possesses the information needed to meet those requirements?
  • Do the False Claims Act’s (FCA) qui tam provisions violate the Appointments Clause of Article II of the U.S. Constitution?

Both questions have previously appeared in petitions for writ of certiorari, but neither question has been addressed by the Supreme Court.  See, e.g., Petition for Writ of Certiorari, U.S. ex rel. Joshi v. St. Luke’s Hospital, Inc. (denied Oct. 2, 2006); Petition for Writ of Certiorari, GPM Gas Corp. et al. v. U.S. ex rel. Grynberg (denied Apr. 22, 2002).


Continue Reading Supreme Court Asked to Review Pleading Standard and Constitutionality of FCA

In recent years, healthcare providers have increasingly faced civil and criminal enforcement actions premised on the allegation that services billed to government healthcare programs were not medically necessary. As a result, those claims allegedly have constituted fraud in violation of the civil False Claims Act (FCA) and/or various criminal statutes.

These actions – whether brought by the government in civil or criminal proceedings or qui tam relators in civil FCA cases – pose significant issues for providers. Often, disputing clinical judgments related to care or services provided many years in the past can be particularly challenging when efforts are made by the government or relators to use statistical sampling to establish civil liability and/or damages across a vast universe of claims. Given the risks associated with these cases, it is not surprising that there have been a number of high-dollar civil settlements involving medical necessity allegations against providers, including hospitals, physicians and providers of hospice, home health and therapy services. In criminal cases, the government likewise has secured a number of high-profile convictions and guilty pleas in cases challenging billing associated with allegedly unnecessary medical procedures.


Continue Reading FCA Medical Necessity Cases May Stand on Firmer Footing After Recent Appellate Decisions