This is the second post of a two-part discussion of FCA pleading standards and discusses the pleading requirements for connecting a fraudulent scheme to the submission of false claims.  Read our previous post on the requirements for pleading the details of a fraudulent scheme.

Pleading Submission of False Claims

Most courts require FCA plaintiffs to round out their FCA pleadings with allegations that false claims were submitted to the government as a result of the alleged fraud scheme.  Some courts require plaintiffs to identify specific representative examples, while others permit the pleading of “reliable indicia” leading to a “strong inference” that claims were actually submitted.

Pleading Actual Claims  

The U.S. District Court for the District of Massachusetts recently laid out the level of detail generally expected for pleading the submission of actual false claims.  In U.S. ex rel. Wollman v. General Hospital Corporation, it held the relator made insufficient allegations of actual claims submitted as part of a fraudulent billing scheme involving overlapping surgeries when the complaint included “no dates, identification numbers, amounts, services, individuals involved, or length of time” for any of the surgeries at issue.

Continue Reading Recent Developments in FCA Pleading Standards – Part Two

The False Claims Act (FCA) continues to be the federal government’s primary civil enforcement tool for imposing liability on healthcare providers who defraud federal healthcare programs.  A significant portion of FCA litigation is initiated through the filing of sealed qui tam complaints by relators on behalf of the United States.  When these complaints are unsealed, whether the government intervenes or not, their first hurdle is often surviving a motion to dismiss.  Because actions under the FCA allege fraud against the government, courts require allegations sufficient to satisfy Rule 9(b) of the Federal Rules of Civil Procedure.

Determining whether an FCA complaint satisfies Rule 9(b) turns on two related questions: Does it contain an adequate description of the alleged fraud scheme? If so, does it connect that scheme to false claims submitted to the government?

This post discusses the requirements for adequately pleading a fraudulent scheme.  We have also written a follow-up post discussing the requirements for connecting that scheme to the submission of actual false claims.  To follow our discussion of recent developments in FCA pleading standards, subscribe to this blog.

Pleading Details of a Fraudulent Scheme

Generally speaking, courts agree that in order to pass muster, FCA complaints must include all of the details one would expect to find in the first paragraph of a newspaper article—that is, the “who, what, when, where and how” of the alleged fraud.  While meeting this standard may seem simple enough, courts continue to grapple with the nuances and difficulties associated with pleading fraud with the requisite specificity.

Continue Reading Recent Developments in FCA Pleading Standards – Part One

As highlighted in a previous post, the $348 million judgment against the owners and operators of skilled nursing facilities in U.S. ex rel. Ruckh v. Genoa Healthcare, LLC, made serious waves in the FCA world.  The judgment, which included a trebling of the jury’s damages verdict and fines of $5,500 for each of over 400 claims, far surpassed any settlement or judgment previously entered in a long-term care or skilled nursing case.  However, on January 11, 2018, nearly a year after entering the landmark judgment, the Middle District of Florida overturned it.  In doing so, the court reiterated some of the more stringent requirements a relator must meet in order to prevail on an FCA claim.

Continue Reading <em>Ruckh</em> Court Overturns $350 Million False Claims Act Judgment

A recent jury verdict in an FCA lawsuit pending in the United States District Court for the Middle District of Florida resulted in a not-so-subtle reminder of just how high the stakes can be in such litigation.  On February 15, 2017, in U.S. ex rel. Ruckh v. Genoa Healthcare, LLC, a case in which both the United States and the state of Florida declined to intervene, the jury returned a verdict finding that the operators of 53 skilled nursing facilities(SNFs) had committed FCA violations resulting in more than $115 million in damages.  The FCA violations resulted from the submission of false claims to Medicare and Medicaid stemming from the inflation and upcoding of Resource Utility Group (RUG) levels for patients and false certifications that the SNFs had created timely and adequate patient care plans.

The jury’s verdict represented only actual damages.  On March 1, 2017, the district court assessed a statutory penalty of $5,500 per claim to 446 false claims and trebled the jury’s damages number, the result being a staggering judgment of almost $348 million.  This dwarfs even the largest of the long-term care settlements that have preceded it.

Continue Reading False Claims Act Dangers on Display in Ruckh

The FCA continues to be the federal government’s primary civil enforcement tool for investigating allegations that healthcare providers or government contractors defrauded the federal government. In the coming weeks, we will take a closer look at recent legal developments involving the FCA. This week, we examine recent court decisions that have required a relator only to plead a reliable indicia of the submission of false claims to satisfy Rule 9(b).

Relators in a pair of cases from the Middle District of Florida succeeded in satisfying Rule 9(b) under a relaxed pleading standard. In U.S. ex rel. Space Coast Medical Associates, LLP, 94 F. Supp. 3d 1250 (M.D. Fla. Feb. 6, 2015), the district court held relators had pleaded “sufficient indicia of reliability that claims were submitted” by alleging “particularized knowledge of the Defendants’ billing process and of alleged fraudulent bills,” as well as “individual Medicare patients who received treatment.”

Continue Reading FCA Deeper Dive: Rule 9(b) and the Pleading of Actual Claims Under a Relaxed Standard

The U.S. District Court for the Middle District of Florida issued yet another opinion endorsing the use of statistical sampling in FCA cases. In its April 28, 2015 opinion in United States ex rel. Ruckh v. Genoa Healthcare, LLC., the district court held that the relator could use expert testimony of statistical sampling to establish FCA violations concerning claims submitted by defendants’ skilled nursing facilities.

The relator alleged that the defendants violated the FCA by falsifying reports summarizing patients’ medical conditions and the treatment provided to those patients. Relator further alleged fraud by the defendants who allegedly allowed unauthorized individuals to submit reports to CMS. After the defendants’ motions to dismiss the complaint were denied, the relator moved to admit expert testimony on statistical sampling due to the “voluminous discovery” and the impossibility of “producing and processing the relevant medical records at the fifty-three medical facilities and some fifty-three off-site storage locations within a reasonable time.” DOJ, which did not intervene in the case, filed a statement of interest in support of statistical sampling.

Continue Reading Another District Court Endorses Statistical Sampling