On September 1, 2016, the U.S. Court of Appeals for the Seventh Circuit reversed the dismissal of an FCA lawsuit by the U.S. District Court for the Eastern District of Wisconsin, and in doing so, evaluated the particularity required to survive a motion to dismiss under Rule 9(b) as it relates to both a relator’s obligation to plead specific claims and the specifics of the underlying fraudulent conduct at issue.
Continue Reading Seventh Circuit Rejects Specific Claims Requirement for 9(b), Maintains a High Bar for Medical Necessity Allegations

There are a number of key issues that will drive the government’s enforcement efforts in the coming year and that will have a significant impact on how healthcare fraud matters are pursued by relators asserting FCA claims and are defended on behalf of healthcare providers. In the coming weeks, we will examine these issues in greater depth and why healthcare providers should keep a close eye on these issues. This week, we examine the government’s continued enforcement focus on long-term care providers.

The previous year saw the continued trend of an increasing number of FCA cases based on the theory that long-term care services (e.g., skilled nursing, home health, or hospice) provided to patients were medically unnecessary, and therefore, the healthcare provider submitted false claims in connection with those services.  See, e.g., U.S. ex rel. Hayward v. SavaSeniorCare, LLC, No. 3:11-cv-0821 (M.D. Tenn.), United States’ Consolidated Complaint in Intervention (Oct. 26, 2015); U.S. ex rel. HCR ManorCare, Inc., No. 1:09-cv-00013 (E.D. Va.), United States’ Consolidated Complaint in Intervention (April 10, 2015).Continue Reading FCA Issues to Watch: Medical Necessity of Long-Term Care Services

DOJ recently reached settlements in connection with three long running enforcement efforts, amassing more than $1 billion in settlement funds. These settlements reflect the continued expansion of aggressive government enforcement in the healthcare industry. Since January 2009, DOJ claims recovery of more than $16.2 billion in healthcare-related FCA cases alone.

Swiss pharmaceutical company Novartis AG agreed to pay $390 million to settle allegations that it provided unlawful rebates to specialty pharmacies to boost prescription refills for Novartis products. While Novartis did not admit that these rebates constituted illegal kickbacks, it did acknowledge providing rebates to three specialty pharmacies to incentivize an increase of prescription refills. This settlement comes at the conclusion of Novartis’ five-year CIA resulting from a settlement with DOJ in 2010. As part of its latest settlement, Novartis has agreed to extend its CIA for an additional five year period. Additionally, Novartis has agreed to amend its CIA to include obligations covering the company’s interactions with specialty pharmacies and to provide an annual report to DOJ detailing Novartis’ compliance with the CIA.Continue Reading Recent FCA Settlements Bring Closure to Long Running Enforcement Efforts

On September 29, 2015, the Fourth Circuit granted a petition for interlocutory appeal that may result in the first significant appellate decision to determine whether an FCA plaintiff may rely on statistical sampling to prove liability or damages.

In U.S. ex rel. Michaels v. Agape Senior Community, Inc., relators asserted that a nursing home operator violated the FCA by submitting false claims with respect to hospice and other nursing home-related services. While not in complete agreement, the parties both asserted that the action, in which DOJ declined intervention, involved more than 10,000 patients and more than 50,000 claims. The district court concluded that relators would be required to prove the falsity of each and every claim based upon evidence relating to each particular claim.Continue Reading Fourth Circuit Agrees to Hear Statistical Sampling Appeal

On March 31, 2015, in United States v. Robinson, the U.S. District Court for the Eastern District of Kentucky issued the latest opinion approving the use of statistical sampling by the government and relators to establish FCA liability.  In Robinson, the government has asserted that an optometrist provided medically unnecessary optometric services to nursing home residents over a five-year period and subsequently billed Medicare for these services.  As support for its medical necessity argument, the government submitted an expert witness opinion based on an examination of a sample of 30 of the 25,779 claims at issue.

In moving for summary judgment, the defendant argued in part that the government should not be permitted to utilize statistical sampling to extrapolate FCA liability and damages to the 25,779 claims at issue.  The government contended that requiring a claim-by-claim review in FCA cases involving this magnitude of claims would enable many defendants to evade prosecution and that other courts have found statistical sampling appropriate in establishing FCA liability in similar cases.Continue Reading Trend of Using Statistical Sampling to Support FCA Liability Continues