On June 25, the U.S. Court of Appeals for the Eighth Circuit affirmed the dismissal with prejudice of a qui tam False Claims Act (FCA) suit alleging certain physician compensation arrangements at Trinity Health violated the Anti-Kickback Statute (AKS) and Stark Law.

The relator, a former surgeon at one of Trinity’s hospitals, alleged the following:

  1. Trinity paid five of its highest-earning physicians above fair market value by compensating them in excess of 90th percentile compensation for their specialties at levels not justified by their personal productivity.
  2. The high compensation generated practice losses for Trinity absent taking into account the physicians’ downstream referrals to the health system.
  3. As a result of the physicians’ compensation methodology, they performed unnecessary surgeries to inflate their compensation.
  4. Trinity opted not to renew the relator’s contract because he complained about these allegedly-unnecessary surgeries.


Continue Reading Eighth Circuit Affirms Dismissal of Kickback Case

On May 6, the U.S. District Court for the District of South Carolina entered final judgment dismissing with prejudice a relator’s qui tam False Claims Act (FCA) suit against the defendant wholesale pharmacy. The relator, a former pharmacist who worked for the defendant, alleged that the defendant submitted false claims to government healthcare programs in connection with prescription medications dispensed for use at nursing homes and assisted living facilities. The relator alleged a scheme in which the defendant manually filled “thousands” of prescriptions with less-expensive generic medications while billing for more-expensive alternative medications stocked in its automated dispensing system.

A qui tam complaint containing similar allegations filed against Omnicare Inc. in the U.S. District Court for the District of New Jersey resulted in an $8 million settlement in 2017. In this lawsuit, however, the defendant, represented by Bass, Berry & Sims and others, obtained full dismissal with prejudice of the relator’s FCA and retaliation claims.


Continue Reading Qui Tam Complaint Against Pharmacy Dismissed for Lack of Particularity

On December 26, 2018, the U.S. Court of Appeals for the Fourth Circuit issued an opinion in United States ex rel. Grant v. United Airlines affirming dismissal of the relator’s False Claims Act (FCA) allegations on the grounds that the complaint failed to plead presentment of a false claim with sufficient particularity under Rule 9(b). In the same opinion, however, the court revived the relator’s retaliation claim on the grounds that the relator satisfied the lower standard of Rule 8(a) applicable to retaliation claims, which are not claims of fraud.

Presentment Must Follow from Conduct Alleged in Complaint

The court affirmed dismissal of the relator’s substantive FCA claims because it held that the relator failed to adequately plead presentment under Rule 9(b) in either of the two ways that the Fourth Circuit has recognized as acceptable:

  1. By alleging with particularity that specific false claims actually were presented to the government for payment, including by describing the time, place, and contents of the false representation; the person making the false representation; and what was obtained by making this representation
  2. By alleging a pattern of conduct that would “necessarily have led to a false claim being submitted”

The court focused its analysis on whether the complaint was adequately pleaded under the latter of those two options. The relator was a former maintenance technician of United Airlines who was a second-tier subcontractor on a government contract for the repair and maintenance of military aircraft. His complaint alleged that United Airlines was specifically subcontracted to repair, overhaul and inspect certain airplane engines and was required to do its work in compliance with certain regulations. The complaint alleged that United Airlines violated the FCA by failing to comply with the required regulations in completing work on these airplane engines.
Continue Reading Fourth Circuit Weighs in on Standards for Pleading Presentment and Retaliation

The FCA provides protections for whistleblowers in connection with their whistleblowing activities.  To establish that an employer retaliated against an employee in violation of 31 U.S.C. § 3730(h), an employee must demonstrate that:

  1. The employee engaged in protected activity.
  2. The employer knew that the employee was engaged in protected activity.
  3. As a result of the above, the employee was discriminated against.

Definition of FCA Retaliation “Protected Activity”

Prior to 2009, “protected activity” was defined as employee conduct “in furtherance of an action under this section, including investigation for, initiation of, testimony for, or assistance in an action filed or to be filed under this section.”


Continue Reading FCA Deeper Dive: FCA Retaliation Claims

The U.S. Court of Appeals for the Fourth Circuit recently affirmed dismissal of an FCA complaint for failure to state a claim under the FCA’s anti-retaliation provision, 31 U.S.C. § 3730(h). In U.S. ex rel. Carlson v. Dyncorp Int’l, LLC, the Fourth Circuit held that the relator failed to establish that he had engaged in protected activity, a required element for a prima facie retaliation case under the FCA.  In reaching that conclusion, the Fourth Circuit provided useful guidance on the standards used to assess whether a relator engaged in protected activity.
Continue Reading Fourth Circuit Interprets Meaning of “Protected Activity” Under 2010 FCA Whistleblower Amendments

Matt Curley was interviewed by Becker’s Hospital Review in connection with an article dated February 10, 2016, about how healthcare providers can take practical steps to reduce the risk of employees and third parties pursuing whistleblower lawsuits when they encounter potential compliance issues. The comments below expand upon that interview.

Healthcare providers receiving reimbursement from government payers know there is a significant risk of encountering whistleblowers under the False Claims Act. Last year, there were more than 600 new whistleblower lawsuits filed under the False Claims Act. And, during the previous five years, there have been nearly 3400 new False Claims Act lawsuits filed by whistleblowers.

Whistleblowers received nearly $600 million in FY 2015 year as their share of the proceeds of False Claims Act judgments and settlements. That amount brought total recoveries during the previous five years to nearly $2.5 billion.

With the often times protracted, expensive, and disruptive government investigations that can follow the filing of a whistleblower lawsuit under the False Claim Act, practical measures that can reduce the possibility of whistleblower activity are certainly worth consideration.


Continue Reading Practical Tips to Prevent Whistleblowers