Transcript THE FALSE CLAIMS ACT THE BASICS

THE FALSE CLAIMS ACT
THE BASICS
David M. Laigaie, Esquire
DILWORTH PAXSON LLP
1500 Market Street - 3500E
Philadelphia, PA 19102
Phone: (215) 575-7000
Fax: (215) 575-7200
E-Mail: [email protected]
What Is The False Claims Act?
Federal Statute [31 U.S.C. §3731]
Elements
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Submit or cause to be submitted
A claim for payment to the United States
That is false or fraudulent
“Knowingly”
Brief History of
The False Claims Act
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Enacted in 1863 because of blind mules…
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Invigorated in 1986 because of Russia…
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“Nothing Succeeds Like Success…”
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The Government is Minting Money
with the False Claims Act
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Since October 1987 total recoveries of $25 billion
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The era of multi-billion dollar settlements
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Why is The False Claim Act
So Successful?
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Federal Budget is Ginormous
Potential Exposure Under FCA is Crushing
Whistleblowers
Federal Budget is Ginormous
$3.8 Trillion Dollars in 2012
$400 Million per hour
$111,000 per second
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24% to Defense
22% to Healthcare
12% to Welfare
22% to Pensions
Potential Exposure Under
FCA is Crushing
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Treble Damages
Per Claim Penalties
United States ex rel. v. MedQuest Assoc., Inc. (Tennessee 2011)
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Defendant is Independent Diagnostic Testing Facility
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Allegations
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Failed to have properly trained physicians supervise contrast media
radiology studies
failed to notify HHS of change in ownership of a testing site
Defense is “So What?”
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Court Says “Here’s What;” Grants summary
judgment
Total payments = $ 400,000
Treble damages = $1,200,000
Penalty: Unsupervised contrast media studies
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Penalty: Change in ownership
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343 claims
$11,000 per claim
$3,773,000 total penalty
945 claims
$5,500 per claim
$5,197,500 total penalty
Whistleblower Provisions
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How Private Enforcement Works
Why Private Enforcement Works
What is the Result of Private Enforcement
Whistleblowers Have Strenghtened
FCA Enforcement
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Complicated Fraud Schemes
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Cost reports
Cost outliers
DRG upcoding
Clinical Lab services unbundling
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Novel Theories of Liability
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Off-Label Marketing (U.S. ex rel. King v. Solvay)
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Pharmaceutical pricing/reporting of discounts (U.S. v. Schuman v.
AstraZeneca PLC)
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Research fraud (Hill v. UMDNJ)
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Fraud in the Inducement (U.S. ex rel. Wildhart v. AARS Forever,
Inc.)
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Implied Certification Theory (Wilkens v. United Health Group)
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Quality of Care (U.S. v. Villaspring Health Care)
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Marketing of Medicare Advantage Plans (Wilkens v. United Health
Group)
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Universal Enforcement
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FCA reaches geographic areas of lax government enforcement
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More cases under each theory of liability
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Whistleblower lawyers multiplying
Relationship Between the FCA and
Stark/Anti-Kickback Statute?
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FCA is a keyhole through which AKS and Stark
violations can be pulled
Whistleblowers aggressively pushed this issue; DOJ
waffled; Courts were mixed.
PPACA Expressly made AKS violation predicate for FCA
Liability
What does this mean?
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Interpretation of Stark shifts from HHS (regulations
promulgated with global application but glacial speed) to
courts (opinions issued regularly but responding to
specific facts)
Enforcement of AKS – a criminal statute – shifts from the
Government to financially motivated Plaintiffs’ lawyers
Judicial Interpretation of AKS/Stark
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U.S. ex rel Singh v. Bradford Regional Medical Center
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Suit involving hospital and radiology group alleging that hospital’s lease of
radiology group’s nuclear imaging camera violated Stark and AKS.
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The defendant doctors left the hospital and opened a competing nuclear
imaging center.
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The hospital tried to rescind privileges based on competition, and the hospital
and defendant doctors ultimately agreed to a lease arrangement.
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The hospital thereafter paid the defendant doctors over $30,000 a month.
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Competing medical practice filed suit, challenging lease arrangement
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Court exhaustively assessed whether the lease violated Stark/AKS
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Held that it violated Stark, entered Summary Judgment
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Stated that it likely violated AKS
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Jury will decide intent issues
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United States v. Campbell
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UMDNJ “hires” community cardiologists to increase
volume of cardiac procedures at UMDNJ
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Campbell paid $75,000 per year
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UMDNJ self-reports that the employment relationships
were illegal and refunds $8.33 million
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Campbell does not agree and files claims against UMDNJ
and others
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Government alleges that Campbell’s referrals to UMDNJ
violated Stark
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Court interprets what constitutes a referral
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Court assesses bona fide employee status