Whistleblowers remain a steady source of False Claim Act (FCA) suits against health care and life science companies each year. Join our upcoming webinar – “Qui Tam Relators: What You Need to Know” on July 12 at 1pm ET. Colleagues in our Health Care Enforcement Defense Practice Group will help companies better understand how to deal with FCA cases, which result in billions of dollars of recovery for the government each year. Hope Foster, Larry Freedman, Karen Lovitch and Ellyn Sternfield will share insights to the relator process, help companies understand how to react if it is named in a whistleblower suit, and provide tips for how to prevent them.
Mintz Levin’s Health Care Enforcement Defense Group published its most recent Health Care Qui Tam Update on August 4, 2016. This Update covers 31 health care-related False Claims Act cases that have been unsealed since the last Health Care Qui Tam Update.
The Update takes an in-depth look at three noteworthy cases and analyzes the trends observed in recently unsealed cases:
- A substantial majority of the unsealed cases had been under seal for periods well in excess of the required statutory period. Of the 31 complaints, 28 were filed before 2015, with three unsealed complaints dating back to 2010. Of the remaining complaints, four were filed in 2012, eight in 2013, 12 in 2014 and three in 2015. As these cases illustrate, lengthy extensions of the seal on qui tam actions continue to be routine.
- The cases identified were filed in federal district courts in 18 states, including multiple cases in California (3), New York (4), Florida (4), Kentucky (2), Massachusetts (2), Ohio (2), and Pennsylvania (3).
- The federal government declined to intervene, or elected not to intervene at this time, in 23 of the 31 cases. The federal government intervened, in whole or in part, in eight cases.
- Nature of the Claims
- 15 of the recently unsealed cases involved both state and federal claims.
- Nine involved allegations of unlawful kickbacks. Of these nine, five also alleged violations of the Stark Law.
- Claims for relief under state or federal anti-whistleblower retaliation provisions appeared in six of the 31 recently unsealed cases.
- In nearly two-thirds of the unsealed cases (20 of 31), relators were current or former employees of the defendant. In two cases, the relator’s relationship to the defendant was not revealed by the unsealed filings.
The full Update is available here.
Recently, South Carolina U.S. District Judge Joseph Anderson, Jr. issued an opinion in which he struggled with how to handle a non-intervened qui tam brought under the Federal False Claims Act (FCA). In his opinion, Judge Anderson requested that the United States Court of Appeals take an interlocutory appeal to determine two issues:
- The extent of the government’s right to object to a reasonable settlement in a non-intervened FCA case; and
- The plaintiff’s right to use statistical sampling to provide liability and damages in an FCA case.
While the second issue has been the subject of much debate recently, the first issue is relatively new. However, with more and more state and federal FCA cases proceeding without government intervention, it is likely an issue that many more state and federal judges will be facing. Continue Reading Government’s Objections to Non-Intervened FCA Settlement Are Unreasonable – Now What?
Mintz Levin’s Health Care Enforcement Defense Practice has published its most recent Qui Tam Update, highlighting two qui tam cases unsealed in November and December of 2014 and giving an overview of the other 17 cases unsealed during the same time period. Mintz Levin’s analysis of the 19 total unsealed cases revealed that almost half included both state and federal claims and that nearly 70% of the relators in the cases were current or former employees of the defendants. The two featured cases are:
- United States ex rel. Fox Rx, Inc. v. Managed Health Care Associates, Inc., No. 2:14-cv-00073-JLR (W.D. Wash.), regarding allegations that Managed Health Care Associates, Inc. (“MHA”), a pharmacy services provider, submitted claims for Schedule II controlled substances that were dispensed without a proper prescription. The relator, Fox Rx, Inc., a Medicare Part D plan sponsor, had brought two previous cases against MHA, which were highlighted in Mintz Levin’s October 2104 Health Care Qui Tam Update. Notably, the government has declined to intervene in all three cases.
- United States ex rel. Rew v. Mission Health of Georgia, LLC, 8:14-cv-00648-JSM-MAP (M.D. Fla.), regarding allegations that Mission Health’s nursing homes and assisted living facilities failed to obtain physician certification of patients’ need for skilled nursing care. The realtor in this case was formerly the Vice President of Clinical Reimbursement for one of Mission Health of Georgia.
Further information about both cases and the trends we’ve observed in recently unsealed cases are available in the full Qui Tam Update. In our Qui Tam Update series, we monitor recently unsealed FCA cases, identify trends in health care enforcement, and discuss noteworthy cases and developments. To receive the Qui Tam Update by email, subscribe here.
The Department of Justice (DOJ) recently announced that ev3 Inc. (which acquired Fox Hollow Technologies, Inc. (“Fox Hollow”), a medical device manufacturer, in late 2007) agreed to pay $1.25 million to resolve allegations that Fox Hollow violated the False Claims Act (FCA) by causing certain hospital clients to submit false claims to the Medicare program.
Fox Hollow manufactures the Silver Hawk Plaque Excision System, which is a device used in atherectomy procedures. Atherectomy is a minimally invasive surgical procedure that utilizes a small cutting device to remove atherosclerosis (or hardening of the arteries) from large blood vessels. The goal of atherectomy procedures is to open up narrowed coronary arteries and increase blood flow and circulation.
A former Fox Hollow sales representative, Amanda Cashi, filed an FCA qui tam action in December 2009 alleging that in 2006 and 2007, Fox Hollow caused 12 hospitals located in nine states to submit claims to Medicare for medically unnecessary inpatient stays for beneficiaries receiving elective atherectomy procedures. More specifically, DOJ alleged that Fox Hollow, in an effort to increase hospital purchases of the Silver Hawk device, advised hospitals to bill atherectomy procedures as more expensive inpatient procedures even though many of those patients should have received less costly outpatient procedures. As a result, those hospitals allegedly received higher reimbursement than they were entitled to for treating certain beneficiaries receiving Silver Hawk atherectomy procedures. Ms. Cashi will receive $250,000 as her share of the government’s settlement with ev3. Continue Reading Device Manufacturer Settles False Claims Act Allegations with DOJ for $1.25 Million
Written by: Bridgette A. Wiley
The US Department of Justice (DOJ), the Department of Health and Human Services’ Office of Inspector General (OIG), and other federal and state agencies continued to focus on health care enforcement as a top priority in 2014. Companies in the health care industry were subject to steep monetary penalties and high dollar settlements, while individuals saw lengthy prison terms and the imposition of large fines, forfeiture, restitution, and settlements.
My colleagues Hope Foster and Bridget Rohde recap 2014 health care enforcement actions, highlight key takeaways, and forecast what to expect in 2015 in their recently published Health Care Enforcement Year in Review and Forecasting Report. Hope and Bridget will also host a webinar on Thursday, February 5, 2015, from 12:00 – 1:00 EST to discuss the key enforcement trends of 2014 and their likely impact on the activities of these very active agencies in 2015. Topics for discussion include:
- The prioritization of cases against health care providers, including doctors, nurses, and other medical practitioners;
- The expanding array of criminal charges leveled against companies and individuals to include not only health care fraud, anti-kickback statute violations and false statements, but also identity theft, money laundering, tax violations, and obstruction of justice;
- The geographical reach of these actions, as DOJ continues to bring cases across the country;
- The continued focus of the DOJ Civil Division on alleged provider and procedure fraud; and
- The ongoing importance of qui tam relators in health care enforcement.
For more information about the upcoming webinar and to register, click here.
In November 2013 and this past October, Mintz Levin’s Health Care Qui Tam Update highlighted three separate qui tam False Claims Act (FCA) cases filed by Fox RX, Inc. (Fox), a former Medicare Part D plan sponsor. Fox filed one of those cases against OmniCare, Inc., PharMerica Corp., and Managed Health Care Associates, Inc. and its wholly owned subsidiary (MHCA), alleging that the defendants (1) failed to substitute generic drugs for brand-name drugs in states with laws requiring such substitution; and (2) dispensed expired drugs. The federal government, twenty-one states, and the District of Columbia declined to intervene. On August 12, 2014, Federal District Court Judge Denise Cote granted the defendants’ Motions to Dismiss the suit, finding in part that Fox had failed to state a claim under the FCA.
On December 1, 2014, Judge Cote granted a motion filed by MHCA for attorneys’ fees and costs. Judge Cote based her decision in large part on a meeting between Fox and MHCA that had taken place on January 10, 2014. At this meeting, MHCA’s legal counsel presented a PowerPoint presentation that explained MHCA’s business model and demonstrated not only that MHCA could not possibly have committed the acts that Fox alleged, but that due to its compensatory structure, MHCA did not even have a motive to commit the acts alleged.
But instead of dismissing the case, Fox proceeded to file a Second Amended Complaint in February 2014, which revised but did not withdraw its allegations against MHCA. In her August opinion dismissing Fox’s suit, Judge Cote found that the Second Amended Complaint did not “allege with particularity any act by [MHCA] that resulted in a branded drug being dispensed instead of a generic, in a pharmacist dispensing a medication beyond its expiration date…or in the submission of any inaccurate information.” Two weeks later, MHCA filed its motion for attorneys’ fees and costs incurred since its meeting with Fox on January 10, 2014.
Written by: Brian P. Dunphy
The United States Court of Appeals for the Seventh Circuit affirmed the dismissal of a False Claims Act (“FCA”) case against Shopko Operating Stores, LLC, in which a former Shopko pharmacist asserted Medicaid billing violations. The Seventh Circuit agreed “with the district court that [relator’s] legal theory is not viable no matter how detailed his factual allegations.” Importantly, the appeals court also found that Shopko was “permitted to bill in the fashion that it did.” My colleagues from Mintz Levin’s health law and litigation practice areas, Tom Crane, Ellen Janos, and Bret Leone-Quick, along with other members of the firm’s health law and litigation groups, represented Shopko before both the district court and the Seventh Circuit.
Written by: Kimberly J. Gold
Mintz Levin’s most recent Qui Tam Update authored by our Health Care Enforcement Defense Practice provides a broad overview of 65 recently unsealed health care–related qui tam cases, with an in-depth look at six cases.
The six featured cases are:
- United States ex rel. Fox Rx, Inc. v. Managed Health Care Associates, Inc., No. 2:13cv6154 (C.D. Cal.) and United States. ex rel. Fox Rx, Inc. v. Managed Health Care Associates, Inc., No. 2:13cv8433 (C.D. Cal.), regarding two false claims allegations by a private Medicare Part D sponsor against pharmacy providers.
- United States ex rel. Angel v. Alliance Rehabilitation LLC, No. 1:10cv2124 D.D.C.), regarding a $2.78 million settlement to resolve allegations of false claims for physical therapy services.
- United States ex rel. Madany v. Shahab, No. 2:09-cv-13693 (E.D. Mich.), regarding false claims for home health services based on underlying Anti-Kickback Statute violations.
- United States ex rel. Brown v. Holy Spirit Hospital of the Sisters of Christian Charity, No. 1:12-cv-1197 (M.D. Pa.), regarding false claims for diagnostic tests that were never performed and failure to report or repay overpayments.
- United States ex rel. Mahmood v. Elizabethtown Hematology Oncology, PLC, et al., No. 3:11-cv-00376 (W.D. Ky.), regarding a $3.7 million settlement to resolve allegations of false claims for chemotherapy infusion treatments.
The Fox cases are significant because they illustrate that whistleblowers can come not only from their current and former employees, but also from their business relationships. In the past, sponsors of Medicare Part D prescription drug plans have rarely served as relators, but Fox has brought multiple claims against pharmacy providers. One of Fox’s other cases was noted in our November 2013 Qui Tam Update.
In our Qui Tam Update series, we monitor recently unsealed FCA cases, identify trends in health care enforcement, and discuss noteworthy cases and developments. To receive the Qui Tam Update by email, subscribe here.
Written by Laurence J. Freedman and Samantha P. Kingsbury
On Wednesday, during a speech before the Taxpayers Against Fraud Education Fund conference in Washington, D.C., Leslie R. Caldwell, Assistant Attorney General for the Department of Justice’s (DOJ) Criminal Division, announced that her office will be stepping up its review of False Claims Act (FCA) qui tam complaints for potential criminal prosecution. She also invited potential qui tam relators (whistleblowers) to contact criminal authorities prior to filing qui tam complaints in the event there is potential criminal conduct.
Ms. Caldwell stated that the Criminal Division has implemented a procedure so that all new qui tam complaints are shared by the Civil Division with the Criminal Division as soon as the cases are filed. Under this process, she said, experienced prosecutors in the Criminal Fraud Section are immediately reviewing these qui tam complaints to determine whether to open a parallel criminal investigation. Ms. Caldwell noted that the Criminal Division has “unparalleled experience prosecuting health care fraud, procurement fraud and financial fraud” and that it will “bring that expertise to bear by increasing [its] commitment to criminal investigations and prosecutions that stem from allegations in False Claims Act lawsuits.” Beyond its expertise, the Criminal Division has relationships with foreign governmental agencies and criminal investigative tools (e.g., search warrants, wire taps, undercover operations and confidential informants) that it will be able to contribute to FCA cases.
By reviewing FCA qui tam complaints immediately, the Criminal Division will be able to streamline the process of assessing these cases for possible criminal charges. Ms. Caldwell also indicated that her division’s deeper involvement in FCA cases will mean a shift in priorities with respect to the types of defendants on which DOJ focuses its attention. Specifically, Ms. Caldwell commented that “cases involving fraud by executives at health care providers, such as hospitals, are [ ] a high priority” and that DOJ may increasingly bring criminal charges against corporate entities.