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.

Register now!

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.

Health care companies and their counsel handling health care fraud investigations or False Claims Act (“FCA”) cases should consider the potential strategic implications of a decision compelling an FCA defendant to produce attorney work product to a relator.  United States ex rel. Garbe v. Kmart Corp., No. 3:12-cv-00881-MJR-PMF, 2014 U.S. Dist. LEXIS 73261 (S.D. Ill. May 29, 2014).  In Garbe, a federal court ordered a defendant to produce attorney-generated information to an FCA relator that defendant had given to the Office of Inspector General (“OIG”) in response to an OIG subpoena in 2009, finding that the defendant waived the work product protection through disclosure of the data to OIG. Continue Reading Lessons to Be Learned from FCA Defendant Who Provided Attorney Work Product to OIG

Written by: Thomas S. Crane, Kimberly J. Gold and Ellyn L. Sternfield

The U.S. Department of Health and Human Services (HHS) announced on April 9th  a “historic” release of Medicare payment data to provide consumers with “unprecedented transparency on the medical services physicians provide and how much they are paid.”  The Centers for Medicare and Medicaid Services (CMS) declared its intent to make such data available in an April 2ndletter to the American Medical Association.  CMS stated on its blog that “[p]roviding consumers with this information will help them make more informed choices about the care they receive.”  The new data set covers more than 880,000 health care providers in all 50 states, the District of Columbia, and Puerto Rico, who collectively received $77 billion in Medicare payments in 2012 under the Medicare Part B Fee-For-Service program.

The data set includes information on the provision of services by physicians and how much they are paid for those services and is organized by provider (National Provider Identifier or NPI), type of service (Healthcare Common Procedure Coding System, or HCPCS, code), and place of service (either facility or non-facility). The data set also includes the number of services, average submitted charges, average allowed amount, average Medicare payment, and the number of unique beneficiaries treated.

To protect the privacy of Medicare beneficiaries, any aggregated records which are derived from 10 or fewer Medicare beneficiaries are excluded from the data set.

Continue Reading CMS Releases Physician Medicare Billing Data

Written by:  Brian P. Dunphy

Health care employers concerned that former employees may misappropriate the company’s confidential information to support qui tam lawsuits under the False Claims Act (“FCA”) received guidance from a recent court decision.  United States ex rel. Wildhirt v. AARS Forever, Inc., No. 1:09-cv-01215, 2013 WL 5304092 (N.D. Ill. Sept. 19, 2013).  The court denied a motion by the qui tam relators – both former employees of the defendants – seeking dismissal of several counterclaims filed against the relators by the defendants, AARS Forever, Inc. and THH Acquisition LLC 1.  Defendants’ counterclaims alleged that their former employees breached their employee confidentiality agreements by disclosing confidential information in support of their qui tam lawsuit.  Among other things, the court rejected relators’ argument that the agreements were unenforceable on public policy grounds and thus allowed several counterclaims to proceed.

Continue Reading The False Claims Act is Not a License to Divulge Employer Confidences

Written by:  Samantha P. Kingsbury

This past Friday, hospital company HCA Holdings, Inc. asked a federal court judge to dismiss a False Claims Act (FCA) suit filed by whistleblower and former employee, Stephen McMullen.  Mr. McMullen worked for an HCA-affiliated hospital for a total of 20-22 days over a period of five months before accusing the company of fraudulently billing Medicare for non-invasive diagnostic vascular studies.

HCA argued that Mr. McMullen’s first and amended complaints contained only generalized allegations without factual support because he only worked at one HCA-affiliated facility for a short period of time.  HCA also argued that Mr. McMullen was a serial relator who had demonstrated a pattern of working for providers for a short time and then accusing them of failing to comply with technical guidance relating to accreditation of laboratories and/or the supervision of technicians performing vascular scans.

HCA is not the only hospital company against which Mr. McMullen has made such accusations.  In May 2012 – on the same day that he filed suit against HCA – Mr. McMullen filed a qui tam FCA suit against Ascension Health based on the same alleged underlying conduct.  Ascension moved to dismiss the matter in June 2013.  Ascension noted that its case was at least the fourth case in which Mr. McMullen had sued a hospital operator over alleged FCA violations.

As of the date of this post, it remains to be seen what will become of Mr. McMullen and his various FCA suits.  For information on recently unsealed FCA qui tam cases, follow Mintz Levin’s Qui Tam Updates and check back each month for additional updates.

Written By Kevin McGinty

To incentivize whistleblowers to bring false claims promptly to the government’s attention, the False Claims Act (FCA) includes a so-called “first-to-file rule” (31 U.S.C § 3730(b)(5)), which bars a person other than the government from “bring[ing] a related action based on the facts underlying” a pending action alleging violation of the FCA.  In a recent case of first impression, the First Circuit affirmed dismissal of a qui tam complaint under the first-to-file rule even though the relator argued that the previously filed complaint had not pleaded the alleged FCA violation with the particularity required under Rule 9(b) of the Federal Rules of Civil Procedure.  See United States ex rel. Heineman-Guta v. Guidant Corp., No. 12-1867, slip op. at 2 (1stCir. May 31, 2013) (Heineman-Guta). Continue Reading First Circuit Rules First-Filed Complaint Need Not Satisfy Rule 9(b) to Bar Subsequent Qui Tam Actions

Our next Mintz Levin Health Beat Webinar will focus on strategies for minimizing the risk of being subject to whistleblower actions.  Attorneys from our Health Care Enforcement Defense,Class Action, and Employment, Labor & Benefits practices will discuss how to establish an effective qui tam avoidance program.  Preventing Whistleblower Actions: Customizing an Effective Qui Tam Avoidance Program will be held on May 22nd from noon to 1:00 pm EST. We hope you can join us!