We previously reported on the viability of the “implied certification” theory of FCA liability based on oral argument before the Supreme Court in Universal Health Services, Inc. v. U.S. ex rel. Escobar. We concluded that the theory—under which a claim for payment can be false without an express certification, but because the government contractor has not complied with an applicable statute, regulation, or contractual provision—did not appear to be headed for extinction. It turns out we were right.
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Did the FCA’s “Implied Certification” Theory Dodge a Bullet?
Last week’s argument before the Supreme Court in Universal Health Services, Inc. v. United States ex rel. Escobar had the potential to put false claims based on an “implied certification” in the crosshairs. Instead, based on the weight of questioning by a plurality of justices, it appears that some form of implied certification theory may survive. (We previously reported on this case, here.)
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You Again?: Application of the First-to-File Bar Where Subsequent Actions Are Brought By the Same Relator
The Federal False Claims Act (“FCA”), 31 U.S.C. § 3729, et seq., has unique procedural aspects that come into play when a private whistleblower (the “relator”) seeks to sue on behalf of the Government. One of these, the so-called “first-to-file” bar, applies when two “related” whistleblower actions are filed: “When a person brings an [FCA action], no person other than the Government may intervene or bring a related action based on the facts underlying the pending action.” 31 U.S.C. § 3730(b)(5). The circuits are split as to whether the bar applies only while the first-filed action is “pending,” or applies even if the first-filed action has been dismissed. For example, the Fourth Circuit held “that once a case is no longer pending the first-to-file bar does not stop a relator from filing a related case.” U.S. ex rel. Carter v. Kellogg Brown & Root Servs., Inc., 710 F.3d 171, 181, 183 (4th Cir. 2013), cert. granted, 134 S. Ct. 2899, 189 L. Ed. 2d 853 (2014). On the other hand, the D.C. Circuit expressly disagreed with Carter, rejecting the concept that the first-to-file bar is a “temporal limit” to related suits, and concluding that related actions are barred “regardless of the posture of the first-filed action.” U.S. ex rel. Shea v. Cellco P’ship, 748 F.3d 338, 343-44 (D.C. Cir. 2014), reh’g denied en banc (July 16, 2014). In finding that the statutory reference to “pending action” means the first-filed action, the D.C. Circuit noted that its interpretation “better suits” the policy of the bar—to prohibit subsequent private actions once the Government is on notice of the fraud. The Supreme Court’s July 1, 2014 grant of certiorari to review the Fourth Circuit’s decision in Carter should resolve the circuit split.
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Cloudy Skies Ahead for Providers? CMS’ Release of Medicare Billing Data Combined with Physician Payment Sunshine Act Data May Boost Fraud Litigation
In February 2013, we reported (on our Healthcare Law Blog) that the Centers for Medicare and Medicaid Services (CMS) announced the final rule for the Physician Payments Sunshine Act. In the interest of providing more transparency for patients, the final rule requires pharmaceutical and medical device manufacturers and group purchasing organizations to report payments or transfers of value provided to physicians or teaching hospitals and to report physician ownership and investment interests. The deadline for submission of aggregate data was March 31, 2014, and the deadline for submission of detailed data is June 30, 2014. CMS has already established a website to display that data beginning in September 2014. In the meantime, also in the interest of transparency, on April 9, 2014 CMS touted the “historic” release of data showing utilization, payments, and submitted charges for services and procedures provided by physicians and other health care professionals to Medicare beneficiaries. As claimed by CMS, this data covers “880,000 distinct health care providers who collectively received $77 billion in Medicare payments in 2012, under the Medicare Part B Fee-For-Service program” and will enable “a wide range of analyses that compare 6,000 different types of services and procedures provided, as well as payments received by individual health care providers.” (See press release. The data is available here.) The consequences of such unprecedented releases of payment/investment interest and Medicare billing data are significant.
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How Are Your Physicians Compensated? Stark Law + False Claims Act = Halifax Paying $85 Million
On March 10, 2014, just days before trial, Halifax Hospital Medical Center and Halifax Staffing, Inc. (collectively “Halifax”) entered into an $85 million settlement with the U.S. Department of Justice resolving allegations that they violated the False Claims Act (“FCA”) by submitting Medicare claims that violated the Stark law. See Notice of Settlement and Settlement filed in U.S. ex rel. Baklid-Kunz v. Halifax Hospital Medical Center, Civ. Act. No. 6:09-CV-1002 (M.D. Fla.) The settlement effectively ended a qui tam action that had been filed by an insider in June 2009. The Government had intervened based on employment agreements with six medical oncologists that compensated the physicians based on the operating margin of Halifax’s medical oncology program. The compensation arrangement, referred to as an “Incentive Bonus,” covered a four-year period—from 2005-2008. There are a few lessons to be learned from this case.
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