False Claims Act – Duane Morris Health Law

February 26, 2025February 26, 2025 by Duane Morris

CMS Issues Final Rule on Returning Medicare and Medicaid Overpayments

By Daniel R. Walworth, Christopher H. Casey, Frederick R. Ball, Erin M. Duffy and Arti Fotedar

The Centers for Medicare & Medicaid Services (CMS) issued a Final Rule as part of the 2025 Physician Fee Schedule, which revises requirements for reporting and returning overpayments of Medicare and Medicaid funds. The Final Rule, which took effect January 1, 2025, amends CMS’s regulation interpreting the federal overpayment statute in two key ways: It revises the definition of when an overpayment is “identified” to trigger the 60-day return period and establishes a 180-day timeframe for investigating additional related overpayments.

Read the full story on the Duane Morris LLP website.

February 25, 2025 by Duane Morris

First Circuit Embraces More Restrictive View of False Claims Act Kickback Enforcement Provision

By Daniel R. Walworth, Christopher H. Casey, Frederick R. Ball, Erin M. Duffy and Joseph R. Welsh

The United States Court of Appeals for the First Circuit’s opinion in United States v. Regeneron Pharmaceuticals, Inc. has sharpened the circuit split for demonstrating the effect of a kickback on healthcare decisions under the False Claims Act (FCA). The Regeneron court held that an FCA claim based on an alleged violation of the Anti-Kickback Statute requires demonstrating that an alleged unlawful kickback was the “but-for” cause of a submitted claim.

Read the full story on the Duane Morris LLP website.

October 8, 2019October 8, 2019 by Duane Morris

Discovery Ruling in District of Minnesota May Have Far-Reaching Implications for FCA Defendants

In a concise, six-page discovery order, a federal judge in Minneapolis may have just started the proverbial shifting of tectonic plates undergirding routine defense procedures in False Claims Act (FCA) litigation by requiring a defendant in an FCA lawsuit to produce the information provided to the Department of Justice (DOJ) during the DOJ’s process of determining whether to pursue the matter.

The FCA creates liability for persons or entities found to have knowingly submitted false claims to the government or having caused others to do so. Like some other federal laws, the FCA creates a private right of action; under the act, a private party—a whistleblower or “relator”—may bring a qui tam action on behalf of the government. When initially filed, the court seals the complaint pending the government’s investigation of the case. If the government chooses, it may intervene and pursue the matter. If not, the relator may pursue the case on its own. (In either case, the relator is entitled to a percentage of the government’s recovery.)

View the full Alert on the Duane Morris LLP website.

February 8, 2018February 9, 2018 by Duane Morris

False Claims Act Enforcement Activity Continues

By Susan V. Kayser

New U.S. Department of Justice (DOJ) statistics released in January 2018 show that False Claims Act (FCA) whistleblowers who are not joined by the DOJ in their lawsuits reaped $898 million in proceeds in 2017, far greater than the $425 million initially reported by the DOJ. However, in a coincidental turn of events, just hours after the new statistics were released a Florida federal court judge overturned a $350 million FCA verdict against a nursing home operator, Salus Rehabilitation, LLC. Accordingly, the DOJ statistics will likely be revised again to reflect 2017 proceeds of $548 million for whistleblowers.

The ruling in the Salus Rehabilitation case is itself worthy of attention. The Salus whistleblower alleged record-keeping violations and a scheme to boost Medicare and Medicaid reimbursement by exaggerating the medical needs of nursing home residents. Overriding a jury verdict, U.S. District Court Judge Steven D. Merryday ruled that a whistleblower’s allegations that the provider defrauded Medicaid were not sufficient to sustain a hefty FCA judgment. He wrote “… the evidence and the history of this action establish that the federal and state governments regard the disputed practices with leniency or tolerance or indifference or perhaps with resignation to the colossal difficulty of precise, pervasive, ponderous, and permanent record-keeping in the pertinent clinical environment.”

In making his ruling, Judge Merryday relied heavily on Universal Health Services v. Escobar, a 2016 U.S. Supreme Court ruling that established a set of requirements that must be met before a FCA judgment can be brought against a provider. Among the requirements are that the government and whistleblowers must show the government would not have paid the underlying claims if it knew of the regulatory violations alleged. The Escobar decision found that continued government reimbursement after fraud allegations are made is strong evidence that the allegations are not material. Judge Merryday noted that in the Salus case the government continued to pay for services rendered and stated that the whistleblower did not provide enough evidence to prove that Medicaid reimbursement would have stopped even if the government were aware of paperwork problems at the Salus facility. Clearly, the Salus decision is a victory for providers.

December 9, 2015 by Amy E. McCracken

Supreme Court to Consider Implied Certification theory of FCA

The Supreme Court has agreed to hear a case involving the implied certification theory under the False Claims Act. Implied false certification occurs when an entity has previously undertaken to expressly comply with a law, rule, or regulation, and that obligation is implicated by submitting a claim for payment even though a certification of compliance is not required in the process of submitting the claim. Many relators have tried to use this theory to turn a regulatory violation into a false claim–with its concomitant treble damages and statutory damages.

There has long been a split in the circuits regarding the viability of the implied certification theory. As recently as June 2015, the Seventh Circuit rejected the theory, stating that the “FCA is simply not the proper mechanism for government to enforce violations of conditions of participation contained in—or incorporated by reference into—a PPA [Program Participation Agreement].” Rejection of this theory recognizes that there administrative procedures designed to address regulatory violations.

In contrast, the Ninth Circuit has embraced the implied certification theory, stating “”[i]t is the false certification of compliance which creates liability when certification is a prerequisite to obtaining a government benefit.” The problem in the health care arena is that facilities promise to comply with a myriad of regulations when entering into PPAs, and certify compliance when submitting bills. Thus, under this theory, every single regulatory violation can turn into a false claim.

The health care industry will be closely watching the Supreme Court’s ruling on this important issue.

October 5, 2015 by Elinor H. Murarova

Recent Trends In FCA Litigation Against Hospice Care Providers

The Office of Inspector General identified “reducing waste in . . . hospice care” as one of the “top management challenges” for the 2015 fiscal year. The federal government’s efforts to respond to that challenge are illustrated by several recent developments in False Claims Act (“FCA“) cases brought against hospice care providers. For example, the Robinson-Hill, Betts, and Gooch cases discussed herein underscore the attention given to hospice care providers and their alleged billing and personnel-related practices, and the high monetary settlements that can result from such attention.

Continue reading “Recent Trends In FCA Litigation Against Hospice Care Providers”

August 20, 2015 by Philip H. Lebowitz

Another far-reaching FCA decision

The number of far-reaching and burdensome False Claims Act (FCA) decisions increases by the day. In an August 14, 2015 order by the U.S. District Court for the Middle District of Florida, a whistleblower’s complaint survived a motion to dismiss based upon some rather attenuated allegations. Since this matter was decided at the pleadings stage, the facts may ultimately dictate a different outcome; nevertheless, the cost and burden of defending the case may result in a costly settlement precipitated by this decision.

In the case, U.S. ex rel. Bingham v. BayCare Health System, the claim is that BayCare’s construction of medical office buildings, common areas, walkways and garages on the campus of a BayCare hospital (St. Anthony’s Hospital), provided a benefit to referring physicians sufficient to constitute prohibited remuneration under the Stark law. The medical office building was constructed by an entity called “St. Pete MOB, LLC”, which is not described as having ownership by referring physicians. Although the facts are not clear, it appears that the allegedly improper benefit to physicians took the form of BayCare providing a “non-exclusive parking easement” to St. Pete MOB. Continue reading “Another far-reaching FCA decision”

June 1, 2015 by Elinor H. Murarova

Gov’t and IPC Continue FCA Fight In Court

The Government and IPC The Hospitalist Company, Inc. (“IPC”) continue their False Claims Act (“FCA“) fight in court, now disputing the scope of discovery in light of the Northern District of Illinois’ partial denial of IPC’s motion to dismiss (detailed by Duane Morris here). The Government has moved to strike certain of IPC’s general objections to discovery: (1) IPC’s objection to producing documents from IPC’s nationwide operations and (2) IPC’s objection to producing documents dated after December 31, 2010 (“Motion“).

Continue reading “Gov’t and IPC Continue FCA Fight In Court”

April 6, 2015 by Philip H. Lebowitz

On-call coverage contracts are OK

An orthopedic surgeon agreed on two separate occasions to an on-call coverage contract with a local hospital in which he warranted that no portion of his compensation was in exchange for referrals. When the contracts were terminated by the hospital after the surgeon invested in a competing surgery center, the surgeon brought a whistleblower False Claims Act action against the hospital, alleging that the contract was intended to induce his referrals.

The U.S. District Court for the Eastern District of Pennsylvania, in Cooper v. Pottstown Hospital Co., LLC, et al., dismissed the surgeon’s complaint. The district court’s description of the failure of the complaint illustrates the characteristics of on-call contracts that make them a permissible relationship between hospitals and physicians. Continue reading “On-call coverage contracts are OK”

March 29, 2015 by Elinor H. Murarova

Certain FCA Defendants Dismissed; “Lumping” Defendants Together Is Not Enough To State An FCA Claim

A district court in the Northern District of Illinois recently partially granted a motion to dismiss the Government’s False Claims Act (“FCA”) complaint filed against IPC The Hospitalist Company, Inc. (“IPC”) and its subsidiaries and affiliates. The district court dismissed IPC’s subsidiaries and affiliates because the Government simply “lumped” those subsidiaries and affiliates in with IPC, and did not plead facts tying the subsidiaries and affiliates to the alleged fraud. The decision underscores an important defense available to FCA defendants, and highlights the nuanced pleading requirements that the Government must meet in an FCA case. Continue reading “Certain FCA Defendants Dismissed; “Lumping” Defendants Together Is Not Enough To State An FCA Claim”