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False Claims Act Statistics, News & Analysis

Escobar Matters for Discovery, Too: District Court Emphasizes Right to Broad Materiality Discovery

While most post-Escobar decisions have involved the merits, Escobar also has significant implications for the scope of materiality discovery under the FCA. Last week, in United States ex rel. California v. Paramedics Plus LLC, the U.S. District Court for the Eastern District of Texas became one of the first courts to directly tackle that issue in a written opinion, holding that Escobar affords FCA defendants the ability to broadly discover how the government has actually handled the disputed issue, both in that case and in other analogous situations.

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Trap! Zap! Zing! — And Poof! A Florida Court Applies Escobar and Makes a $347 Million FCA Jury Verdict Disappear

On January 11, 2018, a Florida district court vacated a $350 million FCA jury verdict against defendants in U.S. ex rel. Angela Ruckh v. Salus Rehabilitation, LLC, No. 8:11-cv-1303 (M.D. Fla. Jan. 11, 2018). At trial in February 2017, relator claimed that the defendants, owners and operators of 53 specialized nursing facilities fraudulently inflated the amount of resources needed by their patients by upcoding Resource Utilization Group (“RUG”) levels to increase the amount they were able to bill Medicare and Medicaid. The jury agreed and found the defendants liable for $109.8 million in damages, which the judge then trebled to $347 million. The government had declined to intervene, but stood to reap the benefits of relator’s perseverance, but the court had other ideas.

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Holding a Mere Temporal Link Between Kickbacks and Medicare Claims Is Too Weak — the Third Circuit Says Goodbye to Relator's Case

Consistent with other recent decisions we have blogged about, the Third Circuit recently held in United States ex rel. Greenfield v. Medco Health Solutions, Inc., that to survive summary judgment, a relator must link alleged kickbacks to specific claims for payment submitted to the government; it is not enough to merely allege that the “taint” of a kickback scheme renders false every claim submitted while that scheme is ongoing. Finding no such link between the defendants’ Medicare claims and an alleged kickback scheme, the Third Circuit affirmed summary judgment for the defendants.

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"The Granston Memorandum": Will DOJ Really Bite the Hands That Feed the FCA — Color LLB Skeptical

Last November, we reported that Michael Granston, Director of the DOJ Commercial Litigation Branch, Fraud Section, announced at a health care conference that in the future DOJ would move to dismiss meritless qui tam cases. We doubted that much would change, especially given that the speech was not accompanied by any type of policy memorandum. We also understood that DOJ had denied any formal change in policy, and yet, last week the other shoe dropped. The New York Law Journal obtained a copy of a memorandum issued by Granston and dated January 10 to all attorneys in the Fraud Section and all Assistant U.S. Attorneys handling FCA cases. The memorandum purports to encourage DOJ to “seek[] dismissal” of non-intervened qui tam cases that “lack substantial merit” and discusses at some length the factors that should guide the exercise of dismissal discretion. Perhaps the memorandum is some reason for optimism, but we at LLB will wait, as we do, for the statistics to see if this marks any real shift in government thinking on FCA enforcement or is mere window dressing.

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Two Courts Confirm Penalties Not Yet Issued Do Not Support Reverse False Claims

The D.C. Circuit and the Tenth Circuit recently joined several other circuits, including the Fifth, Sixth, and Eighth, in holding that liability for reverse false claims cannot be based on contingent obligations to pay the government (meaning obligations to pay that may arise after future discretionary actions), reaffirming that when Congress amended the FCA in 2009 to define the term “obligation,” it intended that liability would result for reverse false claims only where there are failures to pay specific, definite obligations owed to the government.

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