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False Claims Act Statistics, News & Analysis

"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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Frighteningly Large Settlement for Hospice Provider Whose Patients Lived

The day before Halloween, the DOJ announced that Chemed Corporation and its various subsidiaries have agreed to a $75 million settlement for submitting allegedly false hospice services claims to Medicare for reimbursement. Touting this as “the largest amount ever recovered under the False Claims Act from a provider of hospice services,” the government sets the tone early in the new fiscal year for a high-recovery agenda.

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Home Sweet Home: FHA Mortgage Insurance Carries Heavy False Claims Act Risks for Mortgage Originators

Banks are no strangers to complex regulatory schemes and close government scrutiny. That is especially true for banks originating and underwriting mortgages insured by the Federal Housing Administration (FHA), a sub-agency of the Department of Housing and Urban Development (HUD). FHA issues mortgage default insurance to lenders for more than a third of mortgages issued each year, but imposes very specific underwriting and quality control measures upon loan originators seeking FHA insurance. The scrutiny is even greater for mortgage originators authorized to issue the insurance without FHA approval. What might surprise these mortgage lenders, however, is that even seemingly small deviations from those FHA insurance underwriting rules can lead to substantial FCA liability—liability potentially larger than the value of the mortgage defaults the lender seeks to cover through FHA insurance.

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