DOJ Issues New Guidance on the Evaluation of Corporate Compliance Programs in Federal Fraud Investigations

On February 8th, the U.S. Department of Justice (DOJ) quietly issued new guidance on how the agency evaluates corporate compliance programs during fraud investigations. The guidance, published on the agency’s website as the “Evaluation of Corporate Compliance Programs,” lists 119 “sample questions” that the DOJ’s Fraud Section has frequently found relevant in determining whether to bring charges or negotiate plea and other agreements. The February 8th issuance is the agency’s first formal guidance under the new presidential administration, and the latest effort by the DOJ’s “compliance initiative,” which launched at the hiring of compliance counsel expert Hui Chen in November 2015. The new guidance is particularly valuable for healthcare organizations in light of the agency’s heightened efforts to prosecute Medicare Advantage plans for fraudulent reporting under the False Claims Act.

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DC Circuit Finds Government Failure to Seek Repayment is “Very Strong Evidence” of Non-Materiality In False Claims Act Case

The DC Circuit recently issued a decision in U.S. ex rel. McBride v. Halliburton — F.3d —-, 2017 WL 655439 (D.C. Cir. Feb. 17, 2017), in which it applied Universal Health Services, Inc. v. United States ex rel. Escobar, 136 S. Ct. 1989 (2016) to a government contracts False Claims Act matter.  It found that the government’s failure to seek repayment after investigating a relator’s claim was “very strong evidence” that the false statement or claim was not material.

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Justice Department Joins Whistleblower Suit Accusing UnitedHealth Group of Overcharging Medicare by “Hundreds of Millions”

The U.S. Department of Justice (DOJ) has joined a whistleblower lawsuit, United States of America ex rel Benjamin Poehling v. Unitedhealth Group Inc., No. 16-08697 (Cent. Dist. Cal. Sep. 17, 2010), ECF No. 79, against UnitedHealth Group (United) and its subsidiary, UnitedHealthcare Medicare & Retirement—the nation’s largest provider of Medicare Advantage (MA) plans. The suit accuses United of operating an “up-coding” scheme to receive higher payments under MA’s risk adjustment program called the HCC-RAF Program (see below). The complaint alleges that United fraudulently collected “hundreds of millions—and likely billions—of dollars” by claiming patients were sicker than they really were. The suit was originally filed in 2011 by a former United finance director under the False Claims Act (FCA), which allows private citizens to sue those that commit fraud against government programs. Pursuant to the FCA, the case was sealed for five years while the DOJ investigated the claims.

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Fourth Circuit Punts at Rare Opportunity to Rule on Statistical Sampling

Statistical sampling is always a hot topic in False Claims Act (FCA) litigation.  Courts have allowed statistical extrapolation from samples of claims to determine damages in cases where FCA liability was already established.[1]  But courts are reluctant to allow the use of sampling for determining liability in the first instance.[2]  Since the FCA’s monetary penalty per “violation” has been held to apply to each individual claim submitted for reimbursement, it seems only natural that relators and the government be required to prove the FCA’s various elements for each individual claim.[3] But, in a series of recent rulings, some district courts have acquiesced to – or at least been open to – the idea of using statistical sampling to establish liability.[4]  Other courts have rejected statistical sampling to prove liability, especially when all the claims alleged to contain falsehoods remain available for a full review.[5]

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DOJ Releases its 2016 False Claims Act Recovery Statistics

Yesterday, the Department of Justice (DOJ) released its annual False Claims Act (FCA) recovery statistics, which revealed that Fiscal Year 2016 has been another lucrative year for FCA enforcement.  Based on these statistics, DOJ recovered more than $4.7 billion in civil FCA settlements this fiscal year — the third highest annual recovery since the Act was established.  Since 2009 alone, the government has recovered $31.3 billion in FCA settlements and judgments.  This is a truly staggering statistic.  It shows that the government’s reliance on the FCA to combat fraud will continue for the foreseeable future.

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HHS OIG Publishes Final Rule on Anti-Kickback Statute: Safe Harbors And Monetary Penalties

On December 6, 2016 the U.S. Department of Health & Human Services, Office of Inspector General (HHS-OIG) issued two final rules relating to the Anti-Kickback Statute (AKS) and Civil Monetary Penalties (CMP).  These rules affect a wide variety of health care companies and also impact False Claims Act investigations and litigation.

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First Circuit on Escobar Remand: Relators’ Allegations of Regulatory Violations Sufficiently Material to State a Claim Under the FCA

On remand from the Supreme Court’s Escobar decision, the First Circuit holds that Universal Health Services’ (UHS) alleged failure to adequately staff its facilities in compliance with Massachusetts health care regulations is sufficiently material to survive UHS’s motion to dismiss.  The decision is not a complete surprise, but is nevertheless noteworthy because it reflects the First Circuit’s treatment of the matter following one of the most important Supreme Court FCA decisions in recent history.

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Fifth Circuit: No Anti-Kickback Violation When Defendant Merely Hopes or Expects Referrals from Benefits Designed for Other Purposes

The Fifth Circuit recently affirmed the grant of summary judgment in favor of Omnicare, Inc., in a qui tam action alleging violations of the False Claims Act (“FCA”) and the Anti-Kickback Statute (“AKS”). The ruling signifies that, to violate the AKS, there must be unambiguous evidence that a business specifically designed its practices to induce referrals.

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You’ve Been Served—What to Do When You Receive an Agency Subpoena or CID (Part II)

Now that you understand what prompts an agency subpoena or CID, the next step is to have a strategy, which involves answering the question, “what should I do?” Taking the right approach from the outset is critical to protecting your company’s interests.

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The Government’s Take on Materiality After Escobar

Following the Supreme Court’s decision in Universal Health Services, Inc. v. United States ex rel. Escobar, 136 S. Ct. 1989 (2016), we expected significant False Claims Act litigation over the Act’s materiality standard.  Such litigation is a direct consequence of Escobar’s holding, which does not limit the implied certification theory to violations of conditions of payment[1] and emphasizes the Act’s “demanding” materiality standard.

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