DOJ Rule Increases FCA Penalties to Over $20,000 Per Claim

Effective August 1, 2016, the False Claims Act’s (FCA) civil penalty will double.  As it currently stands, the FCA’s civil penalty ranges from $5,500 to $11,000 per violation.  But as of August 1, the FCA’s civil penalty range will almost double to a minimum of $10,781 and a maximum of $21,563.

The increase is the result of an interim final rule issued yesterday by the Department of Justice.  81 Fed. Reg. 42491 (June 30, 2016).  Although the increase was expected, it still reflects a dramatic increase in risk to those doing business with the federal government.  Health care providers are uniquely at risk, because those entities are often sending thousands of claims to the federal government for reimbursement.  When thousands of claims are at issue, the civil penalty can easily add up.

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FCA’s “Implied Certification” Theory Survives

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?

Yesterday’s argument before the Supreme Court in Universal Health Services, Inc. v. U.S. 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.) Continue Reading

“Beware Greeks Bearing Gifts”: FCA Enforcement Turning to Federal Grants?

While we may be hard pressed to recall which ancient epic poem includes the tale of the Trojan Horse (it’s the Aeneid, in case you’re wondering, although it’s also referenced in the Iliad), we all know the lesson—if it seems too good to be true, it probably is. For recipients of Federal grants, there are lots of administrative hurdles but, once you get the money, it’s smooth sailing, right? Hold on a minute. Continue Reading

DOJ Seeks Rehearing in D.C. Circuit Case, Hoping to Resurrect Liability for a Contractor’s “Objectively Reasonable” Interpretation of an Ambiguous Contract Provision

We previously reported on a D.C. Circuit case in which a three-judge panel held that when the government is silent, there is no False Claims Act (FCA) liability for a contractor’s “objectively reasonable” interpretation of an ambiguous contract provision. The government is now seeking a rehearing en banc (a rehearing by all of the D.C. Circuit judges) in the hopes of rolling back the panel’s ruling.  Continue Reading

CMS Clarifies 60 Day Overpayment Rule

The Department of Health and Human Services’ (HHS) Center for Medicare and Medicaid Services (CMS), is set to publish a final rule that will provide some much needed relief to healthcare providers from the burdens of the so-called 60-Day Overpayment Rule.  The final rule clarifies (1) the 60 day period for refunding overpayments is not triggered until both the fact and amount of an overpayment are known; (2) the standard for knowledge is not “actual knowledge,” but when the provider would have identified the overpayment had it exercised reasonable diligence; and (3) the manner in which the refund must be made. Continue Reading

2015: Another Big Year for FCA Recoveries

The Department of Justice has issued its annual press release touting its False Claims Act recoveries from 2015. The government’s haul was substantial: just over $3.5 billion.  This is the fourth consecutive year that recoveries were at or above this level, but represents a significant decline from the government’s record $6.1 billion total recovered in 2014. Continue Reading

Supreme Implications: High Court to Decide Fate of “Implied False Certification” Theory

Setting the stage for what may be a far-reaching interpretation of the False Claims Act (FCA), the Supreme Court of the United States granted certiorari to resolve a circuit split over whether “implied certification” is a viable theory of liability under the FCA. Universal Health Servs., Inc. v. United States ex rel. Escobar, No. 15-7.  Unlike a typical false certification case—in which a person explicitly but falsely certifies compliance with a statute, regulation, or contract provision—an implied certification case does not require an express certification of compliance.  Instead, it merely requires failure to comply with a statutory, regulatory or contractual requirement that is condition of payment. Continue Reading

D.C. Circuit: When The Government Is Silent, There Is No FCA Liability For A Contractor’s “Objectively Reasonable” Interpretation Of An Ambiguous Contract Provision

In a significant win for government contractors, health care providers, and financial institutions who operate in an increasingly onerous regulatory environment, the United States Court of Appeals for the D.C. Circuit issued an important False Claims Act (FCA) ruling in United States ex rel. Purcell v. MWI Corporation, No. 14-5210 (D.C. Cir. Nov. 24, 2015).  In Purcell, the D.C. Circuit held that the government cannot establish that a defendant “knowingly” submitted a false claim when it certifies compliance with an ambiguous contract provision based on its objectively reasonable interpretation of that ambiguous provision, and when the government had not officially warned the defendant away from its otherwise objectively reasonable interpretation of that provision.  The case provides some relief for those contractors who rely on their good faith interpretations of ambiguous regulations and contract provisions where there is otherwise no guidance or direction from the government.  It is also another example of the Justice Department expanding its FCA docket beyond traditional government contractor and health care defendants.  Continue Reading

Hundreds of Hospitals Will Pay Over $250 Million in Nationwide FCA Settlement

457 hospitals (or, expressed differently, nearly 10% of all of the hospitals in the United States) have recently agreed to settlements worth more than a quarter of a billion dollars arising out of an investigation into Medicare billings for allegedly unnecessary cardiac implants known as implantable cardioverter defibrillators, or ICDs. ICDs regulate heart rhythms and cost about $25,000 per device.  Whether Medicare covers ICD implants is dependent on the National Coverage Determination (“NCD”).  The NCD states that ICDs should not be implanted in patients who recently suffered a heart attack or heart bypass surgery or angioplasty, and has set waiting periods for the procedure of 40 days after a heart attack and 90 days after a bypass or angioplasty. Continue Reading

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