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THE FALSE CLAIMS ACT THE BASICS

THE FALSE CLAIMS ACT THE BASICS. What Is The False Claims Act?. Federal Statute [31 U.S.C. §3731] Elements Submit or cause to be submitted A claim for payment to the United States That is false or fraudulent “Knowingly”. Brief History of The False Claims Act.

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THE FALSE CLAIMS ACT THE BASICS

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  1. THE FALSE CLAIMS ACTTHE BASICS

  2. What Is The False Claims Act? • Federal Statute [31 U.S.C. §3731] • Elements • Submit or cause to be submitted • A claim for payment to the United States • That is false or fraudulent • “Knowingly”

  3. Brief History ofThe False Claims Act • Enacted in 1863 because of blind mules… • Invigorated in 1986 because of Russia… • “Nothing Succeeds Like Success…”

  4. The Government is Minting Moneywith the False Claims Act • Since October 1987 total recoveries of $25 billion • The era of multi-billion dollar settlements

  5. Why is The False Claim ActSo Successful? • Federal Budget is Ginormous • Potential Exposure Under FCA is Crushing • Whistleblowers

  6. Federal Budget is Ginormous • $3.8 Trillion Dollars in 2012 • $400 Million per hour • $111,000 per second • 24% to Defense • 22% to Healthcare • 12% to Welfare • 22% to Pensions

  7. Potential Exposure UnderFCA is Crushing • Treble Damages • Per Claim Penalties • United States ex rel. v. MedQuest Assoc., Inc. (Tennessee 2011) • Defendant is Independent Diagnostic Testing Facility • Allegations • Failed to have properly trained physicians supervise contrast media radiology studies • failed to notify HHS of change in ownership of a testing site • Defense is “So What?”

  8. Court Says “Here’s What;” Grants summary judgment • Total payments = $ 400,000 • Treble damages = $1,200,000

  9. Penalty: Unsupervised contrast media studies • 343 claims • $11,000 per claim • $3,773,000 total penalty • Penalty: Change in ownership • 945 claims • $5,500 per claim • $5,197,500 total penalty

  10. Whistleblower Provisions • How Private Enforcement Works • Why Private Enforcement Works • What is the Result of Private Enforcement

  11. Whistleblowers Have Strenghtened FCA Enforcement • Complicated Fraud Schemes • Cost reports • Cost outliers • DRG upcoding • Clinical Lab services unbundling

  12. 2. Novel Theories of Liability • Off-Label Marketing (U.S. ex rel. King v. Solvay) • Pharmaceutical pricing/reporting of discounts (U.S. v. Schuman v. AstraZeneca PLC) • Research fraud (Hill v. UMDNJ) • Fraud in the Inducement (U.S. ex rel. Wildhart v. AARS Forever, Inc.) • Implied Certification Theory (Wilkens v. United Health Group) • Quality of Care (U.S. v. Villaspring Health Care) • Marketing of Medicare Advantage Plans (Wilkens v. United Health Group)

  13. Universal Enforcement • FCA reaches geographic areas of lax government enforcement • More cases under each theory of liability • Whistleblower lawyers multiplying

  14. Relationship Between the FCA and Stark/Anti-Kickback Statute? • FCA is a keyhole through which AKS and Stark violations can be pulled • Whistleblowers aggressively pushed this issue; DOJ waffled; Courts were mixed. • PPACA Expressly made AKS violation predicate for FCA Liability

  15. What does this mean? • Interpretation of Stark shifts from HHS (regulations promulgated with global application but glacial speed) to courts (opinions issued regularly but responding to specific facts) • Enforcement of AKS – a criminal statute – shifts from the Government to financially motivated Plaintiffs’ lawyers

  16. Judicial Interpretation of AKS/Stark • U.S. ex rel Singh v. Bradford Regional Medical Center • Suit involving hospital and radiology group alleging that hospital’s lease of radiology group’s nuclear imaging camera violated Stark and AKS. • The defendant doctors left the hospital and opened a competing nuclear imaging center. • The hospital tried to rescind privileges based on competition, and the hospital and defendant doctors ultimately agreed to a lease arrangement. • The hospital thereafter paid the defendant doctors over $30,000 a month. • Competing medical practice filed suit, challenging lease arrangement • Court exhaustively assessed whether the lease violated Stark/AKS • Held that it violated Stark, entered Summary Judgment • Stated that it likely violated AKS • Jury will decide intent issues

  17. United States v. Campbell • UMDNJ “hires” community cardiologists to increase volume of cardiac procedures at UMDNJ • Campbell paid $75,000 per year • UMDNJ self-reports that the employment relationships were illegal and refunds $8.33 million • Campbell does not agree and files claims against UMDNJ and others • Government alleges that Campbell’s referrals to UMDNJ violated Stark • Court interprets what constitutes a referral • Court assesses bona fide employee status

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