Over 40 percent of money recovered by the Department of Justice from False Claims Act (FCA) suits involve fraud against federal health care programs. More importantly, nearly 89 percent of all new FCA matters in 2014 originated qui tam lawsuits brought by whistleblowers.

Developments in FCA jurisprudence have innumerable consequences for the health care industry,

 
After a protracted battle, Kaiser Foundation Health Plan, Inc. (Kaiser) recently settled a False Claims Act (FCA) qui tam case alleging that it falsely certified compliance with Medicare Advantage (MA) bidding instructions that relator claimed resulted in billions of dollars in damages to the United States. Crowell & Moring represented Kaiser in the litigation.

Kaiser’s former employee, Chris McGowan filed his initial complaint in 2009, but changed his theory of liability through a number of amendments as the case proceeded. Ultimately, he alleged that for its 2008 and 2009 MA bids Kaiser failed to comply with the CMS Office of the Actuary (OACT) “gain/loss margin” guidance directing that an MA plan’s proposed margin requirement be within a “reasonable range” of the margin requirements for its “other lines of business.” McGowan alleged that Kaiser’s certifications of compliance with MA bid instructions for 2008 and 2009 were false.


Continue Reading Settlement in FCA Qui Tam Case Disposes of Claims Alleging Falsely Certified Compliance with Medicare Advantage Rating Instructions

On October 2, 2013, the federal district court in Columbia, South Carolina imposed a landmark $237 million judgment in a much-discussed False Claims Act case which was predicated on violations of the Physician Self-Referral (Stark) Law, U.S. ex rel. Drakeford v. Tuomey Healthcare System, Inc.1 The case was originally filed as a qui tam case in 2005 by a physician, Michael Drakeford. The federal government intervened in the case in 2007. 

The relator Drakeford and the government alleged that Tuomey Healthcare System (Tuomey) had established employment relationships with certain referring physicians which did not meet a Stark Law “exception,” thus tainting all Medicare referrals and claims submitted by Tuomey for services resulting from these physicians’ referrals. The physicians, employed through Tuomey’s affiliated medical practice groups, were part-time employees and their compensation covered only the physicians’ outpatient surgery services. The physicians’ salaries were adjusted according to collections received by the hospital for the services personally performed by the physicians. The physicians also received productivity and quality bonuses based on a percentage of these collections. 


Continue Reading Landmark False Claims Act Judgment: What Hospitals and Healthcare Providers Should Know