Thursday, August 30, 2012

Recents Blog Posts and Articles of Interests

I have recently come across of a number of blog posts and articles which I commend to you:

Scott Stein at Sidley Austin's Original Source blog writes about the case Halasa v. ITT Educational Services, Inc., 8/14/12, wherein the Seventh Circuit recently dismissed a False Claims Act retaliation claim and rejected the plaintiff's claim that "constructive knowledge" on the part of those who discharged him was sufficient to prove retaliation. The Court found that without actual knowledge of plaintiff's protected activities, plaintiff had not established a "causal link" between the plaintiff's reports of irregularities and his termination. 

 Under the column of interesting qui tams, the Department of Justice recently announced it had intervened in a qui tam suit filed against none other than the polling organization, Gallup.  "According to the whistleblower’s complaint, Gallup violated the False Claims Act by giving the government inflated estimates of the number of hours that it would take to perform its services, even though it had separate and lower internal estimates of the number of hours that would be required.   The complaint further alleges that the government paid Gallup based on the inflated estimates, rather than Gallup’s lower internal estimates."

Ellyn Sternfield at MintzLevin's Health Law & Policy Matters blog writes about the Repko case, wherein the Third Circuit dismissed the qui tam brought against Guthrie Healthcare System by its former general counsel and executive VP, Rodney Repko, on the grounds that Repko was not an original source such that he could avoid the public disclosure bar of the False Claims Act.  Repko had been charged with trying to steal two million dollars from Guthrie after he left the company and had pled guilty.  As part of his plea agreement, he was required to provide the government with "information concerning the unlawful activities of others."  As the article points out, the Third Circuit "was persuaded by the fact Repko had initially disclosed the challenged arrangements to the government under his plea agreement; the disclosure was bargained-for consideration which enabled Repko to obtain a lower sentence on his bank fraud charges.  While never mentioning the word 'voluntarily,' the court found that since the plea agreement compelled his disclosures to the government, Repko was essentially estopped from invoking the original source exception."

Douglas Baruch and John Boese of Fried Frank recently wrote a "FraudMail Alert®" on the case of United States v. BNP Paribas SA, No. H-11-3718, 2012 WL 3234233 (S.D. Tex. Aug. 6, 2012), wherein a federal court in Texas applied the Wartime Suspension of Limitations Act, 18 U.S.C. § 3287 (2008) (“WSLA”) and held that the statute of limitations in a False Claims Act case had been suspended  due to the Iraq and Afghanistan conflicts. In addition, Baruch and Boese write "the district court’s ruling makes clear that the WSLA’s suspension is not limited to FCA cases arising out of wartime contracting or even Defense Department contracting in general, meaning that the FCA’s statute of limitations would be rendered ineffective in all sorts of cases, including those involving allegations arising out of the financial and healthcare industries."  Finding the case to run "counter to the plain meaning of the WSLA as well as the clear intent of Congress," they analyze the case in detail and declare it to be just plain "wrong."

A. Brian Albritton
August 30, 2012


Sunday, August 19, 2012

False Claims Act Investigations of Non-Evidence Based ICD Procedures

News has been coming out about what is reported to be the U.S. Department of Justice's latest False Claims Act initiative:  "the national false claims investigation of Medicare billing for implantable cardiac defibrillator (ICD) procedures."  According to the National Heart Lung and Blood Institute, ICDs are small devices implanted  in the chest or abdomen that are used to treat irregular heart beats by using electrical pulses or shocks to bring the heart back to a normal rhythm.  A study published early last year by JAMA, the Journal of the American Medical Association, examined an enormous patient sample where implantable cardiac defibrillators were used.  Out of over 100,000 patients who received such devices, the article found that 22.5% of those patients received ICD devices even though they did not meet "evidence-based criteria for implantation:"  what the authors called "non-evidence based" ICD procedures.  Patients who  received non-evidence based ICDs, the study found, had a significantly higher rate of in-hospital death and complications.

In an article reprinted at (and apparently several other cites as well), "Feds Turn corner in ICD Investigation; Hospital Liability in Divided Into Categories," its author, Larry Husten, writes that DOJ "is apparently about to take a big step forward in its national false claims investigation of Medicare billing for implantable cardiac defibrillator (ICD) procedures" and whether such ICD procedures are medically necessary.  "DOJ, reports Husten, "now has a blueprint for determining hospital liability" under the False Claims Act.  According to Husten, Medicare will normally reimburse the use of ICDs, but a number of the "covered indications" for when such devices may be used have "timing requirements."  "Medicare," writes Husten, "won’t pay for a patient’s ICD implant within 40 days of an acute myocardial infarction (MI) or within three months of a coronary artery bypass graft (CABG) or percutaneous transluminal coronary angioplasty (PTCA). . . . . The idea is to first give patients time to recover from the heart attack to determine whether the patient really is at elevated risk for cardiac arrest."  Husten writes that there are exceptions to when such devices can be implanted notwithstanding these timing requirements; however, he quotes an anonymous source who says that "it doesn’t look like the government will go easy when hospitals billed in violation of the timing requirement in other circumstances."

The press attention to this new initiative appears to be prompted in part by the  Hospital Corporation of America ("HCA")  recent disclosure that it provided information to the Civil Division of the U.S. Attorney's Office for the Southern District of Florida about the "the medical necessity of interventional cardiology services provided at about 10 HCA hospitals, mostly in Florida."

In a recent article, "Hospitals face hefty False Claims penalties over defibrillator cases," on the investigation of ICD usage by Joe Carlson of Modern, he writes that for the "past two years" DOJ has been conducting a "patient-by-patient investigation into thousands of implantable cardioverter defibrillators . . . for Medicare beneficiaries between 2003 and 2010 at hospitals across the country. . . . .  More than 100 U.S. hospitals are believed to have received requests for records on their implanted defibrillators, with the first round going out in March 2010."

I think there has been some question as to whether DOJ can really pursue such large scale "medical necessity cases" as involved here with ICDs.  Carlson, for example quotes one attorney who rightly points out that "the government would have to be prepared to show that a hospital acted with intent to defraud, or with deliberate indifference or reckless disregard for the CMS rules, in order for False Claims penalties to come into play."  In certain False Claims Act cases based on alleged statistical abnormalities, however, I have not found that the government was prepared to show either fraud or deliberative indifference.  Rather, the government draws the inference that fraud or deliberate indifference occurred based on the statistical abnormality alone, and hospitals faced with the prospect of a False Claims Act suit, often settle rather than fight the issue of medical necessity.   For example, in the pneumonia up-coding cases, hospitals were accused of overusing higher reimbursable diagnostic codes for a certain type of pneumonia.  Rather than fight these cases, hospitals settled in droves, even in many instances where there was substantial evidence to support their use of such codes.  Another example can be found in the recent DOJ kyphoplasty settlements.  In those cases, DOJ accused the hospitals of admitting  too many kyphoplasty patients for a one day stay and argued that the patients should have been observed instead.  Here again, hospitals settled, often protesting their innocence.    My point is medical necessity cases are much easier to bring when there is a gross or large statistical aberration in the procedure at issue by the hospital or medical provider:  the government does not need evidence of fraud or recklessness beyond the aberration itself in order to drive settlements.

A. Brian Albritton
August 19, 2012

Friday, August 3, 2012

When a Relator Steals Confidential Information: the Case of Cabotage v. Ohio Hospital for Psychiatry

In an entry entitled, "What Happens When a Relator Steals Patient Data?", Scott Stein of the Original Source blog writes about the case of Cabotage v. Ohio Hospital for Psychiatry, No. 11-cv-50 (July 27, 2012 S.D. Ohio), wherein the Court dealt with that question  and barred the relator from using such documents under its "inherent authority." This was an issue that was hotly debated by panelists at the Ethics breakout of the Ninth National Institute of the Civil False Claims Act.  I commend Scott's article to you, where you can also find a link to the case.

A. Brian Albritton
August 3, 2012

Can Government Employees Be Relators? The 5th Circuit says, Yes.

In a case of first impression for the circuit, the 5th Circuit Court of Appeals recently held that government employees who learn of alleged violations of the False Claims Act within the scope of their employment may nevertheless file a qui tam and are not precluded from acting as relators even though their job as a government employee was "to investigate a fraud." Randall Little  and Joel Arnold on behalf of the United States v. Shell Exploration and Production Co., et al., Case no. 11-20320, (5th Cir. July 31, 2012).

In this case, the relators were auditors with the Minerals Management Service ("MMS"), an agency of the Department of Interior, and part of the mission of their agency was "to uncover theft and fraud in the royalty programs" for offshore drilling.  The relators alleged that Shell failed to pay the United States $19 million in royalties due it from Shell's offshore drilling. The Court noted that it was "undisputed that the Shell allegations came to light during the course" of the relators' "official duties" and that reporting their findings was "a job requirement."  The relators reported their requirements and then subsequently filed two different qui tams.  The government did not intervene.

Overturning the District Court's grant of summary judgment, the 5th Circuit found that government employees, such as the relators, qualified as "persons" under the False Claims Act. 31 U.S.C. 3730(b)(1)("A person may bring a civil action for a violation of section 3729 . . . ").  In making its decision, the Court declined a number of policy and statutory construction arguments offered by the government in an amicus and the defendant as to why government employees cannot be relators, including arguments based on the text of the statute; the "absurdity" of having government employees as relators, and that government employees serving as relators would violate "ethics guidelines" applicable to government employees.  The Court also noted that the 10th and 11th Circuits also permit government employees to be relators.  U.S. ex rel Williams v. NEC Corp., 931 F.2d 1493, 1501-02 (11th Cir. 1991) and U.S. ex rel Holmes v. Consumer Ins. Grp., 318 F.3d 1199, 1208-12 (10th Cir. 2003); but see U.S. ex rel. LeBlanc v. Raytheon Co., 913 F.2d 17, 19-20 (1st Cir. 1990)(some federal employees may not be qui tam claimants.)

Additionally, the Court remanded the case for the District Court to properly apply the 2006 version of the "public disclosure bar," 31 U.S.C. 3730(e)(4), which has been subsequently amended, as defendants  had alleged that the "scheme" alleged by the relators had been the source of several public disclosures.  The Court did note, however, that if public disclosure had occurred, the relators cannot be an "original source" and the action must be dismissed.  To be an original source, a relator must have "direct and independent knowledge" of the allegations of his or her complaint and must have "voluntarily provided the information to the government." 31 U.S.C. 3730(e)(4).  Following other courts, the 5th Circuit held that a relator who was "employed specifically to disclose fraud is sufficient to render his disclosures nonvoluntary."

Overall, this opinion is somewhat of a monument to plain language statutory interpretation.  The Court appears to acknowledge that having government employees as relators may be problematic ("we are are of the dilemmas identified").  But, it refuses all invitations on the basis of policy to create an exception to what it characterizes as clear statutory language.

A. Brian Albritton
August 2, 2012