Thursday, December 27, 2012

False Claims Act and Qui Tam DOJ Statistics for 2012

The Civil Division of the U.S. Department of Justice has released the False Claims Act/Qui Tam statistics for FY 2012, which ended September 30, 2012. They can be found here. As in previous years, the overwhelming number of all cases filed pursuant to the False Claims Act were filed by qui tam relators and a great majority of the recoveries came from the health care area.

For 2012 False Claims Act (FCA) and Qui Tam (QT) matters, the DOJ statistics reveal the following:
  • 782 FCA/QT new referrals, investigations, and qui tam matters. This number has increased slowly over the last two years as it was 773 in 2011 and 715 in 2010. QT actions continue to drive the overwhelming majority of new matters: almost 83% or 647 of the "new" matters were QT's.
  • Total FCA/QT combined recoveries (settlements and judgments) were $4,959,333,498. Of that total:
    • Almost $1.605 billion (32%) recovered in FCA cases filed by the government;
    • Approximately $3.325 billion (67%) recovered in QT cases where government intervened;
    • $29.387 million (.059%) recovered in QT cases where government did not intervene; and
    • Total relator share awards: nearly $431 million (8.7% of total recoveries and judgments).
The DOJ divides the FCA/QT new matters and recoveries into three major categories: statistics related to Health and Human Services, Department of Defense, and Other. Not surprisingly, new matters and recoveries relating to health and human services (e.g., Medicare, Medicaid, VA, Tricare) continued to maintain a commanding lead in 2012:
  •  436 new health-care related matters, of which 412 were QT cases
    • Over $3 billion (61%) in total health care related recoveries, almost $2.5 billion in QT cases; and
    • Over $284 million in relator share awards.
  • 69 new defense related matters, of which 57 were QTs
    • Almost $167 million (3%) in total defense related recoveries, only $2 million were non-QTs; and
    • Over $19 million in relator share awards.
A. Brian Albritton
December 27, 2012

Thursday, December 20, 2012

Wake Up Call for Those Asserting Broad Privilege Claims: U.S. ex rel Kalid-Kunz v. Halifax Hospital

The Court in the False Claims Act/Qui Tam case of US ex rel Kalid-Kunz v. Halifax Hospital Medical Center, et al., 2012 WL 5415108 (M.D. Fla., November 6, 2012) recently rejected a number of privilege claims made by the defendant in that hotly contested litigation. See previous blog post. The Court’s opinion evaluating Halifax Hospital’s privilege claims is a wake up call both for litigators and in-house counsel, and serves as a refresher on where and when the attorney-client privilege and work product doctrine applies. Though it did not really apply new law as some commentators have claimed, the Court examined Halifax’s privilege claims in a manner and at a level of detail not usually seen in discovery orders. In doing so, the Court emphasized that the attorney-client privilege applies to communications made by or to counsel in the course of obtaining or receiving legal advice and it rejected privilege claims for any email, document, or record that did not exhibit such a clear purpose, regardless of whether a lawyer was copied on the document. The Court’s rulings are quite instructive.  For example: 

·                  The Court rejected the hospital’s attempts to shield as privileged hospital compliance communications that only tangentially involved legal counsel;

·                  In lieu of examining every single document for which defendant claimed a privilege, the Court required that the parties file a “representative samples” for in camera review and based its rulings on review of those samples;

·           Communications by in-house counsel were not entitled to a “presumption” of being privileged, given the mixed role of in-house counsel and their involvement in business decisions; 

·                  Just because a document is labeled “attorney-client privilege” and “funneled through an attorney” does not “automatically encase the document in the privilege.” It has to be related to providing or receiving legal assistance;  

·                  Emails on which both a lawyer and non-lawyer are copied or sent are not considered to have the “primary purpose” of seeking legal advice and thus did not qualify for the privilege; 

·                  You can send “privileged” emails to non-lawyers if you are “apprising “them of the legal advice that was sought and received” -- essentially passing along advice of a lawyer;

·           “A draft of a document is protected by the attorney-client privilege if it was prepared with the assistance of any attorney for the purpose of obtaining legal advice or, after an attorney’s advice, contained information a client considered but decided not to include in the final,” and

·           Each email of an email string must be listed separately in a privilege log and the privilege evaluated for each email in an email string. Email string may not be listed as one message.

Additionally, the Court rejected the Hospital’s privilege claim over its “compliance referral log.” In the face of Hospital’s claim that it was a “factual record about compliance issues that may need to be investigated" and that the log was prepared in anticipation of litigation, the Court found the log was kept in normal course, often just recorded facts, incorporated emails that were not privileged, and did not reflect review by counsel.

The Court rejected privilege log descriptions such as “facilitates the provision of compliance advice”, “facilitates the rendering of compliance advice”, and “reflecting request for compliance advice” on the grounds that you “cannot tell from the descriptions whether privilege is properly asserted.”

The Court rejected the Hospital’s privilege claims for “audit reviews” conducted by the management department, compliance department, and finance department. Again, these audits were not conducted primarily for the purpose of obtaining or receiving legal advice.

Overall, the Court refused to recognize privilege claims that were simply based on the fact that the lawyer may be a recipient of the document or information or on the fact that the subject matter of the report or document (e.g., audits or compliance log) might be of interest to counsel or report matters that might raise a legal concern.  

A. Brian Albritton
December 20, 2012

Wednesday, December 5, 2012

DOJ Announces Nearly $5 Billion in False Claims Act Recoveries for FY 2012

The U.S. Department of Justice announced yesterday that it had secured $4.9 billion in settlements and judgments in civil cases involving fraud against the federal government for fiscal year 2012. Highlights of DOJ's announcement include:
  • $4.9 billion for 2012 is a "record recovery" for a single year, eclipsing the previous record by more than $1.7 billion.
  • Total recoveries under the False Claims Act since January 2009, when President Obama took office, is $13.3 billion.
  • 647 qui tam actions were filed in 2012.
  • Of the $4.9 billion in recoveries, $3.3 billion resulted from suits filed by qui tam relators.
  • Of the $4.9 billion, health care fraud recoveries accounted for more than $3 billion and housing and mortgage fraud recoveries accounted for $1.4 billion.
  • Enforcement actions against the pharmaceutical and medical device industry were the source of the largest recoveries, such as the $1.5 billion paid by GlaxoSmithKline and $441 million paid by Merck.
  • The mortgage fraud recoveries included a $900 million settlement with five mortgage companies to address mortgage loan servicing and foreclosure abuses.
  • Procurement fraud recoveries totaled $427 million, bringing the total of procurement fraud recoveries to $1.7 billion since January 2009.
  • Nearly 8,500 qui tam suits have been filed since 1986; 2,200 were filed since January 2009.
As Acting Associate Attorney General Tony West stated in announcing these False Claims Act recoveries, the "recovery of taxpayer dollars" is "a high enforcement priority" that has been brought about in part by the "aggressive use of [the False Claims Act]. . . . . The False Claims Act is, quite simply, the most powerful tool that we have to deter and redress fraud." The statements made by Associate Attorney General West and Principal Deputy Assistant Attorney General Delery in announcing these recoveries can be found here and here.

A. Brian Albritton
December 5, 2012