Friday Enforcement Wrap: Justice Department Issues Formal Guidance on False Claims Act Cases

DOJ News

Justice Department Issues Formal Guidance on False Claims Act Cases

The Justice Department issued formal guidance announcing the Department’s policy on credits to defendants who cooperate in False Claims Act investigations. Parties may earn cooperation credit by, among other measures, disclosing voluntarily misconduct of which the government was not aware, preserving relevant documents and information beyond what is legally required, identifying potential witnesses, facilitating the government’s review of proprietary data, admitting liability or accepting responsibility, and taking corrective action in response to a violation. Parties who earn cooperation credit will “most often” receive a reduction in the damages multiplier and civil penalties, and the Department may also advise other interested agencies about the parties’ cooperation. The total credit a company can receive “may not exceed an amount that would result in the government receiving less than full compensation for the losses caused by the defendant’s misconduct.” The guidance, however, does not offer specific information on precisely how a company will benefit from the identified forms of cooperation with the government.

The DOJ press release can be found here.

The full text of the policy can be found here.

Patient Recruiter Sentenced to 87 Months for Kickback Scheme

A patient recruiter from South Florida was sentenced to 87 months in prison for her participation in a scheme to pay illegal kickbacks in exchange for referrals for home health care services to Medicare beneficiaries. After a four-day trial in February, the defendant was convicted of conspiracy to defraud the United States and to receive health care kickbacks, and four counts of receiving health care kickbacks. Evidence presented at trial indicated that the defendant received at least $710,000 in kickbacks for referring Medicare beneficiaries to five home health agencies, which caused Medicare to pay those agencies over $1.6 million.

The DOJ press release can be found here.

Patient Recruiter Sentenced to 87 Months for Kickback Scheme

A patient recruiter from South Florida was sentenced to 87 months in prison for her participation in a scheme to pay illegal kickbacks in exchange for referrals for home health care services to Medicare beneficiaries. After a four-day trial in February, the defendant was convicted of conspiracy to defraud the United States and to receive health care kickbacks, and four counts of receiving health care kickbacks. Evidence presented at trial indicated that the defendant received at least $710,000 in kickbacks for referring Medicare beneficiaries to five home health agencies, which caused Medicare to pay those agencies over $1.6 million.

The DOJ press release can be found here.

Litigation News

First Circuit Transfers $34 Million False Claims Act Award to Different Relator

The First Circuit reversed a lower court’s determination of which relator provided the government with the “essential facts” that led to a $265 million settlement with Millennium Health in 2015, providing a now-deceased relator with a $34 million award. The First Circuit concluded that, while the relator who initially won the award had filed the earlier lawsuit against Millennium, the second relator’s lawsuit set forth the essential facts of Millennium’s allegedly fraudulent conduct, thereby making the second relator the “first-to-file” the FCA claim as a matter of law. The relators alleged that Millennium was involved in schemes to provide “custom profiles” of urine samples and free “point-of-care cups” as kickbacks, but only the second relator’s complaint was able to describe the details of those schemes. Accordingly, the First Circuit held that the second relator was entitled to the $34 million award. In doing so, the First Circuit also overturned prior precedent concluding that the first-to-file provision was jurisdictional, holding that the Supreme Court’s 2015 decision in Kellogg Brown & Root Services, Inc. v. United States ex rel. Carter, 135 S. Ct. 1970 (2015), offered “a clear implication” that the first-to-file provision was non-jurisdictional.

The case is McGuire v. Estate of Robert Cunningham, case number 17-1106, in the U.S. Court of Appeals for the First Circuit.

Federal District Court Holds Relator Kickback Claims Adequately Pled

A federal judge held that a former employee of now-defunct CardioDx adequately alleged claims against the company and Phlebotek Corp. for violations of the False Claims Act and California Insurance Code. The relator alleged that CardioDx sought reimbursement from Medicare for a medically ineffective cardiovascular test, for which Medicare paid $1,095 per test. The relator also alleged that CardioDx paid kickbacks to Phlebotek, a phlebotomy company, in exchange for referrals: CardioDx allegedly paid Phlebotek $25 for every administration of the test, and Phlebotek then paid $19 to its independent contractors. In denying the motion to dismiss, the court rejected Phlebotek’s argument that it administered a very small portion of the testing for which CardioDx allegedly billed Medicare, and that the relator failed to identify precisely who did the tests and when.

The case is United States ex rel. Barnette v. CardioDx Inc., case number 3:15-cv-01339, in the U.S. District Court for the Northern District of California.