Courts are making government agency actions, or lack thereof, in deciding whether to pay health-care claims a centerpiece of their analysis in determining if whistle-blower allegations of Medicare and Medicaid fraud rise to the level to support False Claims Act violations under the Supreme Court’s Universal Health ruling. This focus on whether regulatory compliance was “material” to an agency’s payment decision will create new hurdles for litigators, complicate discovery, and possibly precipitate more settlements, health-care fraud attorneys told me.
The Universal Health opinion noted that one indication of whether the government, in the form of an agency such as the Department of Health and Human Services, believes a particular Medicare or Medicaid regulation or requirement is material is whether it continues to pay allegedly deficient claims after it learns of the deficiency.
Health-care attorneys told me FCA litigators will now ask the government officials directly whether compliance with particular health-care regulations affect its decisions to pay Medicare claims. Laurence Freedman, a health-care partner with Mintz, Levin, Cohn, Ferris, Glovsky and Popeo PC in Washington, said future FCA litigation will include “disputes about the extent of discovery permitted against government employees who ran [health-care reimbursement] programs and made payments.”
The U.S. Court of Appeals for the First Circuit recently held that allegations of fraud against two medical device makers didn’t support FCA claims because the government didn’t pursue, or intervene in, adverse actions against the companies (United States ex rel. D’Agostino v. Ev3, Inc., 2016 BL 429304, 1st Cir., No. 16-1126, 12/23/16). The First Circuit said fraud allegations made by a former employee about two pulmonary devices were publicly known for years, and yet the Centers for Medicare & Medicaid Services continued to pay claims associated with the devices and the Food and Drug Administration didn’t suspend or revoke their approval.
With the possibility that courts will apply Universal Health’s materiality standard directly to government payment decisions when determining whether FCA allegations can stand, attorneys representing providers and whistle-blowers alike will no doubt follow suit in their own practices.
Read more about the case in my story at https://www.bna.com/whistleblowers-suit-against-n73014449140/.
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