10th National Institute on the Civil False Claims Act – American Bar Association, Day 2 – June 5, 2014

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Panel Topic: Recent Developments in Healthcare Law Fraud

Federal Government’s View:
• The government takes the potential effects on patient care very seriously. If the fraud is resulting in procedures being performed that wouldn’t otherwise be or more aggressive procedures being performed, the government will look at those cases very carefully.
• The government is seeking to weigh in in declined cases more through Statements of Interest. Courts have been very receptive to SOIs.
• The recent trend is towards more litigation, though not necessarily more trials. In the past, the cases seemed to settle more quickly.
• Often the fraud schemes do not involve written agreements or evidence, so the assistance of relators is critical to the government’s mission in combatting fraud.
• Given the increasing complexity and breadth of these cases, the government is relying more and more on relators’ counsel to help at the investigative stage.
• The defendants’ focus on the relator is not helpful—the relator’s character is not really going to influence the government’s decision.
• Trend towards more state actions includes the state attorneys general pursuing cases that are too small for the DOJ but are significant for the states involved.

State Attorney Generals Views:
• State attorney general offices are staffing up their Medicaid enforcement divisions—it has become an increasing area of focus for the New York AG’s office, for example.
• There is a national organization of state AG medical fraud lawyers who exchange information and work together. There is a subcommittee of lawyers from states with their own Medicaid False Claims Acts.
• State AGs are coordinating their efforts and attempting to centralize their discussions with defendants. The cases are very large and complex and often involve many states.

Relators’ view:
• For years, the critical mission for relators was obtaining the government’s intervention—a declination was seen as a death knell. But because the government’s resources have not kept pace with the number of cases, relators are taking declined cases forward more frequently and investing significant resources to do so. Relators’ counsel has shown an increased willingness to invest the resources to pursue the case without the government.
• In recent years, there has been additional “partnering” between the government and the relators’ bar—partial intervention is a mechanism for partnering in cases because the burden can be split.
• Relators used to spend more time trying to find a favorable U.S. Attorney, but now the relators are looking for the right judicial forum from a legal perspective. Relators will seek to venue cases in a circuit with better law, especially on Rule 9(b) specificity issues.
• Corporate integrity agreements are a big target for relators’ counsel—they are being reviewed carefully for possible FCA issues.
• A recent trend seems to be that defendants are attempting late-hour and incomplete voluntary disclosures to reduce liability.
• Conventional wisdom of relator’ counsel used to be that the DOJ and state AGs “didn’t play well together,” but that view has changed—there seems to be more of a unified effort by the two. This is a good trend from relators’ perspective.

Defense View:
• Defendants are more willing to litigate the cases—clients are starting to grow weary of being accused of fraud and paying for things that were not really fraud.
• The administration’s focus on the Anti-Kickback Statute seems to have encouraged more cases. The Affordable Care Act has certainly changed the focus.
• Off-label marketing cases—both drugs and devices—seem to be growing. Good manufacturing practice and QSR types of cases are starting to take off.
• Worthless services and quality of care cases are taking off.
• Medical necessity cases are also increasing—they allege that unnecessary care is being provided and that utilization rates and expenditures are higher than normal.
• Defendants understand that relators are willing to take cases forward.
• Trend toward coordination among states is helpful to settling cases—it leads to earlier discussions and resolutions.
• States are also showing a willingness to take cases the DOJ has declined or even leading the investigation and prosecution ahead of the DOJ.
• Mediation is often not successful until the case is fairly mature, particularly when there are significant questions about the state of the law.