Monthly Archives: December 2014

The Top Posts of 2014

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Since everyone is doing a year-end review, why not? The list below links to the most widely read posts on the Intermountain False Claims Act Blog in 2014, according to reader metrics (and without adjusting for the amount of time each post was available).

  1. A post discussing the importance of relators’ counsel asking hard questions of the government when the government declines to intervene took the top spot. When the Government Speaks, Relators Should Listen
  2. A post discussing the application of the False Claims Act to minority-owned business set asides was the second most read entry of the year. False Claims Act Applies to Minority-Owned Business Set Asides 
  3. The third most read piece addressed costs and fees for prevailing defendants in False Claims Act cases. Costs and Fees Are Different

We’ll see you again in 2015. Happy New Year!

The Fall 2014 Intermountain Round Up – Recent Developments in False Claims Act and Whistleblower Cases in the Intermountain West

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It’s the “Anti-Retaliation Edition” apparently since all of the updates involve issues under the anti-retaliation section of the False Claims Act. Here’s what has happened around the Intermountain West over the past few months:

  1. The District of Arizona ruled that Dodd-Frank’s prohibition on compelled arbitration for certain anti-retaliation claims does not extend to anti-retaliation claims under the False Claims Act.
  2. A whistleblower may be protected by the FCA’s anti-retaliation provision even where she fails to successfully state a claim under the False Claims Act.
  3. The Animal Legal Defense Fund successfully persuaded the District of Idaho that its claim that the anti-retaliation provision of the False Claims Act (as well as other federal whistleblower protection laws) preempt Idaho’s Ag Gag law was ripe for adjudication. 
  4. The District of Colorado found that a paralegal’s complaints that her employer was withholding key documents in response to a Department of Justice subpoena in an FCA case did not constitute protected activity under the FCA’s anti-retaliation provision.

Flash Post- DOJ Intervenes in Suit Against For-Profit College

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On Wednesday, December 3, 2014, the US Attorney for the Southern District of Florida announced its decision to intervene in a whistleblower lawsuit filed against a now-defunct for-profit college, which is alleged to have violated numerous laws and regulations relating to the receipt of federal student funding.

The allegations in the case–captioned United States of America, State of Florida ex rel Juan Peña vs. FastTrain II Corp. d/b/a FastTrain College, and Alejandro Amor, Case No.: 1:12-cv-21431– include some truly headline grabbing claims, including that the college “used exotic dancers as admissions officers, falsified documents and coached students to lie on financial forms as it fraudulently obtained millions of dollars in federal money.” The FBI raided the school in 2012 when the allegations first surfaced. Not surprisingly, federal criminal counts have also been filed.

While most lawsuits under the False Claims Act do not involve such brazen violations, this case is a reminder that blatantly fraudulent activities will be caught and prosecuted and that the False Claims Act provides incentives to whistleblowers to expose such activities.

Claims Against Healthcare Providers in New Mexico Survive Summary Judgment (Part II-Materiality and Scienter)

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This is Part II of a three-part series summarizing the court’s summary judgment ruling in United States ex rel. Baker v. Community Health Systems, Inc. (D.N.M. May 16, 2014). In this post, we focus on the court’s analysis of the materiality and scienter elements. A description of the history of the case can be found here, and a summary of earlier parts of the decision is here.

Materiality: Both sides in Baker filed cross-motions on the question of whether the allegedly false claims by New Mexico were material to the federal government’s decision to reimburse the hospitals under the Medicare program. “False claims are material if they have a tendency to influence or are capable of influencing agency decision making.” (citing United States ex rel. Bahrani v. Conagra, Inc., 465 F.3d 1189, 1200 (10th Cir. 2006)). Basically, if the government would have made the payments even if it had known about the alleged false statements, then the statements are not material.

Since both sides submitted adequate evidence tending to show that New Mexico’s submission of the form reporting donations was and was not material, the court denied the parties’ cross-motions for summary judgment. Some evidence suggested that the allegedly false statements had no effect on the Centers for Medicare & Medicaid Services’ (CMS) payment decision, while other evidence suggested the opposite. As a result, the court ruled the matter was for a jury to resolve.

Scienter: The defendants moved for summary judgment, arguing that (1) they did not act knowingly, as that term is defined by the False Claims Act (i.e., with actual knowledge, reckless disregard, or deliberate ingnorance), (2) they relied in good faith on the advice of a New Mexico official, and (3) the federal government was aware of the donations and their circumstances.

The defendant hospitals presented significant evidence showing that they did not know how the state was reporting the donations and that they relied on the advice of a senior official at the New Mexico agency responsible for administering Medicaid.

While the court previously held the defendants could not rely on the standalone affirmative defense of government knowledge, the court had permitted the parties to use the government’s knowledge to negate the scienter element. In order to use the government’s knowledge to negate scienter, “a defendant must show that it was so ‘forthcoming’ and cooperative in disclosing the relevant facts to the Government that the defendant could not have known that its conduct was improper.” (citing Burlbaw v. Orenduff, 548 F.3d 931, 949 (10th Cir. 2008)). Consistent with this ruling, the defendants presented substantial evidence demonstrating that CMS was aware of problems with New Mexico’s reporting of the donations for years before it took any action to defer funding or otherwise avoid making impermissible payments.

The plaintiffs countered with significant evidence tending to show the defendant hospitals were aware that their donations were linked to Medicare funding and that they made the donations to help New Mexico pay the state portion of the Medicare funding, which then triggered the federal payments. As with the other legal elements, the court determined that the evidence presented a genuine conflict that would have to be resolved by the jury.