Tuesday, July 23, 2013

False Claims Act settlements often are business deals

Jul. 22, 2013 - 05:02PM   |  

NASHVILLE, TENN. — The Justice Department regularly announces big settlements with federal contractors who agree to pay millions of dollars to settle False Claims Act cases alleging they bilked the government.
But for contractors, the decision on whether to settle a case or to fight accusations and go to trial can have less to do with guilt or innocence and more to do with practical business considerations.
“Often, it’s really just a cost-benefit analysis,” said Jonathan Cone, counsel at the Crowell & Moring LLP law firm. “In some cases, it’s actually more cost effective to settle a case rather than risk losing business with the federal government.”
Speaking at a session on contractor ethics at the National Contract Management Association conference here., Cone said investigative and legal costs alone can reach into the hundreds of thousands of dollars before a case even gets to trial. Plus, contractors can risk debarment or suspension.
Andy Liu, a partner Crowell & Moring, said attorneys always insist upon provisions in any settlement deal indicating that the client contractor denies the allegation that gave rise to the case.
Under the False Claims Act, the government can sue to recoup funds on its own or intervene in cases filed by whistleblowers, who can share in any recovery to the government.
Among other trends in False Claims Act cases, Cone said the government can initiate or intervene in cases involving “implied certifications,” citing the Lance Armstrong doping scandal as one recent and prominent example.
“He was on Oprah and admitted taking banned substances,” Cone said. “Less well known is that the United States is suing him under the False Claims Act because of that.”
Armstrong had a sponsorship deal with the U.S. Postal Service that did not specifically bar the cyclist from taking performance enhancing drugs, but it did say he had to follow the rules for international cycling, which clearly ban doping.
“So the government’s theory of the case, then, is that each time he requested money from the Postal Service, he’s implying he’s in compliance with his contract and that makes his request for money false,” Cone said.
While the lawsuit has made national headlines because of Armstrong’s fall from grace, the theory behind the case also offers a cautionary tale to contractors who do business with the government.
“What we’re talking about here is every time you’re submitting an invoice, you risk the government or relator arguing that you’re ... certifying that you’re in compliance with your contract, material regulations and statutes,” Cone said.
“So the government can say, ‘Well, you were submitting those invoices and yet you were breaching your contract.’ ”

HPH Hospice agrees to $1M settlement in False Claims Act allegations

Tampa, Florida -- The United States Attorney's Office for the Middle District of Florida announced Monday HPH Hospice, has agreed to pay $1 million to resolve allegations that it violated the False Claims Act by submitting false claims for hospice services to the Medicare and Medicaid programs. 
The U.S. States Attorney's Office reports the settlement resolves allegations that between Jan. 1, 2005, and Dec. 31, 2010, HPH Hospice submitted false Medicare and Medicaid claims for patients who did not need end of life care.
The Medicare hospice benefit is available for patients who have a life expectancy of six months or less if their disease runs its normal course. Patients admitted to a hospice stop receiving care to cure their illnesses and, instead, receive medical care focused on providing them with relief from the symptoms, pain, and stress of a terminal illness. Medicare reimburses for different levels of hospice care.
The government alleged that HPH Hospice caused staff to admit ineligible patients in order to meet targets imposed by management, adopted procedures to delay and discourage staff from discharging patients who were not appropriate for hospice services, instructed staff to make false or misleading statements in patients' medical records to make them appear eligible when they were not, and failed to implement an adequate compliance program that might have corrected these problems. 
The settlement also resolves allegations that HPH Hospice billed the government at higher reimbursement rates than it was entitled to receive, and provided illegal kickbacks when it provided free services to skilled nursing facilities in exchange for patient referrals.
"The hospice industry provides medical care to our most vulnerable citizens. This settlement should send a message to providers that misconduct of this kind will not be tolerated," stated A. Lee Bentley, III, Acting United States Attorney for the Middle District of Florida.
As part of the settlement, HPH Hospice has agreed to enter into a Corporate Integrity Agreement with the Inspector General of the Department of Health and Human Services that provides for procedures and reviews to be put in place to avoid and promptly detect conduct similar to that which gave rise to the settlement.
The allegations arose from a lawsuit filed by two former HPH Hospice employees, Heather Numbers and Greg Davis, under the whistleblower provisions of the False Claims Act. Under the Act, private citizens can bring suit on behalf of the United States for false claims and share in any recovery. The whistleblowers in this case will collectively receive $250,000.
HPH Hospice is a Florida not-for-profit corporation that provides hospice services in various locations throughout Hernando, Pasco, and Citrus counties in Florida.