They say bad facts make bad law. And in the world of the False Claims Act (“FCA”) 31 U.S.C. § 3729, et seq., where much law is made at the dismissal stage, bad allegations can be just as dangerous. When the Triple Canopy case (U.S. ex rel. Badr v. Triple Canopy, Inc.) was on appeal before the Fourth Circuit for the first time in 2015, it seemed like it was the epitome of such a case. In 2015, courts were still wrestling with the viability of the implied certification theory under the FCA. So a case involving Ugandan mercenaries with falsified marksmanship scorecards hired to protect U.S. and Iraqi facilities in Iraq was exactly the type of case that seemed likely to cement the Fourth Circuit as a favorable jurisdiction for FCA cases brought under the implied certification theory. Recently, the Fourth Circuit ruled (again) on the case—this time taking into consideration the Supreme Court’s decision in Universal Health Services, Inc. v. U.S. ex rel. Escobar, 136 S. Ct. 1989 (2016). Although the FCA defense bar hoped this might result in a different decision, the Fourth Circuit appears to be standing by its 2015 decision in which it held that the government had adequately stated a claim for relief under the FCA’s implied certification theory.
Continue Reading Straight Shooter: The Fourth Circuit Stands By Its Earlier Decision In Case About Iraqi Security Guards Whose Inability To Shoot Straight Gave Rise to FCA Liability

On February 8th, the U.S. Department of Justice (DOJ) quietly issued new guidance on how the agency evaluates corporate compliance programs during fraud investigations. The guidance, published on the agency’s website as the “Evaluation of Corporate Compliance Programs,” lists 119 “sample questions” that the DOJ’s Fraud Section has frequently found relevant in determining whether to bring charges or negotiate plea and other agreements. The February 8th issuance is the agency’s first formal guidance under the new presidential administration, and the latest effort by the DOJ’s “compliance initiative,” which launched at the hiring of compliance counsel expert Hui Chen in November 2015. The new guidance is particularly valuable for healthcare organizations in light of the agency’s heightened efforts to prosecute Medicare Advantage plans for fraudulent reporting under the False Claims Act.
Continue Reading DOJ Issues New Guidance on the Evaluation of Corporate Compliance Programs in Federal Fraud Investigations

The U.S. Department of Justice (DOJ) has joined a whistleblower lawsuit, United States of America ex rel Benjamin Poehling v. Unitedhealth Group Inc., No. 16-08697 (Cent. Dist. Cal. Sep. 17, 2010), ECF No. 79, against UnitedHealth Group (United) and its subsidiary, UnitedHealthcare Medicare & Retirement—the nation’s largest provider of Medicare Advantage (MA) plans. The suit accuses United of operating an “up-coding” scheme to receive higher payments under MA’s risk adjustment program called the HCC-RAF Program (see below). The complaint alleges that United fraudulently collected “hundreds of millions—and likely billions—of dollars” by claiming patients were sicker than they really were. The suit was originally filed in 2011 by a former United finance director under the False Claims Act (FCA), which allows private citizens to sue those that commit fraud against government programs. Pursuant to the FCA, the case was sealed for five years while the DOJ investigated the claims.
Continue Reading Justice Department Joins Whistleblower Suit Accusing UnitedHealth Group of Overcharging Medicare by “Hundreds of Millions”

We previously reported on the viability of the “implied certification” theory of FCA liability based on oral argument before the Supreme Court in Universal Health Services, Inc. v. U.S. ex rel. Escobar.  We concluded that the theory—under which a claim for payment can be false without an express certification, but because the government contractor has not complied with an applicable statute, regulation, or contractual provision—did not appear to be headed for extinction.  It turns out we were right.
Continue Reading FCA’s “Implied Certification” Theory Survives