Solicitor General to Participate in False Claims Act Case before U.S. Supreme Court

The United States Supreme Court will hear oral arguments in Kellogg Brown & Root Services, Inc., et al. v. United States ex rel. Carter, No. 12-1497, during the current term. Last week, the Court granted the Solicitor General’s motion to participate in oral arguments in Kellogg Brown. The case is significant, as it is the first False Claims Act (FCA) case to come before the Supreme Court since 2011, and it involves two questions that will impact future FCA cases.

First, the case asks whether the Wartime Suspension Limitations Act (WSLA) applies to the FCA’s civil fraud statute of limitations when there is no formal declaration of war. If so, the WSLA tolls the statute of limitations period during periods of wartime or conflict for any offense against the United States. The Fourth Circuit held that the WSLA does not require a formal declaration of war to apply. Finding that the WSLA did apply, the Fourth Circuit held that the plaintiff’s claims were not barred by the statute of limitations because the WSLA applies to civil FCA suits, regardless of whether the government chose to intervene. The Solicitor General will argue for an affirmance of the Fourth Circuit holding.

The second question at issue in Kellogg Brown is whether the FCA’s “first to file bar” prohibits qui tam relators from filing a subsequent claim if a prior duplicative claim was previously filed but not is pending at the time of the subsequent filing. The district court held that the plaintiff’s action was precluded by the first to file bar, even though a previous case alleging similar facts had already been dismissed. The Fourth Circuit reversed, holding that the first to file bar does not apply if the previous similar case has been dismissed. Again, the Solicitor General will argue for an affirmance of the Fourth Circuit holding.

Department of Justice Criminal Division to Review All Civil False Claims Act Complaints

During a recent presentation, a Department of Justice representative announced that the DOJ Criminal Division will now review all civil complaints filed under the qui tam provisions of the False Claims Act. Leslie Caldwell, Assistant Attorney General for the Criminal Division, made the announcement at the Taxpayers Against Fraud Education Fund Conference in Washington, D.C., on September 17, 2014.

Under the previous DOJ policy, the Criminal Division was permitted but not required to investigate Civil Division claims. Each U.S. Attorney’s Office was able to exercise its discretion as to whether it would open a criminal investigation based on a pending civil FCA complaint. Going forward, the Civil Division will refer all new qui tam FCA complaints to the Criminal Division, and the Criminal Division will make the decision as to whether a criminal investigation should be opened. Such investigations will run parallel with the ongoing civil investigations.

This change in procedure increases the risks of non-compliance for all federal contractors. Criminal penalties under the FCA include imprisonment for up to five (5) years and significant fines calculated under the U.S. Sentencing Guidelines.

Home Health Provider Agrees to Pay $25 Million False Claims Act Settlement

On November 12, 2014, the U.S. Department of Justice announced that Tennessee-based CareAll Management LLC agreed to pay $25 million to resolve allegations that CareAll violated the False Claims Act. This is CareAll’s second FCA settlement in the past two years. CareAll, a home health agency, allegedly submitted false and upcoded home healthcare billings to the Medicare and Medicaid programs. Between 2006 and 2013, CareAll allegedly overstated the severity of patients’ conditions to increase billings and billed for services that were not medically necessary. In 2012, CareAll paid more than $9 million for allegedly submitting false cost reports to Medicare.

In addition to the $25 million settlement, CareAll agreed to be bound by an “enhanced and extended” corporate integrity agreement with the Department of Health and Human Services Office of Inspector General. The Special Agent in Charge, Derrick L. Jackson, stated that “Fraudulent home-based services are surging across the country. We will continue to protect both Medicare and taxpayers, and ensure that funds are not siphoned off by companies more concerned with the bottom line than patient care.”

The settlement was the result of a coordinated effort by the Civil Division, the U.S. Attorney’s Office for the Middle District of Tennessee, HHS-OIG and the Tennessee Bureau of Investigation. The DOJ press release noted that this settlement “marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team initiative, which was announced in May 2009 by the Attorney General and the Secretary of HHS.”

All providers – home health or otherwise – should diligently monitor their billing practices. It is recommended that providers follow their internal compliance programs, conduct periodic self-audits, and promptly return any improper payments that are discovered.