Share this e-Alert:

Polsinelli - False Claims Act Defense Polsinelli - False Claims Act Defense
         

  

May 2016

  

Good News on the Horizon? FCA Reform Could Signal Relief for Health Care Providers

  

 
 

  

     

  

 
 

For more information about this e-Alert, please contact:

  

Brian F. McEvoy

404.253.6021

Email | Bio

  

Sidney Welch

404.253.6047

Email | Bio

  

Jeremy Burnette

404.253.6059

Email | Bio

  

Emma R. Cecil

404.253.6029

Email | Bio

  

  

To learn more about our False Claims Act Defense practice, to contact one of our False Claims Act Defense attorneys, or for more False Claims Act Defense Intelligence, click here.

  

To learn more about our Health Care practice, to contact one of our Health Care attorneys, or for more Health Care Intelligence, click here.


View Polsinelli documents on JD Supra  

SUBSCRIBE

 
LinkedIn Twitter Facebook Polsinelli Podcast Connect with us on LinkedIn. Connection with us on Twitter. Connect with us on Facebook.
   

Good news may be in sight for businesses and health care providers.

On April 28, 2016, the House Judiciary Committee's Subcommittee on the Constitution and Civil Justice once again considered potential updates to the federal False Claims Act. Those in favor of reform touted the hearing as a first step toward commonsense changes and improvements targeted at promoting compliance and rooting out and preventing fraud in the first instance.

The Subcommittee, which last took up the issue of FCA reform in July 2014, heard testimony from two health care lawyers, a health care system CEO, and former deputy United States Attorney General, Larry Thompson. The testimony focused principally on two proposed reforms:

  • Reduced awards for corporations that adopt gold standard corporate compliance programs
  • Requirement that corporate whistleblowers report frauds internally before filing qui tams

Both proposals drew sharp criticism from the relators’ bar and other opponents of FCA reform.

Proponent Testimony

With respect to the first proposal, Mr. Thompson observed that while the FCA remains a critical tool in combating fraud, it has become unduly adversarial, giving the government enormous leverage against private companies and individuals. The government's reliance on post-hoc enforcement, he told the Subcommittee, results in significant, often unfair and arbitrary, penalties, even where a company has invested considerable resources in compliance and prevention on the front-end.

Citing a 2013 report by the U.S. Chamber Institute for Legal Reform, Mr. Thompson suggested that a better and more even-handed approach would be to incentivize compliance in a real and meaningful way by allowing companies that achieve and maintain superior compliance programs to obtain reductions in penalties or other consequences "when inevitable wrongdoing does occur."

Part of any reform would also have to include a requirement that relators demonstrate that they have brought their concerns to the attention of the target organization before filing a qui tam complaint, said Dennis Burke, President and CEO of a not-for profit-hospital system, in his testimony. This requirement would prevent organizations from being subjected to costly and protracted investigations, not to mention unquantifiable and often irreparable reputational harm, as a result of relators being allowed to "throw everything on the wall to see if anything might stick." If nothing does, he said, relators can simply "walk away and say 'oops, I guess we were (I was) wrong.'"

Echoing Mr. Burke's sentiments, Jonathan Diesenhaus, health care attorney and former Senior Trial Counsel in DOJ's Civil Fraud Section, noted that FCA defendants are left without a remedy when investigations, or more often declined qui tam litigation, come up empty. He pointed out that the FCA's bounty and attorneys' fees provisions shield whistleblowers and their attorneys from the risk-reward proposition that governs other litigation in federal courts. The normal rules of litigation, he said, simply do not constrain whistleblowers and their attorneys in the same way that other plaintiffs and their attorneys are constrained. He suggested that Congress can "reset [the] balance" by creating greater incentives for compliance and self-disclosure, subjecting frivolous whistleblower claims to the same scrutiny as other plaintiffs under the federal rules of civil procedure, and requiring DOJ to evaluate declined qui tams for merit and exercise its statutory authority to dismiss cases that would unjustifiably burden the courts, federal agencies, innovators, small businesses and health care providers.

Opponent Testimony

Opponents warned that requiring corporate whistleblowers to make internal reports to their employers before filing qui tams would result in more widespread retaliation against whistleblowers, making them more reluctant to come forward, and rejected the idea that a so-called gold standard, or certified, corporate compliance program was a silver bullet against fraud. Relator's attorney Neil Getnick argued in his testimony that permitting companies to escape or face reduced liability because they have "checked the boxes" on how to establish a compliance program would merely encourage companies to game the new compliance regime, thus enabling, not eradicating, fraud.

Relief Could be in Sight

Whatever the legislative consequences of these Congressional hearings, the proposed updates to the FCA underscore the significant leverage wielded by the Department of Justice against businesses and health care providers under the current version of the FCA. That leverage has only continued to grow in recent years, in part as a result of the government's and relators' increasingly frequent and aggressive use of the "implied certification" doctrine, which allows relators to bring suits based on mere technical regulatory violations and without proof of actual false claims submitted to the government. Unless and until reforms are legislatively enacted, the FCA's treble damages and civil penalty provisions remain the most potent and prolific means of obtaining mammoth settlements against health care providers and other entities that do business with the government.

For More Information

For questions regarding this information, please contact one of the authors, a member of Polsinelli’s False Claims Act Defense practice, or your Polsinelli attorney.

  

 
 

  

     

  

 
         

 

 

 

  

     

  

 
 

Atlanta  Boston  Chattanooga  Chicago  Dallas  Denver  Houston  Kansas City  Los Angeles  Nashville  New York
Overland Park  Phoenix  Raleigh  St. Joseph  St. Louis  San Francisco  Washington, D.C.  Wilmington
polsinelli.com

 
 

  

     

  

 
 

  

ABOUT POLSINELLI

real challenges. real answers.SM  
Polsinelli is an Am Law 100 firm with more than 800 attorneys in 19 offices, serving corporations, institutions, and entrepreneurs nationally. Ranked in the top five percent of law firms for client service*, the firm has risen more than 100 spots in Am Law's annual firm ranking over the past six years. Polsinelli attorneys provide practical legal counsel infused with business insight, and focus on health care, financial services, real estate, intellectual property, mid-market corporate, and business litigation. Polsinelli attorneys have depth of experience in 100 service areas and 70 industries. The firm can be found online at www.polsinelli.com. Polsinelli PC. In California, Polsinelli LLP.

* 2016 BTI Client Service A-Team Report

  

 
 

  

     

  

 
 

Polsinelli provides this material for informational purposes only. The material provided herein is general and is not intended to be legal advice. Polsinelli is very proud of the results we obtain for our clients, but you should know that past results do not guarantee future results; that every case is different and must be judged on its own merits; and that the choice of a lawyer is an important decision and should not be based solely upon advertisements.

Copyright © 2016 Polsinelli PC.

 
             
Connect with us on LinkedIn. Connection with us on Twitter. Connect with us on Facebook. Polsinelli False Claims Act Defense Health Care