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Federal judge probes unorthodox civil discovery methods used by Davita Healthcare Partners

By Zachary Kitts on February 4, 2015 in , ,

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Federal judge probes unorthodox civil discovery methods used by Davita Healthcare Partners

This is the first of a two-part post on an epic discovery battle currently being waged in the U.S. District Court for the Northern District of Georgia — specifically, this post is about a federal judge’s probe of the unorthodox civil discovery methods of repeat fraudfeasor Davita Helathcare Partners Inc.

Discovery battles are commonplace in qui tam/false claims act litigation (not to mention other types of civil and criminal litigation).  But when the lawyers involved in a discovery dispute start hiring their own lawyers and federal judges start questioning witnesses in camera in chambers without any lawyers present, you know something is going on…and it is likely to be especially interesting to readers of this blog.

Background on Davita

Davita Healthcare Partners provides services to patients suffering from end-stage renal disease; mostly this means kidney dialysis treatment at one of its several thousand clinics across the country.  Davita is no stranger to the federal False Claims Act and is no stranger to paying large settlements.  In October of 2014 the company agreed to pay $400 million to settle allegations that it provided kickbacks in various forms to physicians across the country.  And in July of 2012 the company paid $55 million to settle allegations it fraudulently billed the federal government for free supplies of Amgen Inc.’s anemia drug Epogen.  These two settlements, among other things, earned them a place in the Taxpayers Against Fraud Hall of Shame.

Background — U.S. ex rel. Vainer et al. v. Davita Healthcare Partners, Inc., et al.

In 2007  qui tam relators Alon J. Vainer and Daniel Barbir filed suit against Davita in the Northern District of Georgia.  The specific allegations of relators’ complaint are complex, but a bit of background is important to the discovery dispute currently playing out in Atlanta.

In a nutshell, the primary allegation is that the defendants purposely manipulated their dosing protocols and policies for certain drugs to illegally maximize reimbursement for the wasted or discarded portion of the drugs left over in a vial after administration.  A crucial part of this allegation is that Davita intentionally used a computer program called “Snappy” to implement its illegal reimbursement maximization schemes.  “Snappy” is a company-wide computer program that allows doctors and nurses to input, retrieve, and code dosing amounts for the drugs Davita uses in its kidney dialysis clinics. Naturally, the Relators sought discovery on how Snappy worked, how doctors and nurses used the program, and whether it in fact suggested or provided nurses with doses that created medically unnecessary waste.

Relators in this case have world-class counsel in the form of Marlan Wilbanks and team at Wilbanks & Bridges in Atlanta.

 The Depositions at issue in the Discovery Dispute

As one might expect, Marlan and his firm naturally did depositions during the discovery period in this case, and those depositions included several pursuant to Fed. R. Civ. P. 30(b)(6).  Pursuant to the rule, defendants named a corporate witness — one Richard Tetley — to testify about the knowledge of the corporation with regard to the Snappy program, how the Snappy program worked, how it was used, and whether it was programmed to recommend a dose that would cause Davita to be illegally reimbursed.  The deposition took place in 2012.  During that deposition, Tetley — who again had been named by the defendants as the person most qualified and most knowledgable about the Snappy program — testifed that the Snappy program recommended certain doses for two of the three drugs at issue just as relators alleged.

Relators of course had specific, extensive knowledge of the Snappy computer program. As a result, relators knew that Tetley’s testimony was false.  But, having been through many such discovery battles myself in various civil cases, I imagine that Marlan just wanted to get the testimony in the record and see what defendants had to say.  Usually, lawyers don’t find themselves proving that a witnesses’ testimony is wrong or misguided in discovery — that is usually something reserved for trial.

So far so good.  Depositions carried on for another year, and many witnesses during that time testified in their depositions to the exact opposite of what Tetley said in his deposition.  In other words, these witnesses testified that Snappy did in fact recommend dosage levels for all three drugs, not just for the two Tetley testified to.  Whenever the witnesses testified to this fact, one of two strange things happened.  Very often, after the next break in the deposition, the witness would come back in and change their testimony to match what Tetley had said.  Other times, an errata sheet would mysteriously appear weeks or in some cases months after the depositions — and without exception, the errata sheet would alter the witnesses’ testimony to match exactly what Tetley had said.

This happened again and again and again during 2012 and 2013.  So imagine relator’s counsels’ surprise when, at the end of the year 2013, an errata sheet showed up from Tetley himself, changing his deposition testimony on behalf of the corporation to reflect that the Snappy program did in fact recommend dosage levels for all three drugs!

That resulted in some real discomfort for the defendants.  First of all, it is highly unusual and highly suspect whenever a witness dramatically changes his or her testimony during a deposition break.  Second, it is also highly suspect when a witness submits an errata sheet — which is to be used to correct technical errors and so forth, but not to substantively change deposition testimony — changing his or her testimony in substantive ways, even when the errata sheet is submitted very soon after his or her deposition.

But for a witness to make substantive changes to his or her deposition testimony one year later that bring that testimony into line with what other witnesses originally said before they changed their original testimony?  That, friends, is unheard of, and it stinks to high heaven.

It turns out, relator’s counsel and the court also found this highly irregular and decided to look into it.  The next thing that happened was a motion to compel and re-open discovery in the summer of 2014, which resulted in Judge Pannell’s August 2014 Order re-opening discovery.

And believe me folks, this is where things just start to get interesting…stay tuned for part two….

 

K&G Law Group is a boutique-style law firm based in Nothern Virginia and practicing nationwide

 

 

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My apologies for the hiatus….

By Zachary Kitts on February 3, 2015 in

 

Virginia Qui Tam Law.com -- The first blog dedicated to the Virginia Fraud Against Taxpayers Act and to Qui Tam Litigation in Virginia

 

 

 

 

 

 

My apologies for the hiatus in VaQuiTamLaw.com, but we experienced technical issues for several weeks…

The technical issues have now been solved and so we are back to our regularly scheduled programming.

 

K&G Law Group PLLC

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Virginia Intervenes in Trinity Highway Qui Tam Lawsuit

By Zachary Kitts on December 13, 2014 in , , ,

Virginia Qui Tam Law.com -- The first blog dedicated to the Virginia Fraud Against Taxpayers Act and to Qui Tam Litigation in Virginia

 

 

 

 

 

 

 

Virginia Intervenes in Trinity Highway Qui Tam Lawsuit

Yesterday Virginia Attorney General Mark Herring announced the Commonwealth’s intervention in a qui tam lawsuit against Trinity Highway Products, LLC and Trinity Industries Inc.  The initial qui tam Complaint was filed under seal (as required by Virginia Code 8.01-216.8) by relator Joshua Harman.

This case is not the first filed by Harman, which raises an interesting point we have discussed before on this blog.  Like a great many other big ticket items in our society, the interstate system in the United States is a joint enterprise funded and maintained by the United States government and all 50 state governments.  Even more specifically, the federal government reimburses states for certain highway-related spending, including but not limited to the installation of approved guardrails. Regular readers can see where I am going with this — that means that not only does the United States have a false claims act case against Trinity for submitting false claims to the federal government, but also that each state with a false claims-style statute would also have a claim.

Harman has, therefore,  filed cases like the one in Virginia; ostensibly, he would have filed qui tam cases in other states as well that are still under seal.  The federal qui tam case brought by Harman in Texas went to trial twice this year.  The first attempt ended in a mistrial in July, but the second attempt resulted in a jury verdict of $175 million.  And that is just the single damages.  As we have discussed before in this blog, the jury’s function in a VFATA case is to determine liability and, if the defendant is liable, to calculate the damages in a case. This is a distinct and different issue than the actual judgment ultimately awarded to a plaintiff. Determining the amount of the actual judgment is work for the Court and, by way of the legislation, the Virginia General Assembly.

To my knowledge the federal Court has yet to hear post-trial motions and decide the amount of penalties and set the treble damages.  But based on the evidence as I understand it, Trinity is a company that seems to really have it coming….

Unsafe at Any Speed — Trinity Industries and their Guardrail Debacle

The evidence that emerged in the first trial is, as I understand it, extremely unflattering for Trinity, to say the least.  In a nutshell, after obtaining federal approval of its guardrail design (and by extension state approval, because the states defer decisions like this to the appropriate federal officials) the company radically changed the design of the guardrail by reducing the size of a key part from 5 inches to 4 inches.  This made the guardrail much more dangerous than the model approved by the Transportation Safety Administration, and if Trinity had submitted this design originally, it would have never been approved.

The president of the company said plainly in his testimony in the first trial that the company did not tell the federal government or the government of a single state that used its product about design changes when they were made back in 2005.  What’s worse, in at least one case that he could recall, they directly misinformed a state about it.  Worse still, Trinity knowingly made this design alteration in order to save money, making this a fine example of a what I call the “switcheroo style” of qui tam case.

The Virginia case against Trinity

Harman, who is said by some accounts to be a native Virginian, is represented by Richmond lawyer Wyatt Durette and DuretteCrump, PLC. 

Wyatt is a fine lawyer and I seem to recall from somewhere that his firm does have experience in qui tam/VFATA litigation, but I am not sure where.

I was unable to locate the original Complaint filed by the relator, but the Commonwealth’s Complaint in Intervention can be found here.

Bear in mind that announcing a new lawsuit asking for large damages is only one part of the equation.  As we have seen before in Virginia there is a long way to go between there and the end…but I strongly believe this case has legs — and the extremely regulated world of interstate design is a completely different ball game from the wild-west of foreign currency exchange that we took on in the FX Analytics cases.

It also helps that there is a previous Texas jury verdict in the hundreds of millions for exactly the same conduct, so I will keep my fingers crossed on this one and hopefully there will be more good news soon!

K&G Law Group PLLC

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Taxpayers Against Fraud Unveils New Video Explaining the False Claims Act

By Zachary Kitts on December 9, 2014 in , ,

Virginia Qui Tam Law.com -- The first blog dedicated to the Virginia Fraud Against Taxpayers Act and to Qui Tam Litigation in Virginia

 

 

 

 

 

 

 

Taxpayers Against Fraud Unveils New Video Explaining the False Claims Act

Last Friday the Taxpayers Against Fraud Education Fund unveiled an excellent new two-minute video about qui tam litigation and the importance of false claims acts.

You can check the video out here:

 

It can be difficult at times to explain the  concept of the FCA in a short and effective manner, and sometimes I think laypersons get the hang of it easier than lawyers.

Without a doubt, this video does an excellent job of explaining why qui tam/FCA statutes are necessary and why TAF is necessary.

As regular readers know, I am normally just a bit skeptical about the world of non-profits but TAF is a truly worthwhile group that I am pleased to support.

So my hat is off to Cleve, Pat, Takeia and all the rest of the gang at TAF for a job well done!

 

K&G Law Group is a boutique-style law firm based in Nothern Virginia and practicing nationwide

 

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Qui Tam Complaint Process Part II

By Zachary Kitts on November 29, 2014 in

Virginia Qui Tam Law.com -- The first blog dedicated to the Virginia Fraud Against Taxpayers Act and to Qui Tam Litigation in Virginia

 

 

 

 

 

 

 Qui Tam Complaint Process Part II

This is Part II of a multi-part post about the importance of the qui tam Complaint in FCA litigation.

Part I of the post started our discussion with the importance of being clear and concise without being long and wordy, and left off in the middle of one of the most important concepts — namely, weaving the facts and the law together in the allegations of the Complaint.

WEAVE THE FACTS AND THE LAW TOGETHER IN YOUR COMPLAINT

Like any piece of effective legal writing, a well done FCA Complaint does not simply tell the reader that the defendant broke the law; a well done FCA Complaint shows the reader that the defendant broke the law and then lets the reader draw his or her own conclusions.

The best way to do that is to weave the facts and the law together in your Complaint.  While I think this is important in any civil litigation it is even more important in the qui tam context because modern governmental operations and payment systems are complex, and they seem to get more complex each year.

On top of that, the substantive provisions of the VFATA and/or FCA prohibit seven categories of rather broadly defined misconduct.  A simple straightforward false claim may involve submitting an invoice to the United States for work not performed under 31 U.S.C. § 3729(a)(1)(A), but the statute goes well beyond that and includes reverse false claims, keeping and maintaining false records and/or statements, and so forth.

Some of these kinds of claims are rather complicated both factually and legally.  I therefore think it generally wise to include the specific conduct that violates the law specific provision of the statute together.  An example from an old case of mine is included here.   If you allege that the FCA is violated by the knowing retention of an overpayment, include those allegations in a specific count labeled “Count One – Knowing retention of an overpayment.”

If a Complaint alleges a series of violations arising from one single set of legal principles – for example, accounting fraud in a costs plus contract – I think it also makes sense to include one portion of the Complaint that set forth the clear and unequivocal legal standards that apply to the whole Complaint.

If the reader is left with fifteen or twenty pages of allegations and one page with at the end with all of the statutory provisions violated by the actions in the previous pages, the reader is left to wonder what conduct applies to which statutory provision…and if the reader is left wondering about anything in your Complaint, you are started off on the wrong foot.

A WELL-DRAFTED COMPLAINT SHOULD NORMALLY AVOID ADJECTIVES AND ADVERBS, ESPECIALLY IN QUI TAM/FALSE CLAIMS ACT LITIGATION

Okay, so inevitably we have to discuss a few points of grammar.  As much as I would like to claim to be a grammarian, I cannot in good faith make such a claim.  But I do know enough about grammar to know that adjectives and adverbs have no place in an FCA Complaint.

If one follows the above step and weaves the facts and the law together throughout the Complaint, there will be no need for adjectives and adverbs.  False claim act litigation deals with false and/or fraudulent claims to the government for money.  False claims act cases will always, therefore, deal with conduct that reflects poorly on the defendant, and you will need to make that clear in your Complaint.

But under no set of circumstances should it be necessary to use adjectives or adverbs in preparing a False Claims Act Complaint.  In fact, I would go one step further and say that adjectives and adverbs have a place in a civil Complaint if – and only if – they are necessary to state a claim for punitive damages in a common law cause of action.  There it is necessary – in Virginia at least – to allege that the defendant acted wantonly, oppressively, and so forth.

Such allegations are not necessary in a qui tam Complaint, and you should avoid them like the plague.  The heavy of use of adjectives and adverbs leaves most readers with the distinct impression that the case is not really all that strong.

Stay tuned for more …

K&G Law Group is a boutique-style law firm based in Nothern Virginia and practicing nationwide

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Importance of false claims act qui tam Complaints in FCA litigation

By Zachary Kitts on November 27, 2014 in ,

Virginia Qui Tam Law.com -- The first blog dedicated to the Virginia Fraud Against Taxpayers Act and to Qui Tam Litigation in Virginia

 

 

 

 

 

 

 

 Importance of false claims act qui tam complaints in FCA litigation

Today’s blog post is part one a several part post concerning a question from a regular reader of this blog.  Specifically, he asked my opinion on best-practices for preparing an initial Complaint in a qui tam case under the federal False Claims Act and/or the Virginia Fraud Against Taxpayers Act.

As regular readers know from past posts, I am a big believer in executing on the fundamentals, and I think that is mostly what separates the winners from the losers.

This blog post assumes that counsel is knowledgeable about the basic requirements of jurisdiction, venue, and so forth.  These requirements of course differ somewhat depending on whether a case is filed in federal court – and thus under the federal FCA – or in state court under an applicable state FCA statute.  Instead of focusing on these basic legal requirements, this post focuses on what you put in your initial Complaint over and above the basic requirements.

To be sure, the basic legal requirements of an initial Complaint are somewhat few in number.  Federal Rule of Civil Procedure 8, for example, requires only a short and plain statement of the facts entitling the plaintiff to relief.  Fed. R. Civ. P. 10 provides other requirements like captions and numbered paragraphs, “each limited as far as practicable to a single set of circumstances.”  Particularly important for FCA litigation is Fed. R. Civ. P. 9(b) which requires pleading with specificity in FCA cases.

Beyond those basic requirements counsel is free to do a great many things with the initial Complaint.

THE INITIAL COMPLAINT SETS THE TONE FOR THE ENTIRE CASE AND PROVIDES A ROAD MAP FOR THE REST OF THE LITIGATION – IT SHOULD THEREFORE BE CLEAR, CONCISE, AND EASY TO UNDERSTAND

The initial Complaint sets the tone for the entire case.  It should therefore be complete and thorough; it should also be clear and concise.  These goals are not at odds with each other.  Many lawyers – including some very good ones – confuse “complete and thorough” with “long and wordy.”

If I had to give one piece of advice to counsel it would be to understand how to draft a Complaint that is complete and thorough while being clear and concise without being long and wordy.

Here is one way to do it.  Put yourself in the shoes of the Judge’s law clerk.  This is important for two reasons.  First, a law clerk is by definition a newly minted lawyer with limited experience.  Second, law clerks are often preparing for the next day’s hearings at the end of a long day.  When you combine these two things you get an inexperienced young lawyer who is mentally exhausted and ready to go home when they read your Complaint.

In other words you should make your Complaint easy to understand to a person who is tired and wants nothing more than to go home at the end of a long day.  Lawyers always respond to this by saying “But my case is very complicated.”  A case may very well be complicated — but one of your most important jobs as a qui tam lawyer is to make a complicated case simple.

I know of no better way to do this than making the numbered paragraphs deal with one concept each – or as some people call it, one “factlet” each.  Including only one factlet in each paragraph helps the reader to follow you as you build the allegations of the Complaint.  There is nothing worse for a reader than paragraphs that include six or seven factlets each.  Such allegations are hard to understand and difficult to follow.

You should then group your factlets and arrange them under subheadings that help to guide the reader.  The specifics of your Complaint will vary depending on the kind of case and the nature of the allegations, but in a case alleging false claims in a costs plus contract I think it is wise to set forth the clear accounting standards in a part of the Complaint called something like “Applicable Legal Standards.”

Along those lines, I am including the Complaint from US ex rel Rigsby v. State Farm et al.  This is a well-known qui tam case that ended in a jury verdict a year or two ago.  While the Complaint may differ in some ways from the style that I use, I can tell you first hand that when I started reading this Complaint I had no earthly idea how flood insurance worked, or how federal money was involved.  But I got the idea very quickly, which means the Complaint did its job.

Above all else, I normally do not believe in waiting until the very last page of the Complaint to explain how the defendants knowingly broke the law.  I see this quite often — plaintiffs list 20 or 30 pages of allegations and then include on the last page something like this:

COUNT ONE — ALL OF THE ACTIONS ALLEGED ON THE PREVIOUS PAGES CONSTITUTE A VIOLATION OF THE 31 U.S.C. 3729(a)(1)(A) OF THE FEDERAL FALSE CLAIMS ACT

Sometimes this approach may make sense, but those instances are few and far between I think.  Normally, I submit that it is better to weave the statutory language in with your factual allegations.

STAY TUNED FOR PART II…

Stay tuned readers, next time we will look at weaving the facts and the law together in a Complaint to make it clear and concise while being complete and thorough…

 

K&G Law Group is a boutique-style law firm based in Nothern Virginia and practicing nationwide

 

 

 

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Obama Announces New Attorney General Pick

By Zachary Kitts on November 8, 2014 in ,

Virginia Qui Tam Law.com -- The first blog dedicated to the Virginia Fraud Against Taxpayers Act and to Qui Tam Litigation in Virginia

 

 

 

 

 

 

 

Obama Announces New Attorney General Pick to replace Eric Holder

Political disclaimer — this is a non-political blog dedicated to the Virginia Fraud Against Taxpayers Act and to False Claims Act/qui tam litigation in Virginia.  This blog supports any and all government officials who support FCA recoveries, regardless of political party.

President Obama will nominate U.S. Attorney Loretta Lynch to lead the Justice Department, according to an article in today’s Washington Post . The official nomination is due today at a ceremony in the Roosevelt Room, where President Obama will be joined by Ms. Lynch and outgoing Attorney General Eric Holder.

Ms. Lynch still has to be confirmed by the Senate — however, she has served as United States Attorney for the Eastern District of New York (which is based in Brooklyn) twice, which means she has been confirmed by the full Senate on two prior occasions.  It seems a safe bet that if she had any real problems in her background they would have come to light already.

Now onto the real issue for purposes of this blog — will Ms. Lynch choose to follow in the footsteps of outgoing Attorney General Eric Holder and place an emphasis on enforcement of federal False Claims Act cases?

Lets be honest about it — even if she chooses to emphasize enforcement of FCA cases, General Holder will be a tough act to follow.  In a press release  by Justice a few weeks back when Gen. Holder announced his retirement, General Holder reviewed some of his many accomplishments using the federal FCA.

Since 2009 when Gen. Holder took the reins at Justice, the Department has recovered more than $20.2 billion from False Claims Act cases, with more than $14 billion of those recoveries from cases involving fraud against federal health care programs.  This includes the incredible run that started in FY 2011 (when more than $5 billion was recovered) and ending in FY 2014 (which marked the third consecutive year in which more than $3 billion was recovered).

All that being said, there can be no doubt that General Holder was, to some degree, in the right place at the right time.  That same thing is true for all great figures however, and that is exactly what Eric Holder was.  He will, no doubt, go down in false claims act history as one of the most effective Attorney Generals ever to hold the post.

K&G Law Group is a boutique-style law firm based in Nothern Virginia and practicing nationwide

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Affirmative Civil Enforcement Unit for VFATA claims

By Zachary Kitts on September 24, 2014 in , , , , ,

 

Virginia Qui Tam Law.com -- The first blog dedicated to the Virginia Fraud Against Taxpayers Act and to Qui Tam Litigation in Virginia

 

 

 

 

 

 

 

 Affirmative Civil Enforcement Unit for VFATA claims

Following on the heels of my last post – which covered the Virginia Medicaid Fraud Control Unit receiving the Honest Abe Award from Taxpayers Against Fraud as well as General Herring’s new Complaint in intervention against a number of large banks – I am pleased to report that the Commonwealth also took a major step forward in the last legislative session.

Specifically, legislation was introduced to provide funding for an affirmative civil enforcement unit for non-health care claims in the Office of the Attorney General.  This is of course one of the major things the Commonwealth’s OAG had been lacking, as discussed repeatedly on this blog for more than six years.

Senate Bill 660 provided for the creation of an enforcement unit in the Division of Debt Collection, and also provided that the unit is entitled to retain 30% of the money it recovers to fund future enforcement of non-health care investigations and prosecutions.  As the fiscal impact statement prepared by the Senate indicates, the bill has no negative impact on the budget of the OAG, and will very much help the budget.

The legislative history indicates that SB 660 passed the Senate unanimously and was sent to the House of Delegates.  The bill also fared well there, passing out of Committee — again, unanimously — out of Subcommittee 4 on General Laws and from the full Subcommittee.

And there, on March 4, 2014, the bill died.  My guess is that the General Assembly got so distracted by the Medicaid expansion fight that everything else sort of dropped by the wayside.  With so much support in both houses of the General Assembly, I am sure the bill will be re-introduced next year and hopefully it will pass.

My only real concern with SB 660 is the authority given to the position in the reporting structure of the OAG.  There is no question that the lawyers in charge of non-health care qui tam actions will struggle with various agencies in state government from time to time, just like the United States Department of Justice struggles with federal agencies.  Government agencies can be difficult clients in general, and this is especially true when a government agency may feel like it screwed up.

Without question the person (or persons) handling non-health care VFATA claims will need to be creative in his or her navigation of the Commonwealth’s government agencies…and the non-health care enforcement unit will also need to be able to twist arms from time to time.

Stay tuned for more to follow….

Virginia Qui Tam Law.com – The first blog dedicated to the Virginia Fraud Against Taxpayers Act and to qui tam litigation in Virginia

K&G Law Group is a boutique-style law firm based in Nothern Virginia and practicing nationwide

 

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Virginia Medicaid Fraud Control Unit Receives “Honest Abe” Award at Fourteenth Annual TAF Conference

By Zachary Kitts on September 19, 2014 in , ,

Virginia Qui Tam Law.com -- The first blog dedicated to the Virginia Fraud Against Taxpayers Act and to Qui Tam Litigation in Virginia

 

 

 

 

 

 Update from the Fourteenth Annual Taxpayers Against Fraud Conference: Virginia Medicaid Fraud Control Unit Receives a Well-Deserved Award and Attorney General Mark Herring Announces a Major Intervention

The Fourteenth Annual Taxpayers Against Fraud Education Fund Conference was this week, and as usual, it was a great event.  I have been a regular at this conference since 2007, and every year seems to get better than the last.  However, this year was one of special significance for the Virginia Fraud Against Taxpayers Act, and I am proud to say that the Commonwealth was in the spotlight twice.

Virginia MFCU awarded TAF Honest Abe Award

First, I was honored to present the 2014 “Honest Abe” award for good government to the Virginia Medicaid Fraud Control Unit.  And I meant what I said there — we are used to hearing government at all levels point to a lack of resources to justify inactivity, and when government entities refer to “resources” what they mean is money.

There is, however, a far more important resource in government affairs than money, and it is leadership.  The Virginia Medicaid Fraud Control Unit has it, and the proof is in the results that the consistently obtain.

The second major event came on the final day of the Conference.  As regular readers of this blog know — and as referenced above by the Virginia MFCU receiving the Honest Abe award — Virginia has a top-notch enforcement unit for health care cases under the Virginia Fraud Against Taxpayers Act.

What has lagged, however, is enforcement of non-health care VFATA cases.  Indeed, although I have handled — and will continue to handle — health care cases, most of my successes in this area of law have been non-health care cases, and generating interest in the non-health care side of things was one of my primary goals when I started this blog in 2008.

So, I was especially pleased to see, on the final day of the conference, the press release by Virginia Attorney General Mark Herring announcing his intervention in a non-healthcare qui tam case against various banks for defrauding Virginia Retirement Services….hmmm, sounds vaguely familiar — does it not?

The case is captioned Virginia ex rel Integra Rec LLC v. Barclays Capital et al. and it was initiated by a relator on January 24, 2014 in the Circuit Court for the City of Richmond.

Despite the similarities to my FX Analytics case, I do not represent the relator in this one, and I actually don’t know who does, but I am happy to see that more lawyers are taking an interest in these types of cases, and that can only be good for the Commonwealth of Virginia and for the taxpayer.

I knew on the first day of the conference that something was afoot — General Herring was originally supposed to attend the TAF Conference, but had to cancel at the last minute, which is a sure sign of something….

I am certain that we will see more good news from the Virginia MFCU in the not-too-distant-future — and I am hoping that we will see more good news from the Integra Rec case….only time will tell.

 

K&G Law Group is a boutique-style law firm based in Nothern Virginia and practicing nationwide

 

 

 

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State qui tam laws enable states to recover money merely by having a qualifying state false claims law

By Zachary Kitts on August 25, 2014 in ,

Virginia Qui Tam Law.com -- The first blog dedicated to the Virginia Fraud Against Taxpayers Act and to Qui Tam Litigation in Virginia

 

 

 

 

 

 

 

 

State qui tam laws enable states to recover money merely by having a qualifying state false claims law

Today’s post is the first of a two-parter that takes a look at the inner-workings of a multi-state qui tam case and, specifically, at a recent opinion from the U.S. District Court for the Eastern District of Pennsylvania. The Court’s opinion in UNITED STATES OF AMERICA ex rel. DONALD R. GALMINES, et al. v. NOVARTIS PHARMACEUTICALS CORPORATION concerns an important procedural issue that can arise in multi-state actions and that, in turn, triggers a look at the state false claims act statutes passed by the several states.

But first we begin, as usual, with some background.

The Importance of Multi-state qui tam actions

As regular readers know, in the qui tam/false claims act world, much of the action today is in the health care context. The United States spends more money today on health care claims than it has ever spent, on anything, in the history of the United States.  Actually, never mind the total amounts spent on health care — the New York Times estimated last week that $60 billion dollars is lost to false and/or fraudulent health care claims every year.

And lest anyone think that there is an easy solution, consider this — roughly 4.5 billion Medicare claims are adjudicated daily.  That is 22.5 billion claims for payment each week.

Long story short, there is no solution to the problem of fraud on government health care programs. The very best we can do is to devise ways to contain the fraud and false claims.  And hands down, the single best method to contain fraud and false claims on government health care programs is the federal false claims act. In that regard, the federal government has experienced unqualified success with the federal False Claims Act since the law was originally passed in 1863 and substantially revised in 1986.

But paying for health care is not the exclusive domain of the federal government.  Each one of the 50 states administers some form of the Medicaid program, which provides health care to people who can’t afford it on their own – and the federal government picks up at least 50% of the tab for each state.  So, with a large chunk of every state government’s health care budget coming from the feds, Congress determined that it would be a good idea to have each and every state pass a state false claims act.  Under our system of laws, however, the federal government cannot require any state to pass a specific law. For this reason Section 1909 of the Deficit Reduction Act of 2005 creates a financial incentive for states to enact false claims legislation.

Not just any old false claims act will suffice — and Congress understood, perhaps based on its own experience, that the legislative process is inherently unpredictable, and it differs from state to state in its level of unpredictability. The very best states have a legislative process that is messy and disorderly, and some states have a legislative process that is full-on dysfunctional. So, for a State to qualify for this monetary incentive, the State law must meet certain requirements listed in section 1909 of the Act.  DHHS-OIG has also published a memo to provide guidance to the states.

There are many reasons why it is a good idea for a state to have a state false claims act modeled on the federal False Claims Act, but chief among them is this – by requiring each state to have a false claims statute that meets certain standards, multi-state qui tam actions are facilitated.  A qui tam relator is able to file his or her case in a U.S. District Court making claims for violations of the federal false claims act, and then include pendent state claims for each state in which a violation occurred.

Stay tuned for part two of this two-part post, which focuses on the opinion from the E.D. Pa….

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