Insurance Coverage for False Claims Act Lawsuits?

The number of qui tam actions brought under the False Claims Act (FCA) has increased dramatically over the past several years, as the incentives for bringing such claims have grown.

Reed Smith attorneys Brian Himmel and Natalie Metropulos have authored “Insuring Against FCA Suits in the Health Care Industry” in Corporate Counsel discussing the steps that health care service providers should take to insure themselves against allegations of FCA violations. Recommendations include assessing current insurance coverage for defending and resolving such claims, and additional types of policies that can provide FCA coverage.

To read the article, click here.

Manufacturer, Group Payment Organization, and Physician Financial Information Slated For Disclosure, May Spur False Claims Act Activity

As mentioned on our Health Industry Washington Watch blog, pharmaceutical and medical device manufacturers and group purchasing organizations (GPO) are currently in the process of submitting detailed 2013 payment and investment interest data to the Centers for Medicare & Medicaid Services. The submission of this data, as dictated by the Physician Payment Sunshine Act, is intended to highlight certain financial relationships between the manufacturers and GPOs and physicians. With some exceptions, this data will become public by September 1, 2014, at which time the Department of Health and Human Services’ Office of the Inspector General, Department of Justice, and relators’ attorneys will likely analyze the data to initiate investigations and support complaints under the federal False Claims Act. To read the entire post, click here.

Whistleblower Cannot Rely on Stolen Patient Records

This post was written by Andrew Bernasconi & Nathan Fennessy.

A recent decision by the United States District Court for the Southern District of Ohio may make it much harder for qui tam relators to rely upon stolen medical records or patient information in False Claims Act (“FCA”) whistleblower actions. See Cabotage v. Ohio Hospital for Psychiatry, No. 11-cv-50 (S.D. Ohio July 27, 2012). In Cabotage, the district court held that a registered nurse was not permitted to support her allegations of FCA violations by relying on confidential protected health information that she surreptitiously removed from the hospital where she was employed.

The nurse in Cabotage purportedly removed the confidential protected health information as part of an “investigation” of alleged fraudulent conduct by the Medical Director. She subsequently provided this information to an investigator from the Department of Health and Human Services, but the agency declined to pursue a claim. After the nurse was terminated for other reasons, she commenced an action against her former employer under the FCA whistleblower provisions and the Ohio Whistleblower’s Act. During the course of discovery, the hospital learned about the nurse’s removal of confidential protected health information. After repeated requests to return the information were declined, the hospital filed a Motion for Return of Confidential Health Information.

The district court denied the motion on the grounds that the Health Insurance Portability and
Accountability Act of 1996 (“HIPAA”) did not vest the court with jurisdiction to provide the remedy sought by the hospital. The court concluded, however, that it possessed inherent authority to issue an order preventing the nurse from using the confidential information in the instant action because the information was confidential, potentially privileged, and had been obtained outside the discovery process governed by the court.

The court’s decision is qualified and stops short of creating a new rule applicable to whistleblower cases, but nonetheless provides a step in the right direction for defendants facing whistleblowers who have inappropriately used or taken confidential information from their employer.

 

FCA Qui Tam Relator Sanctioned for Destroying Evidence on Company-Issued Laptop

This post was written by Andrew Bernasconi and Nathan Fennessy.

In yet another reminder about the importance of maintaining evidence on company-issued laptops, blackberries, or other electronic devices; the United States District Court for the Northern District of California recently sanctioned a qui tam relator for destroying more than 10,000 documents on his company-issued laptop. Moore v. Gilead Sciences, Inc., No. C 07-03850 SI, 2012 WL 669531 (N.D. Cal. Feb. 29, 2012).

To read the full post on Reed Smith's Global Regulatory Enforcement Law Blog, click here.
 

In-House Relator? The 2nd Circuit Considers Whether To Put the False Claims Act Between Attorneys and Their Clients

This post was written by Matthew R. Sheldon and Alexander Y. Thomas.

The Second Circuit Court of Appeals is reviewing a lower court decision disqualifying a former in-house attorney from acting as a False Claims Act qui tam relator against his former employer. The relator was formerly general counsel to Unilab, a subsidiary of Quest Diagnostics Inc. The qui tam suit alleged that Unilab violated the Federal Health Care Anti-Kickback Act by engaging in a fraudulent scheme to increase medical testing referrals under the Medicare and Medicaid programs. To read the full post on Reed Smith's Global Regulatory Enforcement Law Blog, click here.

 

Sweeping Changes to the Federal False Claims Act are on the Horizon

This post was written by Scot T. Hasselman, Andrew C. Bernasconi, and Nathan R. Fennessy.

On April 28, both the U.S. Senate and the U.S. House of Representatives took steps that would provide sweeping changes to the federal False Claims Act ("FCA"). The bills would significantly expand the scope of FCA liability while at the same time make it easier for qui tam relators to bring and maintain FCA suits on behalf of the government.

In short, the bills are answers to a DOJ and relator’s counsel "wish list" that would eliminate 20 years of hard-fought defense jurisprudence. In addition, the House bill, for example, would eliminate the public disclosure jurisdictional bar and defense, which could allow a sworn federal agent to utilize information obtained in the course of official investigations to file FCA lawsuits as a relator, and to receive a portion of any financial recovery. The House bill would also eliminate any basic pleading standards by relators and allow relators’s attorneys to file fishing expeditions without any substantive basis of allegation. 

For additional information, please see Reed Smith's full alert.