Four Takeaways from Sixth Circuit Ruling on False Claims Act Liability

Cross-posted at WLF’s contributor site

Federal and state governments are clearly “feeling their oats” in the area of False Claims Act (FCA) enforcement. FCA enforcement has never been more lucrative, with recoveries doubling to $9 billion over the last year. A large bulk of that profit has come from settlements, meaning that prosecutors’ theories and tactics face no judicial scrutiny. Big profits + little oversight = aggressive pursuit of increasingly novel FCA claims.

Challenges to government’s FCA theories and positive outcomes are increasingly few and far between, so we will actively assess and promote them whenever they arise. The U.S. Court of Appeals for the Sixth Circuit’s October 5 U.S. ex rel Williams v. Renal Care Group opinion firmly rejected federal efforts to expand key aspects of the FCA and offers some important lessons for FCA targets.

Background. The Justice Department intervened in a FCA qui tam action against a kidney dialysis provider (RCG), which had a wholly-owned subsidiary to offer dialysis equipment for home care. RCG created this subsidiary to take advantage of a particular method of Medicare reimbursement. The qui tam relator, and subsequently DOJ, argued that RCG’s creation of a subsidiary was a knowingly false and fraudulent attempt to claim federal Medicare reimbursement. A district court agreed, granting DOJ’s summary judgment motion and imposing nearly $83 million in fines. On appeal, the Sixth Circuit reversed the lower court and remanded the case. The unanimous decision provides four important takeaways: Continue reading “Four Takeaways from Sixth Circuit Ruling on False Claims Act Liability”