Alumni Attorney Talks is a virtual series that aims to provide prospective law students with helpful insights about attending law school and pursuing a legal career. This series features interviews with University of Illinois alumni working in a variety of diverse settings within the legal profession.

Check out Attorney Rosenblat’s interview here!

Long awaited victory on a qui tam False Claims Act case filed in 2013. Great job by the AUSA in getting a criminal conviction and civil judgment of $25,589,300.

CHICAGO — A former owner of a home visiting physician company in suburban Chicago, who was previously convicted of theft from the Medicare program, has been ordered by a federal judge to pay more than $25 million in damages and penalties as the result of more than 4,000 violations of the False Claims Act.

AJIBOLA AYENI, 63, of Flossmoor, formerly operated DOCS AT THE DOOR, P.C., a home visiting physician company in Matteson, Illinois. In 2017, the government intervened in a sealed whistleblower lawsuit that had been brought against him and other defendants in 2013. The United States filed its own complaint-in-intervention against Ayeni and his wife, JOY H. TURNER-AYENI, 61, of Flossmoor, and their companies, including Docs at the Door, alleging that they had violated the federal False Claims Act by knowingly submitting claims for Medicare payments for services not rendered, services that were not medically necessary, and services that were “upcoded” to a higher level reimbursement than was appropriate or provided. The allegations included that Ayeni and Docs at the Door had submitted thousands of claims for a Medicare service called care plan oversight, which they knew had not been provided. Care plan oversight is a covered Medicare service, where a physician who has certified a plan of care for a home health patient spends an additional 30 minutes in a calendar month performing certain oversight functions that are not related to the certification itself or a face-to-face visit with the patient, which are separately billed.

Also in 2017, Ayeni was charged in a related criminal case alleging care plan oversight fraud. That case resolved in a guilty plea on August 22, 2019, when Ayeni pleaded guilty to one count of theft or embezzlement in connection with a health care benefit program. In his plea, Ayeni specifically admitted that the Medicare program paid Docs at the Door approximately $523,600 from 2011 through June 2015 as the result of 4,367 false claims for the care plan oversight service that he, as the owner and authorized official of the business, knowingly caused to be submitted although he knew that care plan oversight service had not been rendered. He also admitted that he instructed others to create false documentation to support those false claims for care plan oversight.

On March 24, 2023, Chief U.S. District Judge Rebecca R. Pallmeyer granted summary judgment to the United States regarding the care plan oversight false claims in its civil case, holding that Ayeni and Docs at the Door are liable under the False Claims Act for those false care plan oversight claims to Medicare based upon Ayeni’s earlier guilty plea and his admissions within the plea agreement. On March 28, 2023, the court entered judgment against Ayeni and Docs at the Door in the amount of $25,589,300, made up of $1,570,800 in treble damages and $24,018,500 in civil penalties.

The ruling is announced by Morris Pasqual, Acting United States Attorney for the Northern District of Illinois; Robert W. Wheeler, Jr., Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation; and Mario Pinto, Special Agent-in-Charge of the Chicago Region of the U.S. Department of Health and Human Services Office of Inspector General. The government is represented in its civil fraud case by Assistant U.S. Attorney Sarah North. The government was represented in the criminal case against Ayeni by Assistant U.S. Attorneys Jeremy Daniel and Sarah North.

To combat fraud, the False Claims Act permits private individuals to sue for false claims on behalf of the government and to share in any recovery. The Act also allows the government to intervene or take over the lawsuit, as it has done in this case, and to recover three times damages plus civil penalties, that ranged from $5,500 to $11,000 for each false claim submitted by the defendants during the fraud scheme in this case.

Source: https://www.justice.gov/usao-ndil/pr/suburban-chicago-health-care-company-and-its-owner-ordered-pay-false-claims-act (All information above taken from here)

On January 18, 2023, CMS issued a press release announcing a new action to reduce what CMS termed the improper diagnosis of schizophrenia and the inappropriate use of antipsychotic medications. While both are laudable goals, and no one would support the improper diagnosis of a patient or the inappropriate administration of medication, CMS will determine the accuracy of a diagnosis of schizophrenia by off-site audits, chart reviews. As a health care fraud and audit defense attorney, I have found that these chart reviews are often biased against the provider. I have represented many clients who had their charts audited by Medicare vendors, with the preliminary results never being favorable. Once we were able to see the results and the reasoning, we can rebut the auditor’s determination. Sometimes we may have to go through a couple of reviews before getting a positive result. In one case, based on a chart review, Medicare claimed a client owed around $1.5 million, only to be overturned by an administrative law judge. In another case, the amount claimed to have been fraudulently billed was reduced substantially by the United States attorney. Some nursing homes have a high population of residents suffering from mental diseases and will, of course, have a higher population of patients properly diagnosed with schizophrenia. Yet CMS can use these audits to report inaccurate coding and will downgrade the facility’s Quality Measure rating to one star. Once again, this new action reinforces the need to document thoroughly and accurately. Although time-consuming, I cannot overstate how vital charting is to avoid a recoupment or civil or criminal investigation.

When submitting claims two factors are key. First, the chart notes must be accurate and sufficiently detailed to justify the procedure code used. The hiring of a trained biller and coder can end up being cost-effective. It is good preventative medicine. By reviewing the chart notes, offering suggestions, and checking that the proper procedure code is used, the audit should result in no unexpected outcomes. Electronic billing programs that select procedure codes are only as accurate as the provider input. It is better to spend some time upfront and check the notes and charts before the claims are submitted.

Don’t be an outlier, but if you are . . .

If you are an outlier, a top biller of a procedure code, you are going to attract the attention of the OIG and likely a health care fraud United States Attorney. Doubly make sure that everything is properly documented, the procedure code used is accurate, and even have a law firm and an expert in billing and coding review your claims for accuracy. The benefit of hiring a law firm is to protect attorney-client privilege. Simply hiring an outside billing firm could result in that firm reporting you and trying to obtain a reward under the False Claims Act. A lawyer cannot act against his client’s interest and the outside consulting firm is hired as an agent of the firm.

“Attorney Rosenblat was exceedingly competent, diligent and attentive to my sensitive legal matter, which he resolved with aplomb. I am grateful for his professionalism and would highly encourage others to retain his services in the future.”

Case Studies

A medical practice was audited, and over $1.5 million was sought in recoupment to Medicare. All redeterminations and reconsiderations were filed, including an appeal to the Office of Medicare Hearings and Appeals. Medicare was unwilling to seriously enter into a settlement conference facilitation. A hearing was held before the OMHA and the administrative law judge ruled in favor of the provider.

A physician was contacted by the US Attorney and Medicaid Fraud Control Unit. Medical records were requested and produced. The initial demand from the government was single damages of over $400,000. (False Claims Act settlements are routinely settled for double damages, in this case over $800,000.) The final settlement amount was $75,000, $37,500 doubled.

Get to Know Us

What does Mike like to do besides practicing law and helping his clients? He is an avid runner and ran in this year’s Wine Glass Half Marathon in Corning, New York. He is also a supporter of the Fighting Illini and contributes to the IFund and the American Bar Foundation.

Legal Errors

With in-person court appearances no longer the rule, a lawyer appeared as a cat on a Zoom call when a filter was accidentally applied to his camera. You can watch the video below.

Lawyer Tells Judge ‘I’m Not a Cat’ In The Best Zoom Court Mishap Yet.

From Above The Law. To see the video click here.

The government frequently cites to the case of United States v. Brown for the proposition that white-collar criminals “‘act rationally, calculating and comparing the risks and the rewards before deciding whether to engage in criminal activity.’” Brown actually agreed with this cost/benefit analysis, but a defendant should not.

There is no empirical evidence to support the proposition that individual defendants run a cost benefit analysis before engaging in health care fraud or any white-collar fraud. While I may agree, also without any empirical evidence, that a corporation may run a cost benefit analysis in assessing its risk of False Claims Act liability, increased profit versus risk of liability and damages, there is no evidence that individuals run that type of analysis. But sentencing based on general deterrence resulting in a long sentence are contradicted by empirical evidence. According to the National Institute of Justice, “prison sentences (particularly long sentences) are unlikely to deter future crime.” National Institute of Justice, https://www.ojp.gov/pdffiles1/nij/247350.pdf. Research generally indicates that increases in the certainty of punishment, as opposed to the severity, are more likely to produce deterrent benefits. https://www.sentencingproject.org/wp-content/uploads/2016/01/Deterrence-in-Criminal-Justice.pdf.

As we can see here, white collar defendants should not be unfairly sentenced based on the loss amount or sentenced more severely based on a faulty belief that white-collar criminals act rationally and conduct a cost-benefits analysis before engaging in criminal conduct.

If you are facing an allegation of fraud and are looking for thoughtful and professional representation contact Mr. Rosenblat. Mr. Rosenblat worked at the Illinois Attorney General’s Medicaid Fraud Unit, has spoken at several local bar associations regarding the Illinois False Claims Act, and contributed as an author for the 2022 edition of Employment Termination: Procedures, Grounds, And Challenges. Illinois Institute of Continuing Legal Education.

Illinois Medicaid

The Illinois Medicaid program covers over 3 million individuals, with over 65% in managed care. The Office of Inspector General, Healthcare and Family Services, conducts audits, peer reviews, and advanced data mining. In 2016, the OIG recovered or saved $220.4 million through recoupments, cost savings, and cost avoidance.

Medicare Audits

Various agencies can conduct Medicare audits from a United States Attorney’s Office to a paid contractor. Most USAO investigations will seek more than a recoupment for the alleged overpaid funds, as their investigations would likely be under the False Claims Act, which allows for treble damages plus a penalty for each false claim. If the investigation is criminal, the USA would likely seek a conviction under the health care fraud statute. (18 USC 1347)

Some of the third parties that conduct Medicare audits are:

Recovery Audit Contractors

RAC’s review post-payment claims to detect and correct improper payments to permit CMS, fiscal intermediaries (FI), and Medicare Administrative Contractors (MAC) to implement steps to prevent future erroneous payments. In Illinois, the RAC is Cotivit, LLC.

Medicare Administrative Contractors

A MAC processes Medicare Part A, Part B, or durable medical equipment (DME) claims for Medicare. MAC’s are the contact between Medicare and the providers, MAC’s process fee for service claims (FFS). Currently, there are 12 MAC’s and four DME MAC’s.

Zone Program Integrity Contractors

ZPIC’s are tasked to investigate fraud, waste, and abuse by health care providers. ZPIC’s conduct audits of health care providers on behalf of CMS. Unlike other contractors, RAC’s and MAC’s, ZPIC’s concentrate on fraud allegations, not billing errors. As such, ZPIC audits are more likely to result in a referral to federal law enforcement.

Conclusion

Medicare audits can result in substantial recoupments, the suspension of payments, and even criminal prosecution. As a health care audit and defense law firm, we can develop an effective response to eliminate or mitigate audit, recoupment, or criminal prosecutions. Our firm is designed to defend health care providers, physicians, dentists, and home health agencies efficiently and effectively from allegations of overbilling to fraud. We have saved our clients hundreds of thousands of dollars in recoupments.

Contact us today for a consultation.

On October 31, 2018, Mr. Rosenblat’s client was found not guilty of DUI. The court also granted the defendant’s petition to rescind the statutory summary suspension.

In other significant victories, a client of Mr. Rosenblat was charged with a Class 2 non-probationable DUI. If found guilty, the client would face a mandatory Class X (6-30 years) sentencing based on background. After nearly a year of extensive mitigation, challenging both the charges’ factual basis and presenting substantial mitigation, the State reduced the charges and agreed to a sentence of 24 months probation.

Previous win –

Mr. Rosenblat’s most recent not guilty came on May 13, 2016, when the judge found the defendant not guilty of domestic battery. The alleged victim claimed that the defendant pushed a heavy object into her and knocking her to the ground. To prove its case, the Cook County Assistant State’s Attorney called two witnesses to testify, the alleged victim and a Chicago Police Officer. Mr. Rosenblat’s cross-examination of the complaining witnesses exposed the fact that she could not see who caused the object to be pushed into her. The cross-examination also uncovered many inconsistencies in her testimony that defied common sense. The defendant was found not guilty without the defense calling a single witness.

On March 30, 2016, Mr. Rosenblat’s client was found not guilty of aggravated robbery, a charge that carried a maximum sentence of up 30 years in prison. The complaining witness added facts in his testimony, which he never told to the police even though he was interviewed multiple times. Mr. Rosenblat’s cross-examination of the victim’s prior inconsistent statements showed that he was not credible. Mr. Rosenblat called several witnesses in the defense case in chief, including the defendant. The defendant was found not guilty of all charges.

At a trial on April 22, 2015, the defendant was charged with aggravated DUI, a felony, was found not guilty. The prosecutor called the arresting officer who testified that the defendant failed the standard field sobriety tests and appeared to be under the influence. Mr. Rosenblat cross-examined the police officer and showed the court the police video, including the in-car video of the defendant. Mr. Rosenblat’s thorough review of the evidence, including the DVD produced by the police, revealed that there was a video recording of the defendant in the police car immediately after his arrest. This evidence proved critical to the court finding the defendant not guilty and surprised the judge who was unaware that defendants were being recorded while in the back of the squad car. After the close of the evidence, the defendant was found not guilty.

On April 29, 2015, the defendant who was charged with aggravated assault, was found not guilty. Mr. Rosenblat called several character witnesses for the defendant and the defendant to testify. Mr. Rosenblat’s closing argument highlighted the motivation for the alleged victim to lie about the offense. The defendant was found not guilty.

For more information about the criminal defense practice of Michael C. Rosenblat, P.C. click here.

About Michael C. Rosenblat, P.C.

Michael C. Rosenblat, P.C., is a Chicago area law firm that practices criminal defense, both State and federal in the Chicago metropolitan area, and False Claims Act litigation, representing whistleblowers, relators, or qui tam plaintiffs, throughout the United States.

CHICAGO – Medicare and Medicaid providers are more often than ever facing audits from government agencies, regulators, or their surrogates. When contacted by any such an entity the first step is to determine your potential liability and exposure. Too many times, I have seen providers expose themselves needlessly to a criminal prosecution based on what started out as an administrative investigation. The goal should be to keep the inquiry at the lowest level possible, which is why it is important to obtain counsel experienced in both criminal and civil matters.

Most commonly, audits start with a document request or visit from law enforcement seeking records related to Medicare beneficiaries. This first contact tells us something about the government’s posture. If the government sends out agents to obtain records that is signaling that the government may believe that the provider will alter records if given the opportunity to produce them at a later time, typically 30 days. A document request by mail typically signals a civil inquiry.

When submitting records it is imperative that all documents are reviewed prior to submission and are bates labeled so that the produced documents can easily be identified for purposes of an appeal.

If there is an administrative finding of an overpayment, the provider may begin the appeals process. The first level of a Medicare appeal is the redeterminations. The redetermination is submitted to the same entity that did the original finding of an overpayment and in my experience is unlikely to result in a significant departure from the original overpayment determination. Nonetheless, a Medicare provider must complete this step to move through the appeals process.

The second level of appeal, the reconsideration, is submitted to a Qualified Independent Contractor or QIC. At this level, a Medicare provider is more likely to obtain relief. It is important at this level to submit all evidence the healthcare provider has to support its position because the healthcare provider will not be able to supplement the record, without good cause, if the provider wants to continue the appeals process.

Following the appeal to the QIC, the next level of a Medicare appeal is an appeal to an administrative law judge. These appeals are conducted by HHS, Office of Medicare Hearings and Appeals (OMHA). Here the appeal is usually conducted via telephone but it can be conducted by video teleconference, or even in person. If the Medicare provider wishes to appeal further, the provider may continue the appeal to the Medicare Appeals Council, with the final opportunity to appeal to the federal district court.

The entire appeals process was designed to take less than one year. The redetermination was to take 60 days, the reconsideration 60 days, the ALJ appeal 90 days, and the appeal before the Medicare Appeals Council, 90 days. However, the backlog of appeals at the ALJ level is now expected to take several years.

To learn more about filing an appeal as a Medicare provider of healthcare services, visit RosenblatLaw, or contact Medicare and Medicaid appeals lawyer Mike Rosenblat at (224) 331-1611.

Information and articles on this website are for general information only and are not intended and should not be taken as legal advice.

Congress directed HHS to establish an appeals process for denied Medicare reimbursement claims and directed that the appeals process be completed within certain time parameters. The entire appeals process was designed to take less than one year to complete and set time limits on each stage of the appeal: 60 days for stage one, the redetermination; 60 days for stage two, the reconsideration; 90 days for stage three, the hearing before the ALJ; and 90 days for stage four, the hearing before the Medicare Appeals Council. The fifth stage is judicial review in a district court. For many years the appeals process functioned within these parameters.

Beginning in 2001, there was an increase in appeals. This increase, which was dramatic and unexpected, was caused by a large number of new beneficiaries, and providers appealing almost every denied claim. Additionally, and perhaps most importantly, under the Medicare Recovery Audit Program, HHS hired recovery audit contractors known as RACs to review every claim paid and identify overpayments. The RACs then sought to recoup those overpayments, which could have been paid to the provider years ago. When a RAC identifies an overpayment, the provider could either pay it or file an appeal. Many providers decided to file an appeal, and appeals increased from 56,600 in fiscal year 2011, to 607,402 appeals waiting for an ALJ hearing in June 2017. Although providers can skip this level and escalate the appeal, providers forfeit certain rights and have been reluctant to do so. Without some form of relief, the backlog is expected to grow to over 950,000 by 2021 and some claims which have already been filed are expected to take over 10 years to complete.

Because of this backlog, the plaintiffs filed suit to obtain an order compelling HHS to clear the backlog and comply with the statutory 90-day time frame for ALJ hearings. The district court granted HHS’s motion to dismiss, reasoning that Congress was aware of the problem and could address it. At the first appeal, the appellate court reversed and asked the district court to conduct a balancing test and determine if compelling HHS was appropriate. On remand, the provider-plaintiffs set forth two proposals, one directing HHS to take certain actions, and the other setting a suspense date to meet certain goals. The district court decided to direct HHS to meet certain goals: reduce the ALJ backlog by 30% by December 31, 2017, by 60% by December 31, 2018, by 90% by December 31, 2019, and by 100% by December 31, 2020. HHS appealed and the case was once again before the appellate court.

Noteworthy are the appellate court’s observations calling HHS’s contentions “suspect” and sharing the district court’s “skepticism” that HHS has done all it can. Legally however, the appellate court was tasked with reviewing the district court’s order directing HHS to reduce the backlog by 2021. The appellate court set forth the legal premise: that when a person or agency ought to do something, comply with a statutory deadline, the law implies that the act must be possible to perform. ALJs have the ability to review about 90,000 appeals per year, yet HHS received between 200,000 – 250,000 appeals per year, even in those years when the RAC program was suspended. HHS cannot lawfully settle claims that are without merit yet the only way to reduce the backlog was to settle claims en masse without proper review. A court cannot require an agency to break the law or perform an impossible task. Therefore, appellate court sent the case back to the district court to determine if lawful compliance with the early timetable was impossible, and to make a finding the HHS can lawfully comply with any timetable imposed.

For more information about provider appeals, visit Rosenblat Law or contact Mike Rosenblat at (224) 331-1611.

The information and articles on this website are for general information only and are not intended and should not be taken as legal advice.

The Final Rule will permit a Medicare Appeals Council’s decision to have precedential value to provide consistency, reduce resources need to adjudicate an appeal, and possibly reduce the number of appeals. It also allows attorney adjudicators to decide appeals without a hearing, review dismissals by a Qualified Independent Contractor (QIC), issue remands to CMS contractors, and dismiss a request for hearing when requested by the appellant. These changes will reduce the time that ALJs spend on administrative matters and allow more resources for conducting hearings. The Final Rule will also limit the number of CMS contractors that can participate in a hearing, improve administrative efficiency, by for example allowing an ALJ to vacate its own dismissal, and conduct most hearings via telephone (unless the appellant is an unrepresented beneficiary).

Whether a decision will be made precedential is determined by the Department Appeals Board chair who will consider if the decision addresses reoccurring legal issues or issues of public interest. These precedential decisions will apply to future cases as well as any factual findings involving the same parties and the same relevant facts.

The Final Rule also allows for attorney adjudicators. An attorney adjudicator can issue a decision when an ALJ hearing is not required, for example when an appellant wants to withdraw an appeal, when an appellant appeals a QIC dismissal, or when an appeal should be returned to CMS or the contractor for further information.

The Final Rule also revises the Appointment of Representation regulation to conform with Form CMS 1696, and replaces the “Request for Medicare Hearing by an Administrative Law Judge,” with Form OMHA-100, “Request for an Administrative Law Judge Hearing or Review of Dismissal.”

Another area of importance addressed by the Final Rule regards the inclusion of new evidence before the ALJ. There are now four circumstances identified in the Final Rule as good cause for the introduction of new evidence. Those areas include when new evidence is material to an issue that was not identified in the QIC reconsideration, when the ALJ determines that new evidence is material to a new issue identified after the QIC reconsideration, when a party was unable to obtain the evidence before the QIC issued its reconsideration, and the party made reasonable attempts to obtain the evidence before the QIC issued its reconsideration, 42 CFR 405.1028(a)(2).

The Final Rule also abolished the statement of issues requirement. 42 C.F.R. 405.1022(b)(1). Now all issues raised in prior appeals which were not resolved entirely in favor of the appellant are preserved. The ALJ can also no longer raise new issues with some exceptions. Finally, the Final Rule makes telephone hearings the default hearing method for parties represented. 42 C.F.R 405.1020 (b)(ii)(B)(2).

For more information about filing an appeal as a provider, visit Rosenblat Law or contact Mike Rosenblat at (224) 331-1611

The information and articles on this website are for general information only and are not intended and should not be taken as legal advice.

An appellant who has properly filed a request for hearing before an Administrative Law Judge (ALJ) and whose appeal remains pending after 90 days may with certain restrictions, file a request with the Office of Medicare Hearings and Appeals (OMHA), to escalate the appeal to the Medicare Appeals Council. 42 C.F.R. 405.1016. If the request meets the requirements for escalation and the ALJ, or attorney administrator, does not issue a decision, dismissal order, or remand order, within five calendar days, or within 5 days from the end of the 90-day ALJ decision if the request is filed prematurely, the OMHA, will send a notice that the QIC reconsideration decision will be the decision that will be reviewed by the Council. The Council then has 180 calendar days to issue a decision, or dismissal or remand order. 42 C.F.R. 405.1106

The Council may take any of the following action subsequent to an escalation: Issue a decision based on the record before the QIC, and any additional information entered on the record before the ALJ; conduct any additional proceedings that the Council determines are necessary to issue a decision; remand the case back to the OMHA for further proceedings; dismiss the request for review because the appellant does not have the right to escalate the appeal; or dismiss the request for a hearing if the ALJ or attorney adjudicator could have dismissed the request. 42 C.F.R. 405.1108

There is also a regulation which permits a party to request an expedited judicial review. Any party may request expedited access to judicial review (EAJR) if the QIC made a reconsideration determination and the party filed a request for an ALJ hearing, or for Council review, and a decision or order has not been issued. The EAJR request must meet the amount in controversy requirements of 42 C.F.R 405.1006(b) or (c) [$100, or $1000, see C.F.R. for calculation method], each party must concur in writing, there can be no dispute to material fact, and the person requesting the EAJR must allege that a statutory provision, regulation, or national coverage determination is unconstitutional or invalid.

If a request for hearing is not pending before an ALJ or Council, file a request for an EAJR along with a request for an ALJ or Council review, if an appeal is already pending file a request before the HHS Departmental Appeals Board. 42 C.F.R. 405.990. Within 60 calendar days of being received by the review entity, the entity will either issue an EAJR certification or deny the request. If the review entity does not issue a decision within 60 calendar days an action may be brought in Federal District Court within 60 calendar days.

These regulations became effective March 20, 2017.

For more information about escalating an appeal as a provider, or requesting an EAJR, visit Rosenblat Law or contact Mike Rosenblat at (224) 331-1611.

The information and articles on this website are for general information only and are not intended and should not be taken as legal advice.

In 2010, Armstrong’s former USPS teammate Floyd Landis filed a False Claims Act lawsuit against Armstrong[i] and others accusing them of violating the False Claims Act because of their PED use and their failure to disclose it.

In 2013, Armstrong admitted to his use of PEDs. The United States is now seeking almost $100 million in damages.

The District Court issued an opinion after both the government and the defendants moved for summary judgment concerning specific issues. [The Armstrong case can be found here.]

In the Armstrong case, the government claims that three sections of the FCA were violated by Armstrong and the other defendants. (1) Presenting a false claim, also known as a direct false claim, (2) making or using a false record or statement to get a false claim paid or approved, and (3) conspiring to violate the FCA. The government further claims that FCA liability attaches under a fraud in the inducement theory, an express false certification, and an implied false certification.

Fraud in the inducement is essentially when a party obtains a contract by fraud, even if the work was properly done and the claims submitted are not false. Here the government is required to prove that Armstrong made representations or omissions which the USPS relied on when it entered into the sponsorship contract, [and Armstrong knew they were false or misleading and that they were material to the government’s decision].

The second theory is an express false certification. It is a false claim to falsely certify compliance with a statute, regulation, or contract provision where compliance is a prerequisite for payments. Here the court found that Armstrong did not expressly certify compliance on any claims and therefore granted Armstrong’s motion for summary judgment.

The third theory that the court addressed was the implied false certification theory. Under this theory which the Supreme Court addressed in Universal Health Service v. Escobar, the Supreme Court stated that liability can attach when a defendant makes a specific representation about the goods or services provided and knowingly fails to disclose its non-compliance with a statutory, regulatory, or contractual requirement, and that failure to disclosure makes those representations misleading. Here, the government alleged that Armstrong’s failure to disclose his PED use is an implied false certification that he was in compliance with the contract’s anti-doping provision. The court importantly pointed out that the claim itself does not have to specify contractual language if the contractor withheld information that contractor was not in compliance with a material requirement of the contract.

The Armstrong opinion also discussed damages. In Armstrong, the government claims that actual damages are the entire amount paid for the sponsorship agreement, $32.3 million, trebled under the FCA, while Armstrong claims that damages are zero because the USPS got more value from the sponsorship than what it paid for. The court rejected both damages theories and held that a benefit of the bargain approach should be used, which seems to favor and actually be closely aligned to Armstrong’s theory. The “benefit-of-the-bargain” approach is often used where the market value of goods or services is difficult to determine. The court stated that the government’s actual damages are the difference between the market value of the product it received and the market value of the product, the sponsorship, if Armstrong was in compliance.

The court found that damages should seek to put the government in the same position as if the claims had not been false. The court explained that damages should be based on what the amount the government paid, less the value of what it received, or what were the services actually worth to the government. The court stated that the government would not be entitled to a return of all $32.3 million because it never would have sponsored the team if it knew of the PED violations.

The Armstrong case will be set for trial and it will be interesting to see how the jury determines damages.

Mike Rosenblat is an experienced attorney handling False Claims Act cases. For more information about Mike click here.

[i] I am using Armstrong to refer to all defendants. Specific court holdings which are summarized here may however not apply to all defendants.

One Medicare policy that has seen a boom in litigation, both civil and criminal, in the past few years relates to services being provided to allegedly homebound Medicare beneficiaries. Homebound status is defined in the Medicare Benefit Policy Manual and states that for a patient to be eligible to receive home health services under Medicare, a physician must certify that the patient is confined to the home. To be considered homebound, the Medicare beneficiary must be unable to leave the home without the assistance of a supporting device, special transportation, or the assistance of another person. A person could also be considered homebound, if leaving the home is contraindicated. In addition to the previous conditions, there must also be a considerable and taxing effort to leave the home. In other words, just because someone uses a cane does not mean that the person is homebound for purposes of Medicare home health services.

Although, there can be some differences of opinion as to whether there is an inability to leave the home to such an extent that it would take a considerable and taxing effort, a person who leaves their home to run errands or to engage in social activities will unlikely be considered homebound.

Below is the definition from the Medicare Policy Manual. If you have further questions, contact me by clicking here. Violations of this requirement can result in civil or criminal prosecutions, or recoupments among other possibilities. If you would like information about defending a Medicare Audit, or investigation click here. If you are aware of a provider falsely certifying Medicare beneficiaries as homebound, you may be able to file a claim and receive an award under the False Claims Act. For more information about the False Claims Act, click here.

Medicare Benefit Policy Manual – Chapter 7 – Home Health Services

30.1.1 – Patient Confined to the Home (Rev. 208, Issued: 04-22-15, Effective: 01-01-15, Implementation: 05-11-15) For a patient to be eligible to receive covered home health services under both Part A and Part B, the law requires that a physician certify in all cases that the patient is confined to his/her home. For purposes of the statute, an individual shall be considered “confined to the home” (homebound) if the following two criteria are met:

1. Criteria-One:

The patient must either:

– Because of illness or injury, need the aid of supportive devices such as crutches, canes, wheelchairs, and walkers; the use of special transportation; or the assistance of another person in order to leave their place of residence

OR

– Have a condition such that leaving his or her home is medically contraindicated.

If the patient meets one of the Criteria-One conditions, then the patient must ALSO meet two additional requirements defined in Criteria-Two below.

– There must exist a normal inability to leave home;

AND

– Leaving home must require a considerable and taxing effort

Medicare Benefit Policy Manual, Chapter 7 – Home Health Services, paragraph 30.1-1 – Patient Confined to the Home

Chicago – Not surprisingly in light of the recent charges and convictions of home health agencies (HHA) and related entities in the Chicago area and throughout the country, the Department of Health and Human Service, Office of Inspector General, (HHS-OIG) issued an Alert reporting that the OIG found home health services susceptible to fraud.

HHAs have been accused of violating the anti-kickback statute by paying for referrals, while doctors have been accused of receiving kickbacks for these referrals. The government may consider any payment arrangement a kickback if the payment is not fair and reasonable. Another area of concern for the HHS-OIG was the billing of home health services for patients who were not homebound, as defined in the regulations, billing for care plan oversight services that were not performed, and upcoding patient encounters. One key factor found by the HHS-OIG was that doctors participating in these schemes were usually not the Medicare beneficiary’s primary care physician.

If you have information about fraud, waste, or abuse of a government program, including Medicare/Medicaid click here, or if you need representation as a result of a government audit or investigation, click here. Mike Rosenblat, at (224) 331-1611, or mike@www.rosenblatlaw.com

In a resounding victory for whistleblowers, the Supreme Court, in Universal Health Services, Inc. v. United States et al. ex rel Escobar et al., found that a defendant could be liable for violating the False Claims Act under a theory of implied false certification. This holding supports the proposition that when a defendant submits a claim for payment, but fails to disclose its non-compliance with a law, rule, or regulation, that defendant can be found liable under the False Claims Act, if the failure to disclose is misleading and material. The Court found that the government’s decision whether or not to make a requirement a condition of payment is not a prerequisite to liability. If it was, the Court reasoned, the government could simply make all rules and regulation a condition of payment. Instead the Court in a well-reasoned opinion, focused on materiality, and in doing so rejected the Seventh Circuit’s holding in United States v. Sanford-Brown, Ltd.

The Supreme Court first held that the implied false certification theory can create liability when a defendant makes misleading omissions, such as its violation of a regulation, if that omission relates to the goods or services provided. The court went on to explain that under common-law fraud, half-truths, not providing an important fact, is a misrepresentation, and a defendant must prevent his words from being misleading. However, the Court also held that to create liability, a defendant’s omission must be material, and a defendant must have the required knowledge or scienter. Knowledge is defined as actual knowledge, deliberate ignorance, or reckless disregard of the truth.

Materiality and fraud are closely aligned and the False Claims Act is a fraud statute. The False Claims Act itself defines materiality as “having a natural tendency to influence, or be capable of influencing.” 31 U.S.C. § 3729(b)(4). Materiality means that the omission, or misrepresentation, of compliance with a regulation must be important to the government’s decision to pay the claim. The Supreme Court gave the following examples of materiality:

“Having a natural tendency to influence, or be capable of influencing, the payment or receipt of money or property” 31 U.S.C. § 3729(b)(4).

Would a reasonable man think it important, or did the defendant know or have reason to know that the victim would think it was important.

On the other hand, the Court also stated that if the government has actual knowledge of the misrepresentation, yet still pays the claim, that is evidence that the misrepresentation is not material.

The Supreme Court vacated the case and remanded it for further proceedings consistent with its opinion.

For more information about the False Claims Act, contact the Michael C. Rosenblat.