A new opinion out of the Middle District of Florida illustrates a growing judicial trend that follows on the heels of the Supreme Court’s landmark False Claims Act (FCA) decision in Universal Health Services, Inc. V. Escobar, 136 S.Ct. 1989 (2016), in which courts demand that relators demonstrate “meaningful and competent proof that the federal or the state government, if either or both had known of the disputed practices [alleged to be fraudulent,] . . . would have regarded the disputed practices as material to each government’s decision to pay the defendants and, consequently, that each government would have refused to pay the defendants.” More concretely, the court in U.S. and State of Florida ex rel. Angela Ruckh v. Salus Rehabilitation, LLC, 2018 WL 375720 (M.D.FL. 2018), placed special emphasis on whether the type of fraud allegedly tainting the claims at issue was also present in earlier claims submitted to the government that were, previously, reimbursed with regularity. To this point, the court noted that both the federal and Florida state governments “were – and are – aware of the defendants’ disputed practices, aware of this action, aware of the allegations, aware of the evidence, and aware of the judgments for the relator – but neither government has ceased to pay or even threatened to stop paying the defendants for the services provided to patients throughout Florida continuously since long before this action began 2011.” This inquiry was one of the guideposts set forth in Escobar, to be used in determining the “materiality” of alleged fraud under the FCA. Relying heavily on this basis, the court vacated the previously entered $350 million-dollar judgment against the defendants.
For FCA defendants, the case highlights the importance of carefully scrutinizing the government’s past (and present) responses to the submission of claims containing the same type of alleged fraud at issue in the ongoing litigation.
If you are currently the subject of an FCA investigation or litigation, contact Frier Levitt to speak with an attorney.
