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A Better Partnership


Mar 2016
March 11, 2016

Warner Norcross Attorneys Lead a Successful Defense Case Involving the False Claims Act

Alan Rogalski and Matthew Nelson, both partners at Warner Norcross, prevailed in a key qui tam case brought by a whistleblower under the Federal False Claims Act (FCA) in the U.S. Court of Appeals for the Fifth Circuit.
The ruling upheld the U.S. District Court’s granting of summary judgment for the medical practice in the case of United States of America, ex rel. Darilyn Johnson v. Kaner Medical Group, P.A. The whistleblower’s complaint alleged that the medical practice submitted false claims to Medicare and TRICARE in violation of the FCA by submitting claims for medical services performed by medical assistants, who misidentified the identity and billing number of the physician who supervised the services. The complaint also alleged that the medical practice violated the “reverse false claims” provision of the FCA by improperly charging and retaining beneficiary copays and alleged a claim for retaliatory discharge under the FCA. The medical practice faced potential treble damages, civil monetary penalties, costs and attorneys’ fees under the FCA in excess of $39 million.
In the U.S. District Court, Rogalski argued that the complaint should be dismissed because the whistleblower had failed to prove a violation of the FCA as the claims were neither false nor material to the Government’s decision to pay the claims. On February 12, 2015, the District Court granted judgment in favor of the medical clinic on all counts and found that the medical claims submitted by the medical practice did not violate the FCA. The Court held that even if the information identified in the claims was assumed to be false, the medical clinic’s conduct did not rise above the level or mere negligence, which is not actionable under the False Claims Act, nor was it material to the Government’s decision to pay the claims. The Court dismissed the whistleblower’s retaliatory termination claim because she failed to demonstrate that she was engaged in a “protected activity” under the FCA. The Court also dismissed the Plaintiff’s reverse false claims act count based on the absence of any evidence in support of the allegation.
On appeal, Nelson and Rogalski successfully argued for the medical practice that the plaintiff failed to prove both the allegations of fraud and retaliation. The Court affirmed the dismissal and found that the plaintiff failed to present evidence showing that the medical group submitted any bills to the government that the medical group knew were inaccurate. “The Fifth Circuit’s decision affirms that mere clerical errors in medical billing do not violate the False Claims Act,” Nelson said. “The penalties for violating the FCA are draconian, so this decision is important for medical practices, colleges, universities and anyone else who regularly submits bills to the federal government.”
As to the retaliation claim, the court held that the plaintiff failed to meet the material facts needed to trigger protection under the “whistleblower” provision of the FCA.
“We are gratified for our clients that the court affirmed that the whistleblower’s claims were without merit,” Rogalski commented. “The Court’s opinion once again demonstrates that the FCA should not be used as a general enforcement device for federal statutes, regulations and contracts. The FCA’s intended purpose is to allow the government to recover losses resulting from fraud, which clearly did not exist in this case. The plaintiff was unable to show that the concerns she raised in any way was protecting the government against fraud, which is necessary to satisfy claims of retaliation under the FCA.” 

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