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September 16, 2019

Health Headlines – September 16, 2019


Third Circuit Rules Relators Not Guaranteed an In-Person Hearing When Government Seeks to Dismiss FCA Suit – On September 12, 2019, the United States Court of Appeals for the Third Circuit ruled that courts are not required to provide a qui tam relator with an in-person hearing when the government seeks to dismiss a lawsuit under the federal False Claims Act (FCA).  The Third Circuit’s opinion in United States and Delaware ex rel. Chang v. Children’s Advocacy Center of Delaware, No. 18-2311 (3d Cir. 2019), marked “precedential” by the Court, provides further guidance on the scope of relators’ statutory right to “an opportunity for a hearing” under 31 U.S.C. § 3730(c)(2)(A).

After the United States declines to intervene in a pending qui tam FCA case, it may seek dismissal of the action “notwithstanding the objections of the person initiating the action if the person has been notified by the Government of the filing of the motion and the court has provided the person with an opportunity for a hearing on the motion.”

In Chang, which included claims under the FCA and its Delaware analog, both governments declined to intervene. Afterward, the United States and Delaware each moved to dismiss the case, reporting that they found relator’s allegations to be “factually incorrect and legally insufficient.” Relator failed to request a hearing, and the district court granted the motions without conducting an in-person hearing.

On appeal, and based on relator’s protest, the Third Circuit faced the question of whether the FCA guarantees an automatic in-person hearing for a relator before granting the government’s motion to dismiss. Various Courts of Appeal have handled the question differently.

The Ninth and Tenth Circuits have held that courts have approval authority over governmental dismissal attempts. In those Circuits, the courts will review whether the government has a valid governmental purpose and whether the dismissal has a rational relationship to that purpose before shifting the burden to the relator. Meanwhile, the D.C. Circuit has held that the United States has an “unfettered right” to dismiss a relator’s case. In Chang, the Third Circuit noted that it need not choose sides in the circuit split because relator’s arguments would fail under even the most restrictive view. The Court ruled that, where a relator fails to request a hearing, the court is not required to schedule and hold an in-person hearing on its own volition. The Third Circuit noted that, while the FCA does provide an “opportunity” for a hearing, relators must take steps to “avail themselves of the ‘opportunity.’” Because the relator did not in this instance request a hearing, the court correctly dismissed the action at the United States’ and Delaware’s request.

The full opinion in United States and Delaware ex rel. Chang v. Children’s Advocacy Center of Delaware can be found here.

Reporter, Lee Nutini, Atlanta, +1 404 572 3533, lnutini@kslaw.com.

AseraCare Case Illustrates the Importance of Internal Compliance – On September 9, 2019, the Eleventh Circuit issued a highly anticipated opinion addressing the question of when Medicare claims for reimbursement (in this case, claims for hospice care) can be considered “false” under the federal False Claims Act (FCA).  Importantly, the decision could be viewed as a victory for health care providers because it established limitations on the government’s ability to argue that a Medicare claim is false based on the allegedly flawed clinical judgment of the physician responsible for providing or certifying the necessity of the care billed to the government.  The case involves allegations that the defendants falsely certified patients as eligible for hospice care based on erroneous clinical determinations by physicians that the patients were terminally ill.  Significantly, the court held that when a physician’s clinical judgment required for billing purposes is at issue, “the claim cannot be ‘false’—and thus cannot trigger FCA liability—if the underlying clinical judgment does not reflect an objective falsehood.”

King & Spalding’s Client Alert about the AseraCare case is available here. The full opinion in United States v. AseraCare, Inc., No. 16-13004, 2019 WL 4251875 (11th Cir. Sept. 9, 2019), can be found here.

Also in the News

HHS OIG Issues Advisory Opinion on Scope of Section 1128A(a)(6) of the Social Security Act  -- On September 11, 2019, OIG posted Advisory Opinion 19-05 addressing the scope of the civil monetary penalty provision at Section 1128A(a)(6) of the Social Security Act, which prohibits contracting with excluded persons for the provision of items or services for which payment may be made under a federal health program.  The requestor proposed to purchase real property consisting of a medical clinic and the surrounding property from persons known to be excluded from participation in a federal health program.  The requestor is a community health center that receives federal grant funding from HRSA and owns and operates eight community health center sites that are all enrolled in in the Medicare program as a FQHC.  Under the proposed deal, the requestor would pay an amount based upon an independent appraisal and would not submit claims to or otherwise request payment from a federal health program for the purchase of the site, the site would not be listed or included in any claim for federal health care payment, and no federal grant funds would be used to purchase the site or to receive any financing.  According to OIG, the proposed deal was permissible because, although the site is potentially an “item” under Section 1128A(a)(6) if the requestor were to submit any claims to or otherwise request payment from a federal health care program to purchase the site, requestor certified that the purchase of the site from the excluded person would not be listed in any claim for payment or included in any reimbursement method from a federal health care program, and the excluded person would not have an ongoing relationship with the site or the requestor’s management thereof. 

King & Spalding will host 12th Annual Pharmaceutical University in Philadelphia – On November 12, 2019, King & Spalding will host more than 300 guests at its annual Pharmaceutical University at the Westin in Philadelphia.  For more than a decade, attendees of Pharma U have raved about the breadth and quality of the programming and have embraced the many opportunities to network with hundreds of attendees from the world’s most sophisticated pharmaceutical and biotechnology companies.

This year’s curriculum will include four concurrent tracks and more than 20 different interactive presentations from which to choose.  Lawyers from across the firm will deliver courses on cutting-edge issues critical to pharmaceutical and biotechnology lawyers, executives, and managers.  This year’s sessions will address regulatory, enforcement, litigation, commercial, corporate, intellectual property, international trade, and political issues, among many other cutting-edge issues.  The event will take place from 8:30 a.m. to 5:30 p.m. ET. 

Click here to register.  Registration is $99 per person until Friday, October 18.  Space is limited.  For more information about accommodations, click here.