New policy changes from DOJ will impact False Claims Act cases moving forward.
In announcing a significant policy change, the U.S. Department of Justice (DOJ) said that when it concludes that a qui tam case lacks merit, it will file a motion to dismiss the case rather than allowing the relator to continue.
The surprise announcement was made by Michael Granston, director of the commercial litigation branch of the fraud section in the DOJ’s civil division, during the Health Care Compliance Association’s Health Care Enforcement Compliance Institute in Washington, D.C. on Monday.
Under the False Claims Act, when a relator or whistleblower files a qui tam action, the government has 60 days to determine whether it either takes over the litigation or declines to intervene in the case. Under the latter circumstances, the relator must determine whether to proceed using the relator’s own resources. (Note that courts nearly always extend that 60-day limit.)
While the federal government has always had the authority to dismiss a False Claims Act case, it has rarely done so. I am aware of two such cases, one in California and the other, in which I was involved, in Minnesota. Shortly after we celebrated the dismissal of the case, we learned that the DOJ had changed its position and would allow all cases to proceed if the relator was willing to do the work, even if the DOJ didn’t find the case meritorious.
During his presentation on Monday, Granston explained that the government recognizes that frivolous litigation creates a burden, not only for the government, but also for the courts and the healthcare industry. Therefore, when the DOJ concludes that a case is baseless going forward, it will file a motion to dismiss it.
The DOJ’s decision to file for a dismissal doesn’t guarantee the result; in theory, a judge could refuse to grant the motion and allow the case to proceed. However, from a practical perspective, such a result is unlikely. While it is impossible to predict how often the DOJ will seek dismissal of a case, the fact that the option exists is welcome news to the healthcare industry. Granston also provided some insight on the DOJ’s priorities over the next year. The government will be examining a variety of issues related to electronic health record (EHR) software, including whether the software documents information correctly and whether it properly qualifies for various incentive payments.
Diagnosis coding under Medicare Part C, often called the Medicare Advantage program, is also receiving scrutiny. Granston noted that the Part C program currently constitutes approximately one-third of all Medicare beneficiaries and accounts for approximately one-quarter of all Medicare spending. The government is concerned that some plans are reporting diagnoses that are not properly supported by the record, resulting in overpayments to the plan.
The government is also very interested in pursuing cases involving the delivery of substandard care, particularly in the skilled nursing facility (SNF) setting.
Finally, according to Granston, the government will be devoting considerable resources to resolving two open questions in the courts. In the Aseracare Hospice case, the judge concluded that if there is a dispute about medical necessity and an expert testifies that the care is necessary, the government cannot prevail in a False Claims Act case. The DOJ is deeply troubled by that result and hopes to reverse it on appeal. In addition, the courts have not yet definitively determined whether statistical sampling is allowed in a False Claims Act case. The government is hoping to convince the courts that sampling is appropriate.
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