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Are Today’s Prescription Drug Marketing Practices Killing People?

False Claims Act | SEC Whistleblower Claim

You might think that your doctor writes you prescriptions for medications based solely on your medical condition and the proper treatment, but that may not be the case. Reports show that some physicians are receiving “kick-backs” from pharmaceutical companies for writing certain prescriptions – all in the name of marketing – and that some of these drugs are causing death.

The Subsys Conundrum

Subsys is essentially an intranasal version of the opioid pain medication known as fentanyl, and it is the protégé of a company called Insys Therapeutics. While designed for the treatment of breakthrough pain in cancer patients, more and more physicians are prescribing it for off-label use. This is incredibly concerning since the Center for Disease Control, or CDC, reported that some 175,000 people died between 1999 and 2010 due to prescription opioid abuse. Only 120,000 people died from cocaine and heroin overdoses combined during that same period – an obvious indicator of the danger of potent opioid painkillers.

One Doctor’s Story

Dr. Orlando Florete received a sum of $18,874.03 from Insys Therapeutics during the last five months of 2013. What’s more, according to Freedom of Information Act documents, Dr. Florete also received $133,770.36 from TRICARE, the main insurance plan for the US military, for writing 16 prescriptions for Subsys. Astonishingly, it is perfectly legal for pharmaceutical companies to compensate physicians for recommending and discussing their products, including during very carefully worded seminars.

The Growth of Insys Therapeutics

Insys grew from $15.5 million in sales to over $222 million in just two years, raising many eyebrows. Speculation about Subsys is resounding, and while the company claims their organic growth is aided by growing numbers of physicians who increasingly prefer Subsys, despite the fact that the providers of pharmacy benefits refuse to cover the drug in all but a select few cases. Subsys sales are indeed growing – but not in a way that is beneficial to the patient. Instead, the product is increasingly lethal, especially in patients who take it for off-label conditions like headaches. The insert that comes inside the package clearly contraindicates the use of the drug for headaches or in patients who have very little opioid tolerance, yet physicians still prescribe it, and people are dying.

The Role of Insys

What is even more startling is the fact that Insys seems to use sex appeal to convince doctors to prescribe Subsys to patients who are not the right candidates. Insys purposely hires attractive females to sell their medications, and these women have no experience whatsoever in the pharmaceutical industry. In fact, some come from adult entertainment backgrounds. These women learn to explain the products, to listen, and to spend time with physicians, ultimately imploring them to prescribe more of the medication. It seems that the ploy works, and this explains the phenomenal jump in Insys’ sales during that two-year period.

No matter which way you look at it, there are people in the US taking Subsys who absolutely do not need it, and for some of these people, the drug could prove fatal. However, with a unique sales force, a program in which physicians speak at seminars about the drug to convince their fellow doctors of its efficacy, and a stream of cash ready to be doled out to prescription writers, it seems that the only way the trend will stop is with legal intervention.





Tennessee Hospital Medicaid Fraud

A recent judgement against Jackson-Madison County General Hospital in Jackson, Tennessee means that the hospital will pay $1,328,465 to make up for improperly billing Medicaid and Medicare for the placement of unnecessary cardiac devices. The whistleblower in the case, Dr. Wood D. Deming, received a share of the settlement.

The Hospital’s False Claims

From January 2004 to December 2011, Jackson-Madison County General Hospital performed dozens of unnecessary cardiac procedures on patients for the sole purpose of collecting payments from Medicaid and Medicare. Federal law only allows hospitals reimbursement for medically necessary procedures. According to Edward L. Stanton III, the United States Attorney for the Western District of Tennessee, “Billing Medicare for cardiac procedures that are not necessary or inappropriate contributes to the soaring costs of health care and harms patients.”

Blowing the Whistle

Dr. Wood D. Deming raised the allegations under the qui tam (whistleblower) provisions of the False claims Act, which allows private citizens with knowledge of fraud to act on behalf of the government and share in the recovery. As such, Dr. Deming is entitled to his share of the settlement amount, which topped out at well over one million dollars. However, at this time, the claims are only allegations and liability has not yet been determined.

Improper Placement of Stents and Cardiac Procedures

The hospital’s allegations include improperly and unnecessarily placing stents, performing angioplasties and catheterizations, and using expensive ultrasound imaging when no medical need existed. This not only helped the hospital rack up costs that Medicaid and Medicare would later reimbursed, but it also put dozens of patients in danger. Unnecessary medical procedures carry risks of infection and bleeding, so the hospital exposed these patients to a host of unnecessary risks all in the name of corporate greed, according to Dr. Deming’s claim.

Understanding Cardiac Stents

A cardiac stent is a mesh tube surgically placed inside of the coronary arteries to keep them open. Often, in coronary artery disease, a coating of plaque lines the arterial walls, which presents a great risk for heart attacks and other complications. Not all patients with coronary artery disease require stents, however, but the Jackson-Madison County General Hospital placed them in patients when no medical need existed. Often, these procedures were followed or preceded by angioplasty (balloons placed inside the arteries), catheterization, and various types of imaging. This is a very invasive procedure, and one that many patients at the hospital just did not need, according to the whistleblower.

Patients already experience a great deal of anxiety and distress when dealing with heart problems like coronary artery disease. They should not have to worry about the competency of their doctors and health professionals. Thanks to whistleblowers like Dr. Deming, cardic patients at Jackson-Madison County General Hospital can breathe a sigh of relief.

*Bothwell Law Group did not represent any parties in this case.

If you have a whistleblower case, contact us right away for a free consultation.

Georgia Hospital Pays $20 Million Settlement

Qui Tam Atlanta GA Bothwell Law Group

Inpatient vs. Outpatient: Another Medical Center in Hot Water with Medicare

Medicare is a federally sponsored program designed to help Americans pay for healthcare costs. Although the government strives to provide the best and most affordable care possible, fraudulent billing by healthcare providers drives up costs for covered patients. The Medical Center of Central Georgia overbilled Medicare for services for several years, and the federal government wants its money back.

The Government’s Case

According to the US Department of Justice, the Medical Center of Central Georgia violated the False Claims Act when it overbilled Medicare between January 2004 and August 2008. They claim that the hospital billed Medicare for expensive short-stay inpatient services instead of less costly outpatient services between those years. Inpatient services apply to patients admitted to the hospital for longer than 24 hours due to an illness or injury; outpatient services apply to patients who stay in the hospital for very short periods or who come to the hospital for a simple outpatient procedure. The hospital billed Medicare for inpatient services when the services provided did not meet the criteria.

The Hospital’s Compliance Program

A representative from the Medical Center of Central Georgia said that the hospital takes compliance with the False Claims Act very seriously. The current program consists of a 100% pre-bill review of all inpatient orders as well as a team of physician advisers. According to the hospital, determining whether services rendered are inpatient or outpatient services is difficult, and many hospitals have settled similar claims with Medicare in past years. The attending physician who is on duty at the hospital ultimately decides whether to admit patients. As it turns out, these decisions – as well as the proper billing for them – are incredibly complex.

The Verdict

To avoid complicated and expensive litigation, the Medical Center of Central Georgia settled with the government to the tune of $20 million, a huge sum of money that will go back into the program to help patients. The hospital also agreed to provide employees with additional training in billing compliance for the next five years as part of a corporate integrity agreement. What’s more, the hospital will staff an unbiased, independent third party to review all of its claims for services rendered to federal healthcare program recipients.

The False Claims Act took effect in January 2009 and has since helped the federal government recover a sum exceeding $24 billion. More than half of that comes from cases involving fraud. The federal government is not the only entity relying on the integrity of healthcare providers; the patients must trust their doctors and other team members to bill services properly to avoid the rising costs of healthcare in this country.

If you know of a case of health care fraud, contact an experienced Health Care Fraud attorney at Bothwell Law Group today!

Exposed: A Real Example of Insurance Fraud in Massachusetts

False Claims Act | SEC Whistleblower Claim

With the costs of health insurance increasingly on the rise despite federal regulations designed to provide affordable healthcare to everyone, companies like Life Focus Center are spending precious taxpayer dollars without the taxpayer’s knowledge. Falsely billing an insurance company, including state-funded Medicaid programs, is a crime – and it carries significant repercussions.

What Is Life Focus Center?
Life Focus Center was a Charlestown non-profit provider of day rehabilitation services to individuals with developmental disabilities, and its goal involved helping these individuals reach their optimal levels of capabilities on the physical, social, cognitive, and even occupational levels. A licensed registered nurse, an occupational therapist, a physical therapist, and a speech and language therapist provided care. According to Life Focus Center, they billed their sessions in 15-minute increments.

Why Was the Billing Fraudulent?
The state of Massachusetts’ Medicaid program, known as MassHealth, forbids day habilitation providers from billing for cancelled or missed sessions, and it also requires healthcare service providers to report the actual amount of time each person in the healthcare team actually spent with the patient. As it turns out, Life Focus Center fraudulently billed more hours of service than provided between 2008 and 2011, a clear violation of the Massachusetts False Claims Act. During this time, the rehabilitation center was involved in a scheme in which it wrongly billed MassHealth for services that it never rendered to a member who either did not attend or attended only very rarely.

The Final Verdict
The investigation of Life Focus Center began with a referral to the Massachusetts Attorney General following a review of the center’s records. Assistant Attorney General Angela Neal and Gregory Matthews from the Attorney General’s Medicaid Fraud Division investigated along with the help of MassHealth and the state auditor. The center closed its doors in 2012, but Bay Cove Human Services subsequently took over and resumed operation. Life Focus Center is no longer a MassHealth provider, and in a settlement between the company and the state, they paid more than $94,000.

Whether the fraud was intentional or the result of poor bookkeeping, it cost the state nearly $100,000 that could have been put to use elsewhere. Fortunately, a review of the billing and a subsequent investigation put a stop to the fraudulent claims, saving the state of Massachusetts and its resident taxpayers tens of thousands of dollars.

If you know of Insurance Fraud in Georgia, contact Bothwell Law Group today for a free consultation.

Irwin County Hospital to Pay $520,000 in Settlement

Our law firm was an integral part in successfully achieving a $520,000 settlement in a false claims act suit against the Hospital Authority of Irwin County and 9 doctors.

Just a few of the claims against the hospital and the doctors included:

“Each claim submitted to Medicare and Medicaid where no doctor was present for the examination, diagnosis, and/or treatment is false.”

“The Doctors have conspired with ICH to implement this practice of having one of the Doctors act as the on-call doctor while no doctors are present at ICH.”

“ICH creates false records that indicate that the physician with the standing order being applied was the admitting and ordering physician.”

“Relators were aware that this scheme has been perpetrated at ICH since before they were employed by ICH.”

“No matter what symptoms the patient might be exhibiting, ICH performs an OB ultrasound on every pregnant patient, without consulting him or obtaining his or any other doctor’s medical opinion for that particular patient.”

The lawsuit, filed on July 8, 2013 on behalf of Connie Brogdon and Summer Holland, X‐Ray technicians, formerly and currently employed by Irwin County Hospital, respectively, is pursuant to the qui tam provisions of the False Claims Act, 31 U.S.C. § 3729, et seq., and the Georgia False Medicaid Claims Act, O.C.G.A. § 49‐4‐168.1, et seq.   The lawsuit resolves claims that the Defendants knowingly submitted or caused to be submitted numerous false or fraudulent claims for payment or approval to the Medicare Program and the Georgia Medicaid Program (1) arising from referrals by Dr. Amin while ICH was providing remuneration to Dr. Amin under management services agreements dated July 31, 1996 and November 2010, neither of which was consistent with fair market value; (2) arising from referrals from Defendant Doctors and treatment provided by Defendant Doctors while Defendant ICH had entered into leases with said Defendant Doctors that were not memorialized in writing, all in violation of the Stark Law, the Anti‐Kickback Statute, and related state regulations and policies; and (3) for diagnostic imaging services that lacked the required level of supervision.

Federal and State False Claims Acts allow private citizens with insider knowledge of fraud, waste, and abuse to bring an action on behalf of the governments and to participate in the recovery of the stolen funds.

These statutes allow governments to recover three times the amount they were defrauded, in addition to civil penalties of $5,500 to $11,000 per false claim. Successful whistleblowers can receive between 15 and 30 percent of the governments’ recovery.

The Relators were represented by nationally‐recognized whistleblower attorneys, Mike Bothwell of the Bothwell Law Group and Brandon Hornsby of the Hornsby Law Group. The settlement was achieved through the coordinated efforts of a team of state and federal investigators and attorneys from Attorney General Sam Olen’s Medicaid Fraud Control Unit, the Civil Division of the United States Department of Justice, the United States Attorney for the Middle District of Georgia, and the Office of Investigations for the U.S. Department of Health and Human Services’ Office of Inspector General.   Remarking on the significance of this settlement, whistleblower attorney Mike Bothwell stated that, “The state and federal government worked well with the private whistleblowers to resolve serious health care and billing issues for rural Georgia residents. This public/private partnership brought needed oversight on rural care issues in Irwin County that will continue for years to come.”

The case is United States and State of Georgia ex rel. Brogdon and Holland v. Hospital Authority of Irwin County et al., Civil Action No. 7:13‐cv‐00097(HL) (M.D. Ga.).

For more information about FCA settlements and FCA experience contact us today.

Drug Company Cephalon Suffers Hefty Blows

Federal conspiracy claims and a Federal Trade Commission disgorgement action are a current problem for drugmaker Cephalon.

In April 2015, Cephalon failed to swat down a Federal Trade Commission disgorgement action and federal conspiracy claims. Although the story isn’t new news, the cases dating back to 2008 are still ongoing and new decisions were recently reached.

The FTC took issue with so-called “reverse-payment” settlements Cephalon struck with competing drug makers. Cephalon paid millions trying to stop the competing drug makers from introducing generic versions of their narcolepsy drug Povigil until the year 2012.

Even though U.S. District Judge Mitchell Goldberg found one Cephalon patent invalid in a related 2011 trial, the judge stayed the FTC action pending the U.S. Supreme Court’s guidance regarding reverse-payment settlement claims.

Cephalon is claiming the court should dismiss the FTC’s action since the generic of Provigil, modafinil, entered the market in 2012. Cephalon says injunctive relief is now moot and damages would be inappropriate. They also argue that consumers could obtain duplicative relief in private-plaintiff actions. To this, Goldberg responded “There is no way to predict the outcome of the private plaintiff’s antitrust lawsuits.”

U.S. District Judge Mitchell Goldberg kept the case going last year, saying Cephalon cannot stop the FTC from seeking disgorgement. He also stated “Moreover, the FTC explains that any award obtained pursuant to its proposed disgorgement remedy would be placed in a Consumer Relief Fund and would be used to satisfy any claims in the private plaintiff cases.”

Cephalon’s former employees accuse Cephalon of defrauding the U.S. government by submitting false claims for reimbursement for prescriptions of Provigil and its successor since 2007, Nuvigil, based on illegal off-label promotion. U.S. District Judge Thomas Goldstein is presiding over this False Claims Act complaint against Cephalon.

In 2008, Cephalon pleaded guilty to the misbranding through off-label promotion of Provigil, Actiq and Gabitril.

In April, 2015, Judge Goldstein tossed a few of the claims against Cephalon. However, he allowed many of the big-ticket allegations to advance. Goldstein also advanced the FCA conspiracy claims and claims under the New York False Claims Act based on conduct occurring before April 1, 2007.

Taylor Bean & Whitaker Mortgage Settlement

TBW building

Bothwell Law Group announces the conclusion of its clients’ seven-year long civil False Claims Act case against mortgage giants Taylor Bean & Whitaker Mortgage Corporation (TBW) and Home America Mortgage, Inc.

TBW Agrees To Pay More Than $320 Million For Fraud Allegations

Bothwell Law Group announces the conclusion of its clients’ seven-year long civil False Claims Act case against mortgage giants Taylor Bean & Whitaker Mortgage Corporation (TBW) and Home America Mortgage, Inc. The qui tam complaint was jointly filed in December 2006 by Stephanie Kennedy, former Vice President of Operations, and Comfort Friddle, former Home America loan processor. Defendants will pay more than $320 million to resolve allegations that they falsified loan applications, created false documentation, and misrepresented qualifications of applicants in order to secure federally-funded insurance for home loans that ultimately defaulted.

According to Relators, Greg Hicks, principal at Home America, and his hand-selected group of loan officers and processors tricked the Government into insuring bad loans by hiding or falsifying data about borrowers’ eligibility for various loan programs and their ability to repay. The loans were then sold to TBW, freeing up Home America to repeat the scam. When the loans inevitably defaulted, the Government insurance had to pay. In this fashion, defendants pawned off hundreds of millions of dollars in bad loans onto the federal government.

Farkas (TBW) In Prison, Case Continues Against Hicks (Home America)

Relators observed these practices firsthand, routinely witnessing falsification of credit scores, assets, income, and employment. When they tried to stop the fraud internally, Hicks fired them both. But the pair persevered. “When companies like TBW and Home America commit fraud, everyone suffers,” stated whistleblower Comfort Friddle. “It’s tempting to bury your head in the sand and pretend that you don’t see what’s happening, but if you don’t speak up, everyone is harmed. The effects of this kind of fraud will be felt throughout our economy for years to come.” From filing in 2006, Relators worked tirelessly to assist various Government agencies with related investigations. In 2010, Taylor Bean owner Lee Farkas was convicted of mortgage fraud and is presently serving a 38-month sentence. Relators continue their case against Home America president Greg Hicks.

Kennedy and Friddle were represented by nationally-recognized whistleblower attorneys, Mike Bothwell, Julie Bracker, and Jason Marcus of Bothwell Law Group welcomed today’s announcement, which marks the end of seven years of litigation. “I’m sure there are other people out there right now who are debating whether they should come forward,” Friddle said, “who feel led to do the right thing but are afraid. Those people should know they don’t have to be alone. Good lawyers will guide you every step of the way, explain what’s happening and how it affects the case, and make sure that the Government takes your claims seriously.”

Remarking on the significance of this settlement, whistleblower attorney Julie Bracker stated that, “When we filed this case in 2006, the mortgage crisis was barely a speck on the horizon, and FCA cases against mortgage companies were virtually unheard of. But were engaging in one of the most blatant examples of fraud we had ever seen, and we knew it had to be reported. Fortunately for the taxpayers, the False Claims Act is a flexible tool. We are delighted with the results, and honored to have represented these outstanding whistleblowers.”

False Claims Act Pays Percentage To Successful Whistleblowers

Federal and State False Claims Acts allow private citizens with insider knowledge of fraud, waste, and abuse to bring an action on behalf of the governments and to participate in the recovery of the stolen funds. These statutes allow governments to recover three times the amount they were defrauded, in addition to civil penalties of $5,500 to $11,000 per false claim. Successful whistleblowers can receive between 15 and 30 percent of the governments’ recovery. The amount to be paid in this case has yet to be determined.

The settlement was achieved through the coordinated efforts of a team of attorneys from the U.S. Department of Justice, the U.S. Attorney’s Office for the Northern District of Georgia, and HUD. The team was led by Sam Buffone from the Department of Justice, Joel Foreman of HUD, and at the USAO by Assistant U.S. Attorneys Dan Caldwell (retired) and Paris Wynn.

The case is United States ex rel. Friddle and Kennedy v. Taylor Bean & Whitaker Mortgage Corporation et al., Civil Action No. 06-cv-3023-JEC (N.D. Ga.).

Read the Full Press Release HERE.

More Rule 9(b) confusion at the Sixth Circuit

U.S. ex rel. SNAPP, Inc. v. Ford Motor Company, 532 F.3d 496 (6th Cir. 2008)

Once again, the stubborn judicial insistence on the magical “claim” to satisfy the requirements of Rule 9(b) has felled another detailed complaint.  In this instance, despite a detailed exposé of a fraud by one of the participants, the relator’s inability to produce a claim led to dismissal under Rule 9(b).  The Sixth Circuit then remanded for further consideration under its ruling in

United States ex rel. Bledsoe v. Cmty. Health Sys., Inc., 501 F.3d 493, 502 (6th Cir. 2007) (“Bledsoe II”) as to whether an amended complaint should be permitted under Rule 59.

Relator SNAPP, Inc. (“SNAPP”) brought a qui tam action under the False Claims Act alleging that Defendant Ford Motor Company (“Ford”) fraudulently induced the federal government to contract with Ford by inflating, in official reports to the government, the extent of Ford’s dealings with small and minority-owned businesses.  If true, SNAPP’s allegations show that it was an insider to Ford’s fraud.  The scheme called for Ford to subcontract with large, majority-owned businesses but then launder its payments to that large, majority-owned business through SNAPP, allegedly a small, minority owned business.  Under this scheme, SNAPP received payments only for the purpose of passing them through, while Ford reported these transactions to the government as a subcontract with a small, minority-owned business.

Moreover, SNAPP contends that it did not actually qualify as a small, minority-owned business during the operative timeframe.  The suit alleged that from 1991 until 1999, although SNAPP was nominally owned and managed by a person of color, SNAPP maintains that this nominal control was a sham.  According to SNAPP, it was controlled entirely by Ford during this eight-year period. Ford nominated the majority of Relator’s board members, its organization charts included Relator and its employees, and Ford had full control over its dealings with Relator. Moreover, SNAPP alleges that from 1995 until 1999, Relator had too many employees to qualify as a small business.

The Southern District of Ohio dismissed SNAPP’s complaint for failure to comply with Fed. R. Civ. P. 9(b), and the Sixth Circuit affirmed in the instant opinion.  The Sixth Circuit remanded, however, to enable the district court to consider the Sixth’s decision in Bledsoe II before denying Relator’s motion to file an amended complaint.

In reiterating the pleading standard of Rule 9(b) with respect to FCA actions, the Sixth Circuit repeated its maxim from Bledsoe II that a relator must provide sufficient details regarding the time, place and content of alleged false statements, claim for payment from the federal government, and the manner in which the false statements induced the government to make a claimed payment to allow defendant to adequately prepare a responsive pleading.  Pleading with particularity as to the other elements of the cause of action is not required.  Although it found sufficient particularity as to the time, place and content of alleged false statements and as to the inducement to the government, SNAPP’s claims failed because it was unable to provide a “representative” claim for payment made by Ford.

The Sixth Circuit did vacate and remand denial of SNAPP’s motion to file an amended complaint that apparently included “numerous claims for payment Ford submitted to the federal government,” which the district court had denied, ruling amendment would be futile because Relator “has simply been unable to frame its allegations within the confines of the FCA.”  The Court instructed that in reconsidering Relator’s motion in light of Bledsoe II, the “governing principle” guiding the district court’s consideration should be “whether vacating its order dismissing Relator’s complaint, and allowing the amended complaint, is required in order to prevent an injustice; and where an injustice will otherwise result, the trial judge has the duty as well as the power to order a new trial.” (citing Davis by Davis v. Jellico Community Hospital, Inc., 912 F.2d 129, 133 (1990)).

Attorney General Does Not Limit Court Dismissal

Breaking with the trend of Appellate Courts that just say no to pro se relators, the Tenth Circuit ruled on the merits of a pro se qui tam appeal.  In Brown v. Sherrod, 2008 U.S. Lexis 17438 (10th Cir. July 7, 2008), the unanimous Court rejected the pro se plaintiff’s appeal that the lower court did not have the power to dismiss his frivolous claims without the consent of the Attorney General of the United States.  The Court found the language of 31 U.S.C. sec. 3730(d) only applies to a voluntary dismissal.

No Insurance for FCA Violators

The 10th Circuit was faced with a clear cut question recently–whether general liability policies trigger a duty to defend FCA claims.  In Zurich American Ins. Co. v. O’Hara Regional Center for Rehabilitation, 529 F.3d 916, 918 (10th Cir. 2008), the Court unequivocally held “that the applicable insurance policies do not cover these types of claims.”

While the government purusued an FCA claim in federal court, three insurance companies filed declaratory judgment suits concerning the above question.  The district court granted summary judgment that the professional services portion of the insurance contracts do not cover FCA claims.  O’hara claimed that it negligently failed to provide professionally adequate nursing or medical services or, alternately, tht the billing practices were professional services.  The Court distinguished the inadequate staffing issue from the misleading of the government in billing documents that it was providing adequate staffing.  As to the alternate claim, the Court found “[a]lthough processing Medicare and Medicaid claims may be difficult and time consuming, the activity does not characterize a ‘professional service.’”

Supreme Court Rules on Allisoin Engine Case

On June 9, 2008, the Supreme Court Ruled in the case of Allison Engine Co., Inc. v. U.S. ex rel. Sanders, 76 U.S.L.W. 4387, 2008 U.S. Lexis 4704 (June 9, 2008).  The Court was completely correct on the real issue at hand–“The inclusion of an express presentment requirement in subsection (a)(1), combined with the absence of anything similar in subsection (a)(2), suggests that Congress did not intend to include a presentment requirement in subsection (a)(2).”

Id. slip op. at 16.  However, the Court veered far of course on its focus in the unanimous opinion with the weaknesses highlighted in the footnotes.

Footnote 1 concerns the Court’s insistence in protecting private entities in light of its ruling that no presentment to the government is required under (a)(2), which goes so far afield that it is irreconcilable with the clear language in section 3729(c).  Congress was clear in subsection (c) that it intended a much broader reading, but the Supreme Court has effectively read (c) out of the statute.

Footnote 2 similarly runs roughshod over subsection (b) where Congress expressly stated that no specific intent to defraud is required.  The Supreme Court has pulled out of the statute the language “to get a claim paid” and read that as requiring specific intent.  Thus, both attempts to reconcile the ruling with the plain language of the FCA fall woefully short.

In addition, the Supreme Court has grafted onto the statute requirements that Congress specifically tried to clarify were not intended to be there when it amended the FCA in 1986.  The concepts of specific intent, materiality and limits on direct payments from the government were part of the target of the amendments attempt at cleaning up overly restrictive pre-1986 court decisions.  In the legislative history of the 1986 amendments, Congress told the Courts it expected the FCA to be interpreted very broadly as directed in the case of U.S. v. Neifert-White Co., 390 U.S. 228, 232 (1968), but in Allison Engine, Congress got the anti-Neifert-White.  Hopefully, Congress will correct the more damaging and narrowing comments of the Court in the upcoming “FCA Corrections Act of 2008″.

Seventh Circuit Ignores Qui Tam Motive

In U.S. ex rel. McCandliss, 2008 U.S. App. Lexis 13165, Civil Appeal No. 07-3567 (7th Cir. June 18, 2008), the Seventh Circuit properly recognized that the qui tam relator’s motivation in bringing the lawsuit has no bearing on whether or not the defendant violated the False Claims Act.  The defendant claimed that he had previously sued the relator and said the relator brought the action for “revenge.”  The Court found ample evidence that the defendant had indeed violated the law and held that the relator’s “motivation in pursuing this case is not relevant.”