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Mar 7, 1999

I. Kickbacks And False Certifications

A growing number of Qui Tam cases are based on violations of kickback statutes aimed at health care referrals. Some Qui Tam prosecutions are based on violations of the Medicare and Medicaid Anti-kickback statute ("MMA"), 42 U.S.C. 1320a-7b(b). These cases are premised on the theory that violations of the MMA taint claims submitted under Medicare and Medicaid reimbursement statutes, and thereby violate the FCA. Courts in the past have held that payment or receipt of remuneration of any kind will violate the MMA if any purpose for the payment is inducement or compensation for referrals for program-reimbursable items or services.

Case law under the FCA provides support for the theory that kickbacks taint subsequent claims for payment submitted to the government. In a non-health care context, the government has successfully argued that claims tainted by rigged bids are "false claims" on a theory akin to fraudulent inducement using a presumptively higher, noncompetitive price. Not all "tainted" claims are held to be false claims, however, because the significance of illegal conduct turns on the representations made in connection with the submission of the claim. Using this "tainted claim" theory, qui tam relators have successfully used the FCA as a remedy for MMA violations, without regard to the fact that services were rendered as billed or for the necessity or quality of the services rendered. See, e.g., United States ex rel. Roy v. Anthony, 1994 U.S. Dist. LEXIS 9768 (S.D. Ohio 1994).

In United States ex rel. Pogue v. American Healthcorp, Inc., 914 F. Supp. 1507 (M.D. Tenn. January 5, 1996), for example, a former employee of the defendant alleged that the defendant violated the MMA by paying physicians for referrals and that claims for services rendered as a result of those referrals were false because they asserted an "implied certification" of compliance "with all statutes, rules, and regulations governing the Medicare Act, including the [MMA] and self-referral Statutes." Reconsidering an earlier order dismissing the case, the court observed: "a recent trend of cases appear to support Pogue's proposition that a violation of [the MMA] and self-referral laws also constitutes a violation of the [FCA]." Noting that the government need not prove actual loss to recover penalties under the FCA, the court held: "Pogue may bring his claim under the [FCA] only if he can show that Defendants engaged in the fraudulent conduct with the purpose of inducing payment from the government [to which they would not otherwise have been entitled]."

The Pogue court thus applied a tainted claim theory, but emphasized that the relator must show that the defendant knowingly violated the underlying law or regulation and nevertheless certified compliance with the law for the purpose of inducing a payment.

II. Increased Qui Tam Exposure for Teaching Hospitals

Recent press reports indicate that a Qui Tam action filed in May 1996 against the University of California's several teaching hospitals, is premised upon allegations very similar to those which the government first prosecuted in 1995 against teaching physicians at the University of Pennsylvania. The allegations against the University of Pennsylvania also are now the subject of a nationwide audit campaign that the Department of Health and Human Services IG announced in March, 1996.

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