Health Law Daily Allegations of violations of integrity agreement fail first to file bar
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Thursday, February 27, 2020

Allegations of violations of integrity agreement fail first to file bar

By Jeffrey H. Brochin, J.D.

The relator was not an original source within the meaning of the FCA where he relied on prior qui tam action and press releases to support pleadings.

A federal district court in Tennessee has dismissed the False Claims Act (FCA) (31 U.S.C. §3729 et seq) action filed by a relator who substantially cited the same scheme as was the basis for a prior FCA action, even though he pleaded the scheme in the context of violations of an integrity agreement (IA). No new or unique details were presented and the violations were "substantially identical" to those already publicly disclosed (U.S. ex rel. Maur v. Hage-Korban, February 25, 2020, Anderson, T.).

Prior qui tam action. In 2007, a doctor filed a qui tamaction under the FCA against two hospitals, a physician, and other defendants alleging that they engaged in a kickback and self-referral scheme via overutilization of cardiac medical services that resulted in fraudulent claims being submitted to and paid by federal programs. The action was settled by way of a fine on the cardiologist and imposition of an IA, which was overseen by an Independent Review Organization (IRO).

The current relator alleged violations of the IA, which essentially mirrored those violations cited in the original qui tan action, and the hospitals and the cardiologist moved to dismiss.

Public disclosure bar. One of the motions to dismiss was based on the public disclosure bar doctrine, because the allegations in the instant action were substantially the same as the allegations in the previously settled FCA claim, in a Department of Justice press release, and a hospital press release. The court noted that courts use a three-step analysis to determine whether public disclosure bars a qui tamaction under the FCA. The court must determine whether there has been a public disclosure of fraud, and if so, the court must see whether the qui tamcomplaint contains allegations that are "substantially the same" as the publicly disclosed allegations. Finally, if those conditions have been met, the court must determine whether the relator is an "original source" so that the action may proceed despite the public disclosure.

When the bar applies. The public disclosure bar applies when there has been a public disclosure where enough information exists in the public domain to expose the fraudulent transaction and to put the government on notice of the likelihood of related fraudulent activity. Court filings in cases where the government or its agent is a party constitute a public disclosure. Here, the relator did not dispute that the fraudulent scheme was publicly disclosed and even acknowledged as much in his amended complaint when discussing the prior FCA action. Consequently, the court found that the fraudulent conduct alleged, was publicly disclosed in the prior qui tamaction, the Department of Justice press release, and the hospital press release.

Finding of substantial identity. The court further found that, notwithstanding the fact that the violations alleged in the instant case were alleged to have occurred in the context of IA violations, the allegations here were "substantially the same" as those publicly disclosed in the prior action. The relator argued that allegations in his amended complaint were not based upon public disclosures because they involved an entirely different time frame, different victims, and different financial transactions and reimbursements. However, the court noted that to trigger the public disclosure bar, all that is required is a "substantial identity" between the publicly disclosed allegations and the allegations in the qui tamaction at hand. Accordingly, the court found an additional basis for applying the public disclosure bar.

Relator not an original source. Finally, the court found that the relator in the instant case was not an original source of the information in his complaint. The FCA defines "original source" as an individual who either (1) prior to a public disclosure has voluntarily disclosed to the government the information on which allegations or transactions in a claim are based or (2) has knowledge that is independent of and materially adds to the publicly disclosed allegations or transactions, and who has voluntarily provided the information to the government before filing an action.

The relator must have had direct and independent knowledge or the information on which the allegations were based and disclosed that information to the government before any public disclosure occurred. However, his complaint made no such claim, and the court accordingly found that he was not an original source as required by the FCA.

For the foregoing reasons, the court granted the motions to dismiss filed by the hospitals and the cardiologist.

The case is No.: 1:17-cv-01079-STA-jay.

Attorneys: Stuart J. Canale, U.S. Attorney's Office, for the United States. James Dennis Young (Morgan & Morgan Complex Litigation Group) for Gurpreet Maur, M.D. Joseph Lott Warren (Baker, Donelson, Bearman, Caldwell & Berkowitz, PC) for Elie Hage-Korban. John R. Jacobson (Riley Warnock & Jacobson, PLC) for Community Health Systems, Inc. Brian Dudley Roark (Bass Berry & Sims, PLC) for Knoxville HMA Holdings, LLC d/b/a Tennova Healthcare.

Companies: Community Health Systems, Inc.; Knoxville HMA Holdings, LLC d/b/a Tennova Healthcare

MainStory: TopStory CMSNews FCANews FraudNews QuiTamNews TennesseeNews

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