By Rebecca Mayo, J.D.
A district court in Mississippi decided to err on the side of caution in ruling on a motion to strike affirmative defenses and a motion to unseal the entire record in a False Claims Act (FCA) (31 U.S.C. §3729 et seq.) action against multiple health care facilities. Motions to strike affirmative defenses are disfavored and courts in general and this specific court preferred to determine even pure questions of legal sufficiency only after further development of the case. The FCA provides a unique statutory scheme which requires and favors sealing, and the court decided to hold the motion in abeyance until it could conduct an in camera review of the record (Aldridge v. Cain, December 14, 2017, Wingate, H.).
A relator brought an action under the FCA against Corporate Management Inc. who managed and operated hospitals and other health care facilities in South Mississippi, along with Stone County Hospital, Stone County Nursing & Rehab, Quest Medical Services Inc., and Quest Rehab, Inc. The relator alleged that the health care facilities violated the Anti-Kickback Statute, which prohibits the solicitation or receipt of remuneration in return for referrals of Medicare patients and the offer of payment or remuneration to induce such referrals. The relator also alleged that the health care facilities violated the Stark Law, which prohibit physicians from referring Medicare patients to an entity for health services if the referring physician has a financial relationship with such entity. Further, these violations led to violations of the FCA when claims were submitted for payment.
Affirmative defenses. At a previous hearing, the court ruled on a motion from the government to grant summary judgement on the health care facilities’ affirmative defenses. At that hearing, the health care facilities agreed to withdraw eight of their affirmative defenses. The government contends that when discovery began, the health care facilities filed prejudicial discovery requests predicated on affirmative defenses that lacked any factual support. The government again moved to have the remaining 45 affirmative defenses stricken arguing that they fail on the merits. Because of the early stage of the case, the court held that the health care facilities should have an opportunity to wage affirmative defenses. The court decided that it would rather err on the side of caution and allow a questionable defense to be presented that might turn out to be a valid defense and denied the government’s motion.
Motion to unseal. One of the defenses that the health care facilities raised is that if the government’s intervention relates back to the date of the relator’s claim, the statute of limitations may have expired. The health care facilities moved to have the entire record unsealed so they could analyze the documents in the record to evaluate the allegations against them and assert all potential defenses. The court pointed out that while the FCA provides for relation back so long as the claims arise out of the same conduct set forth in the relator’s complaint, and defendants may be entitled to sufficient information to make that assessment, they are not however entitled to wholesale access to in camera filings. The court has the discretion to balance the need for disclosure against the risk of harm. In previous telephonic conference with counsel for all parties, the court set an in camera review to determine if the the records should be unsealed. The motion to unseal the case is therefore held in abeyance pending the in camera hearing.
The case is No. 1:16-cv-00369-HTW-LRA.
Attorneys: J. Brad Pigott (Pigott & Johnson, PA) for James Aldridge. David Ronald Musgrove (Musgrove Smith Law) for H. Ted Cain.
Companies: Corporate Management Inc.; Stone County Hospital; Stone County Nursing & Rehab; Quest Medical Services Inc.; Quest Rehab, Inc.
MainStory: TopStory CaseDecisions CMSNews AntikickbackNews BillingNews FCANews PaymentNews ProgramIntegrityNews StarkNews MississippiNews
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