Judge Kevin
Thomas Duffy, Southern District of New
York, in a recent decision has expressed
serious doubt that relators in qui tam
actions can assert that purported
violations of the Anti-kickback Act, 42
U.S.C. § 1320a-7 ("AKA"), also
constitute violations of the False
Claims Act, 31 U.S.C. §§ 3729 et seq ("FCA").
United States ex rel Barmak v. Sutter
Corp, No. 95 CV 7637(KTD)(RLE), 2002
U.S. Dist. LEXIS 8509 (S.D.N.Y. May 14,
2002).
The case
involved allegations that a durable
medical equipment company and its parent
company had improperly billed Medicare
for continuous passive motion exercisers
because it had waived co-payments,
employed forged certificates of medical
need, and paid kickbacks to hospitals
and doctors for patient referrals.
Subsequent to a settlement with the
government and the relator as to the
co-payment allegations, the relator
instituted a second amended complaint
seeking recovery under the same core
allegations. Defendants moved to dismiss
the complaint pursuant to Federal Rules
of Civil Procedure 12(b)(1) and
12(b)(6).
Arent Fox
represented a separate defendant in this
action; this element of the litigation
was resolved entirely through settlement
with the relator and the government.
That defendant is not a party to the
second amended complaint at issue in
this decision. "Relator appears to claim
that the kickbacks violate the FCA
because: 'A portion of the home patient
referrals were for beneficiaries of
federal health insurance programs which
paid in part for services procured as a
result of the inducement.' " Id. at
*15-*16.
Judge
Duffy, however, was not prepared to
accept this theory in qui tam cases for
several reasons, even though the Court
recognized that some other courts have
recognized such a cause of action. See
Pogue v. American Healthcorp., Inc., 914
F. Supp. 1507 (M.D. Tenn. 1996); United
States ex rel. Thompson v. Columbia/HCA
Healthcare Corp., 125 F.3d 899, 903 (5th
Cir. 1997).
The Court
pointed to several law review articles
as evidencing that this issue "remains a
hotly disputed and controversial area of
the law." Id. at *16.
While
noting that the Second Circuit had not
passed upon the issue, Judge Duffy did
point to the recent decision in Mikes v.
Straus, 274 F.3d 687, 697 (2d Cir.
2001), as being pertinent. There, the
Circuit held that a party can only be
held liable under the FCA for violation
of a statute or regulation if it has
explicitly certified its compliance with
those statutes or regulations as a
condition for payment. Nor, did the
Circuit hold, was the FCA "designed to
reach every kind of fraud practiced on
the government." Id.
The first
reason underlying Judge Duffy's
skepticism is that the AKA is a felony
statute. "There is absolutely no private
right of action provided and the statute
is to be enforced by the Department of
Justice ("DOJ") through the appropriate
United States Attorneys' Office. 28
U.S.C. § 516 (1994)." Id.
In short,
for Judge Duffy enforcing the AKA is
within the "exclusive jurisdiction" of
DOJ. Secondly, the district court
expressed doubt that relators could
establish that a violation of the AKA
was "ipso facto" a violation of the FCA.
Here no causal connection between the
purported AKA violations and the
submissions of the claims had been
pleaded. Nor was there any allegation
that defendants had certified compliance
with the AKA, and the government had
placed reliance upon that certification,
as part of the payment process.
Although
the district court granted the motion to
dismiss, it did so with a right to amend
granted to the relator. So it seems safe
to assert we have not heard the last
regarding this issue in the case.
Nonetheless, Judge Duffy's explicit
reluctance to recognize this cause of
action in a qui tam case is significant.
First, it
places a substantial burden on relators
to successfully survive motions to
dismiss premised on these and related
arguments.
Second,
Judge Duffy's concerns about the need to
plead some manner of causal connection,
and the requirement of an explicit
certification, are equally applicable to
DOJ efforts to contort the AKA into a
source of FCA violations. The views of a
respected district court judge on this
issue undoubtedly will play an important
role in this continuing debate.
