George Breen, Chair of the firm's National Health Care and Life Sciences Practice Steering Committee, was quoted in an article titled "FCA Suits Over 'Worthless Services' on the Rise." (Read the full version – subscription required.)
Following is an excerpt:
Whistleblowers are increasingly launching False Claims Act litigation accusing health care providers and defense contractors of supplying "worthless services," as opposed to nonexistent services, but courts so far appear skeptical unless the conduct is especially egregious, attorneys say.
The theory is not new, and it has long been an underlying theme in FCA cases where health care services were medically unnecessary. However, lawyers are describing a clear uptick in suits where the government paid for something that was truly needed, and got something in return, but was unhappy with the quality. …
One tactic that has at times proved successful for defense attorneys is to argue that regulators don't base reimbursement decisions on quality considerations and that creating FCA liability for poor care would essentially federalize the enforcement of medical malpractice. In the Mikes ruling, for example, the Second Circuit said that while medical necessity is a condition of payment in Medicare, adhering to professional standards of care is a mere condition of participation. …
George B. Breen of Epstein Becker & Green PC said that logic has consistently been embraced in worthless-services cases by judges wary of attempts to broaden the FCA's scope.
"I think if you look at recent decisions, courts are more sensitive about using the False Claims Act ... to enforce regulatory compliance," Breen said. …
The Momence matter is teeing up some crucial issues for the future of worthless-services litigation, including the conditions of participation argument and the extent to which FCA liability is foreclosed when federal regulators have already levied administrative penalties. Many observers say the appellate court will inject new life into the worthless-services theory if it endorses the multimillion-dollar verdict.
"I would suggest that would be a significant expansion of False Claims Act liability," Breen said.
Regardless, uncertainty is likely to surround many worthless-services cases for years to come, experts say, simply because it's difficult to draw up a hard-and-fast rule that would determine when a service crosses the line from seriously deficient to devoid of value.
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