In September 2015, DOJ issued the well-known "Yates Memo" (named for then-Deputy Attorney General Sally Yates), which focuses on individual accountability for corporate wrongdoing. In the years since issuance of the Yates Memo, DOJ has codified its policy around individual accountability for corporate wrongdoing in the US Attorney's Manual. Despite early commentary that raised questions about whether DOJ would continue to emphasize enforcement against individuals, cases over the past 15 months reflect a continued focus on individual accountability. In a recap of FCA enforcement in Fiscal Year 2017, DOJ announced that it had "continued to ensure individual accountability for corporate wrongdoing by pursuing FCA and other civil remedies to redress fraud by individuals as well as corporations."1 DOJ highlighted several settlements with individual defendants, including the following cases:
- To resolve United States ex rel. Delaney v. eClinicalWorks LLC, eClinicalWorks and three of the company's founders agreed to a combined $155 million settlement. 2 Additionally, three lower level employees (a developer and two project managers) were required to pay smaller amounts to resolve the individual claims against them ($15–50,000 each). 3
- In United States ex rel. Meehan v. Medstar Ambulance Inc., et al. the owners of Medstar Ambulance Inc. and the company agreed to a combined $12.7 million settlement. 4
The trend continued in the first quarter of 2018. In February 2018, DOJ secured a $1.24 million settlement with Horizons Hospice, LLC and its owner to resolve FCA allegations that the company fraudulently billed Medicare and Medicaid for patients ineligible for hospice care. 5 In addition to settlements, DOJ had several recent trial victories against individual defendants accused of FCA violations. In late January 2018, nearly three years after the United States intervened, the ex-CEO and two marketing consultants at Health Diagnostics Laboratory were found liable by a DSC jury for over $17 million in Medicare fraud, which is automatically trebled under the FCA to over $51 million and is subject to as yet to be determined FCA penalties of $5,500 to $11,000 per claim. Health Diagnostics Laboratory previously settled with DOJ in 2015 for $47 million, but the government chose to pursue additional claims against individual defendants. 6
At this point in 2018, the DOJ pipeline of individual liability cases that pre-dated the Trump administration is dwindling and the resolution of matters over the course of this year may be a significant indicator of the true direction FCA enforcement may take under this administration.
Practice Note: In the first quarter of 2018, DOJ continued its push to impose FCA liability on individuals. Based on cases we are seeing across the health care industry, we expect this trend to continue.
1 Press Release, US Dep't of Justice, Justice Department Recovers Over $3.7 Billion From False Claims Act Cases in Fiscal Year 2017 (Dec. 21, 2017), https://www.justice.gov/opa/pr/justice-department-recovers-over-37-billion-false-claims-act-cases-fiscal-year-2017.
2 See Press Release, US Dep't of Justice, Electronic Health Records Vendor to Pay $155 Million to Settle False Claims Act Allegations (May 31, 2017), https://www.justice.gov/opa/pr/electronic-health-records-vendor-pay-155-million-settle-false-claims-act-allegations; United States ex rel. Delaney v. eClinicalWorks LLC, 2:15-CV-00095-WKS (D. Vt.).
3 See Press Release, US Dep't of Justice, Electronic Health Records Vendor to Pay $155 Million to Settle False Claims Act Allegations (May 31, 2017), https://www.justice.gov/opa/pr/electronic-health-records-vendor-pay-155-million-settle-false-claims-act-allegations.
4 See Press Release, US Dep't of Justice, Medstar Ambulance to Pay $12.7 Million to Resolve False Claims Act Allegations Involving Medically Unnecessary Transport Services and Inflated Claims to Medicare (Jan. 13, 2017), https://www.justice.gov/opa/pr/medstar-ambulance-pay-127-million-resolve-false-claims-act-allegations-involving-medically; United States ex rel. Meehan v. Medstar Ambulance. Inc., et al., No. 13-CV-12495-IT (D. Mass.).
5 See Press Release, US Dep't of Justice, Hospice Company and Owner Agree to Pay $1.24 Million to Settle Two False Claims Act Whistleblower Lawsuits (Feb. 8, 2018), https://www.justice.gov/usao-wdpa/pr/hospice-company-and-owner-agree-pay-124-million-settle-two-false-claims-act; United States ex rel. Thomas v. Horizons Hospice LLC, No. 12-cv-315 (W.D. Pa.); United States ex rel. Mizak, et al. v. Horizons Hospice LLC, et al., No. 13-cv-1688 (W.D. Pa.).
6 US ex rel. Lutz, et al. v. Health Diagnostic Laboratory Inc., et al., 9:14-cv-00230, (D.S.C.); US ex rel. Mayes v. Berkeley HeartLab Inc., et al., 9:11-cv-01593 (D.S.C.).
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