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Community, the nation’s largest for-profit hospital system, obtained about 30 percent of its revenue from Medicare reimbursement. Instead of using one of the systems commonly in use for determining whether Medicare patients need in-patient care, Community used its own system, Blue Book, which directed doctors to provide inpatient services for many conditions that other hospitals would treat as outpatient cases. Community paid higher bonuses to doctors who admitted more inpatients and fired doctors who did not meet quotas. Community’s internal audits found that its hospitals were improperly classifying many patients; its Medicare consultant told management that the Blue Book put the company at risk of a fraud suit. Community attempted a hostile takeover of a competitor, Tenet. Tenet publicly disclosed to the SEC, expert analyses and other information suggesting that Community’s profits depended largely on Medicare fraud. Community issued press releases, denying Tenet’s allegations, but ultimately corroborated many of Tenet’s claims. Community’s shareholders sued Community and its CFO and CEO, alleging that the disclosure caused a decline in stock prices. The district court rejected the claim. The Sixth Circuit reversed. The Tenet complaint at least plausibly presents an exception to the general rule that a disclosure in the form of a complaint would be regarded, by the market, as comprising mere allegations rather than truth. The plaintiffs plausibly alleged that the value of Community’s shares fell because of revelations about practices that Community had previously concealed. View "Norfolk County Retirement System v. Community Health Systems, Inc." on Justia Law

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The government-action bar, 31 U.S.C. 3730(e)(3), applies even when the Government is no longer an active participant in an ongoing qui tam lawsuit. The existence of multiple claims—some of which the Government settles—has no bearing on the Government's relationship to the entire action. The Ninth Circuit affirmed the dismissal of a qui tam action brought under the False Claims Act (FCA), 31 U.S.C. 3729 et seq., alleging that a medical device supplier, Biotronik, engaged in a series of wrongful acts. The panel held that the Government remained a party to suits that have been settled, and the Government could not be said "partially" to have intervened in a prior qui tam suit. Therefore, relator was barred by section 3730(e)(3). View "United States ex rel. Bennett v. Biotronik, Inc." on Justia Law

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In a case arising out of the “Great Dissolution” of redevelopment agencies (RDAs) in California the City of Grass Valley (City) appealed a judgment denying in part its petition for writ of mandate. The City, which was also the successor agency for its former RDA, sought to compel the Department of Finance (Department) to recognize the enforceability of certain agreements involving that RDA. The Department cross-appealed a part of the judgment commanding it to consider whether certain expenditures fell under a “goods and services” provision, claiming the City’s failure to raise this issue in an administrative forum precludes the relief granted by the trial court. The Court of Appeal agreed with the Department on that point and reversed with directions to recall the writ granting the City partial relief. However, based on the retrospective application of postjudgment legislation, the Court directed the trial court to issue a new writ commanding the Department to consider the City’s claim regarding a highway project agreement. The Court otherwise affirmed the judgment. View "City of Grass Valley v. Cohen" on Justia Law

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To be valid, a Development Rights and Responsibilities Agreement (DRRA) is not required to confer an enhanced public benefit on a county. After a DRRA was approved and recorded, Cleanwater Linganore, Inc. and other individuals and entities (collectively, Cleanwater) filed a petition for judicial review, challenging the validity of the DRRA, arguing that the DRRA was void for lack of consideration because Petitioners had failed to prove any “enhanced public benefits” as consideration. The circuit court affirmed the Frederick County Board of County Commissioner’s approval of the DRRA. The court of special appeals reversed, concluding that the DRRA was void for lack of consideration because it lacked any enhanced public benefits to Frederick County. The Court of Appeals reversed, holding that the DRRA was not required to confer any enhanced public benefit to the County and was supported by sufficient consideration. View "Lillian C. Blentlinger, LLC v. Cleanwater Linganore, Inc." on Justia Law

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Caremark is a pharmacy benefit manager. In 2006, Caremark employees identified approximately 4,500 Prescription Drug Events (PPDEs) under Medicare Part D that had been authorized for payment by Caremark, but not yet submitted to the Centers for Medicare and Medicaid Services (CMS), due to the lack of a compatible Prescriber ID. Caremark then used a dummy Prescriber ID for those PDEs and programmed that dummy Prescriber ID into its system. Thereafter, when any claim with a missing or incorrectly formatted Prescriber ID was processed, the system would default to the dummy, which allowed Caremark to submit for payment PDEs without trigging CMS error codes. Spay, a pharmacy auditor, discovered the use of “dummy” Prescriber IDs while auditing a Caremark client. That client dropped all issues identified in the audit, collected no recovery from Caremark, and did not pay Spay. Spay filed a qui tam lawsuit, asserting violations of the False Claims Act because the inaccurate PDEs were used to support reimbursement requests. The government declined to intervene. The court granted Caremark summary judgment, finding that Caremark had established sufficient government knowledge to preclude finding the required element of scienter, noting that several courts have adopted the government knowledge inference doctrine. The Third Circuit affirmed, declining to adopt that doctrine but stating that the misrepresentations were not material to the government’s decision to pay the underlying claims. View "Spay v. CVS Caremark Corp" on Justia Law

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TRICARE provides current and former members of the military and their dependents' medical and dental care. Hospitals that provide TRICARE services are reimbursed under Department of Defense (DoD) guidelines. TRICARE previously did not require, DoD to use Medicare reimbursement rules. A 2001 amendment, 10 U.S.C. 1079(j)(2), required TRICARE to use those rules to the extent practicable. DoD regulations noted the complexities of the transition process and the lack of comparable cost report data and stated “it is not practicable” to “adopt Medicare OPPS for hospital outpatient services at this time.” A study, conducted after hospitals complained, determined that DoD underpaid for outpatient radiology but correctly reimbursed other outpatient services. TRICARE created a process for review of radiology payments. Each plaintiff-hospital requested a discretionary payment, which required them to release “all claims . . . known or unknown” related to TRICARE payments. Several refused to sign the release and did not receive any payments. Although it discovered calculation errors with respect to hospitals represented by counsel, TRICARE did not recalculate payments for any hospitals that did not contest their discretionary payment offer. The Claims Court dismissed the hospitals’ suit. The Federal Circuit reversed in part, finding that they may bring a claim for breach of contract but may not bring money-mandating claims under 10 U.S.C. 1079(j)(2) and 32 C.F.R. 199.7(h)(2) because the government’s interpretation of the statute was reasonable. View "Ingham Regional Medical Center v. United States" on Justia Law

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E. Kendrick Smith, an Atlanta lawyer, brought this action to compel a corporation, Northside Hospital, Inc. and its parent company, Northside Health Services, Inc., (collectively, “Northside”), to provide him with access to certain documents in response to his request under the Georgia Open Records Act (“the Act”). A government agency owns and operates a large and complex hospital as part of its mission to provide healthcare throughout Fulton County. The agency leased its assets (including the hospital) to the Northside for a 40-year term at a relatively minimal rent. All governmental powers were delegated to Northside with respect to running the hospital and other assets. Northside’s organizing documents reflected that its purpose aligned with the agency’s: to provide healthcare for the benefit of the public. Thirty years into the arrangement, the corporation became “massive,” and owned other assets in surrounding counties. In resisting Smith’s request for records, Northside argued it no didn’t really do anything on behalf of the agency (in part because the now nearly-nonexistent agency has no idea what the corporation is doing), and thus the corporation’s records of a series of healthcare-related acquisitions weren’t subject to public inspection. The Georgia Supreme Court surmised that if the corporation’s aggressive position were wholly correct, it would cast serious doubt on the legality of the whole arrangement between Northside and the agency. Smith argued everything Northside did was for the agency’s benefit and thus all of its records were public. The Supreme Court concluded both were wrong: Northside’s operation of the hospital and other leased facilities was a service it performed on behalf of the agency, so records related to that operation were public records. But whether the acquisition-related records sought here were also public records depended on how closely related the acquisition was to the operation of the leased facilities, a factual question for the trial court to determine on remand. View "Smith v. Northside Hospital, Inc." on Justia Law

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The Supreme Court affirmed the circuit court’s denial of a motion for a new trial based on insufficient evidence filed by the South Dakota Department of Transportation (DOT), holding that the jury’s verdict was not unsupported by any valid legal theory or evidence. DOT was sued by Reede Construction, Inc., which entered into a contract with DOT to perform highway construction work in Sioux Falls. DOT refused to issue a letter of acceptance after requesting several repairs, many of which Reede failed to perform. After Reede left the job and demanded payment for the repairs it had completed, Reede sued, and DOT counterclaimed. The jury returned a verdict awarding no damages to either party. The circuit court denied DOT’s motion for a new trial. The Supreme Court affirmed, holding that sufficient evidence supported the jury’s verdict. View "Reede Construction, Inc. v. South Dakota Department of Transportation" on Justia Law

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The Supreme Court affirmed the opinion of the court of appeals remanding this matter to the circuit court for entry of an order requiring Utility Management Group, LLC (UMG) to comply with the Open Records Act, Ky. Rev. Stat. 61.870-.884. The Pike County Fiscal Court made an Open Records request to UMG, which provided management and operational services to Mountain Water District, so that the Auditor of Public Accounts could determine the actual costs of the services UMG provided. UMG declined to produce the request documents, asserting that it was a “wholly private entity.” The Attorney General found UMG subject to the Open Records Act and required production. The circuit court, however, concluded that UMG had no disclosure obligation under the Act. The court of appeals reversed. The Supreme Court affirmed, holding (1) at the time of Pike County Fiscal Court’s Open Records Act request, UMG was a public agency subject to the Act; (2) the 2012 amendment to section 61.870(1)(h) does not apply retroactively to relieve UMG of its disclosure obligation; and (3) the challenged 1994 version of section 61.870(1)(h) was and is constitutional. View "Utility Management Group, LLC v. Pike County Fiscal Court" on Justia Law

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The Supreme Court affirmed the judgment of the circuit court affirming the district court’s dismissal of this action filed by Big Sandy Regional Jail Authority against the Lexington-Fayette Urban County Government seeking reimbursement for the cost of housing prisoners held pursuant to warrants issued by Fayette County courts. The district court dismissed the case after finding that the Urban County Government was entitled to sovereign immunity. The circuit court affirmed without addressing the issue of sovereign immunity, finding, rather, that the county of arrest controls responsibility for incarceration costs. The Supreme Court affirmed, but on different grounds, holding that the Urban County Government was not responsible for the costs of incarcerating prisoners not in its possession. View "Big Sandy Regional Jail Authority v. Lexington-Fayette Urban County Government" on Justia Law