Justia Government Contracts Opinion Summaries

Dr. Korban and his medical practice Delta, practice diagnostic and interventional cardiology. In 2007, Dr. Deming filed a qui tam action under the False Claims Act (FCA), 31 U.S.C. 3729(a)(1)(A)–(C), (G) against Korban, Jackson Regional Hospital, and other Tennessee hospitals, alleging “blatant overutilization of cardiac medical services.” The United States intervened and settled the case for cardiac procedures performed in 2004-2012. Korban entered into an Integrity Agreement with the Office of Inspector General, effective 2013-2016 that was publicly available and required an Independent Review Organization. The U.S. Department of Justice issued a press release that detailed the exposed fraudulent scheme and outlined the terms of Korban’s settlement. In 2015, Jackson Regional agreed to a $510,000 settlement. The Justice Department and Jackson both issued press releases.In 2017, Dr. Maur, a cardiologist who began working for Delta in 2016, alleged that Korban was again performing “unnecessary angioplasty and stenting” and “unnecessary cardiology testing,” paid for in part by Medicare. In addition to Korban and Jackson, Maur sued Jackson’s corporate parent, Tennova, Dyersburg Medical Center, and Tennova’s corporate parent, Community Health Systems. The United States declined to intervene. The district court dismissed, citing the FCA’s public-disclosure bar, 31 U.S.C. 3730(e)(4). The Sixth Circuit affirmed. Maur’s allegations are “substantially the same” as those exposed in a prior qui tam action and Maur is not an “original source” as defined in the FCA. View "Maur v. Hage-Korban" on Justia Law

Plaintiff County of Monterey (County) appealed when the trial court denied its petition for writ of mandate and complaint for declaratory and injunctive relief. The County was the successor agency for its former redevelopment agency ("RDA"), and challenged decisions by the Department of Finance (Department) relating to a development known as the East Garrison Project, which was part of the Fort Ord Redevelopment Project located on a closed military base in Monterey. The County claimed the trial court erroneously determined that a written agreement entered into between its former RDA and a private developer (real party in interest, UCP East Garrison, LLC) was not an enforceable obligation within the meaning of the dissolution law because the former RDA did not have the authority to approve the agreement on the date the governor signed the 2011 dissolution legislation. The County further contended the trial court erred in determining the County failed to show the Department abused its discretion in disapproving two separate requests for funding related to administration of the East Garrison Project. The County claimed these administrative costs were expended to complete an enforceable obligation within the meaning of the dissolution law, and therefore the Department should have approved its requests for payment of such costs. Finally, the County argued the Department’s application of the dissolution law improperly impaired UCP’s contractual rights. The Court of Appeal rejected each of the County's contentions and affirmed judgment. View "County of Monterey v. Bosler" on Justia Law

After the Mississippi Department of Public Safety (MDPS) reinterpreted a provision in a contract between it and the Mann Agency, LLC, the MDPS refused to pay more than $700,000 in invoices submitted by the Mann Agency. The Mann Agency filed suit against the MDPS for breach of contract. The trial court dismissed each party’s breach-of-contract claim, found that the case involved a bona fide dispute, and denied the Mann Agency’s claim for interest and attorneys’ fees. The Mann Agency appealed the trial court’s decision to deny its claim for interest and attorneys’ fees, arguing that the MDPS acted in bad faith. The MDPS cross-appealed, arguing the trial court erred by dismissing as moot its breach-of-contract claim. Finding no reversible error, the Mississippi Supreme Court affirmed the trial court's decisions. View "Mann Agency, LLC v. Mississippi Department of Public Safety" on Justia Law

The False Claims Act, 31 U.S.C. 3729–3733, authorizes relators to file qui tam suits on behalf of the U.S. government. If such an action is successful, the relator receives part of the recovery. The Act prohibits presenting to a federal healthcare program a claim for payment that violates the Anti-Kickback Statute, 42 U.S.C. 1320a-7b(b), Venari formed 11 daughter companies, each for the purpose of prosecuting a separate qui tam action, alleging essentially identical violations of the False Claims Act by pharmaceutical companies. CIMZNHCA, a Venari company, filed suit alleging illegal kickbacks to physicians for prescribing Cimzia to treat Crohn’s disease in patients who received federal healthcare benefits. The government did not exercise its right “to intervene and proceed” as the plaintiff but moved to dismiss the action, representing that it had investigated the Venari claims and found them to lack merit. The court denied that motion, finding the government’s general evaluation of the Venari claims insufficient as to CIMZNHCA and that the decision to dismiss was “arbitrary and capricious.”The Seventh Circuit reversed with instructions to dismiss, construing the government’s motion as a motion to both intervene and dismiss. By treating the government as seeking to intervene, a court can apply Federal Rule of Civil Procedure 41, which provides: “The Government may dismiss the action” without the relator’s consent if the relator receives notice and opportunity to be heard. View "United States v. UCB, Inc." on Justia Law

Ginnie Mae (GM), established by 12 U.S.C. 1717(a)(2)(A) to provide stability in the secondary residential mortgage market and promote access to mortgage credit, guarantees mortgage-backed securities (MBS). FMC, a private corporation, was an originator and servicer of government-guaranteed home mortgages and an issuer of MBS in GM’s program. GM learned of FMC actions that constituted the immediate default of the Guaranty Agreements. FMC undertook an investigation and provided the results to GM, while also complying with SEC requests. GM later terminated FMC from its program. The SEC initiated a civil enforcement action, which terminated in a consent agreement, without FMC admitting or denying the allegations but paying disgorgement and penalties. The Consent Agreement provided that it did not affect FMC’s right to take positions in proceedings in which the SEC is not a party but FMC agreed to not take any action or permit any public statement denying any allegation in the SEC complaint FMC later sued, alleging that GM had breached Guaranty Agreements when it terminated FMC from its program and denied violating those Agreements.The Federal Circuit affirmed the Claims Court’s dismissal. FMC’s breach of contract claims are precluded under the doctrine of res judicata. FMC’s action is essentially a collateral attack on the judgment entered in the SEC action. The SEC and GM are in privity for the purposes of precluding FMC’s claims and “successful prosecution of the second action would nullify the initial judgment or would impair rights established in the initial action.” View "First Mortgage Corp. v. United States" on Justia Law

Saginaw County has nearly 200,000 residents. A single company, Mobile Medical, has provided the county’s ambulance services since 2009. The county guaranteed Mobile the exclusive right to operate within its borders; Mobile pledged to serve all eight of Saginaw County’s cities and incorporated villages and its 27 rural townships. In 2011, STAT, a competing ambulance company, entered the Saginaw market, providing patient-transport services for an insurer as part of a contract that covered six Michigan counties. A municipality, dissatisfied with Mobile’s response times and fees, hired STAT. When Saginaw County proposed to extend Mobilel’s contract in 2013, STAT objected, arguing that the arrangement violated state law, federal antitrust law, and the Fourteenth Amendment. The county approved Mobile's new contract and enacted an ordinance that codified the exclusivity arrangement but never enforced the ordinance. STAT continued to insist that Michigan law permitted it to offer ambulance services. Saginaw County sought a federal declaratory judgment that Michigan law authorizes the exclusive contract and that it does not violate federal antitrust laws or the U.S. Constitution by prohibiting STAT from operating in the county. The Sixth Circuit affirmed the dismissal of the claim for lack of jurisdiction. The county failed to establish an actual or imminent injury. Federal courts have the power to tell parties what the law is, not what it might be in potential enforcement actions. View "Saginaw County. v. STAT Emergency Medical Services, Inc." on Justia Law

Charte (relator) filed a False Claims Act (FCA), 31 U.S.C. 3729–3733, "qui tam" suit alleging that defendants, including Wegeler, submitted false reimbursement claims to the Department of Education. Relators are entitled to part of the amount recovered. As required to allow the government to make an informed decision as to whether to intervene, Charte cooperated with the government. Her information led to Wegeler’s prosecution. Wegeler entered into a plea agreement and paid $1.5 million in restitution. The government declined to intervene in the FCA action. If the government elects to pursue an “alternate remedy,” the statute provides that the relator retains the same rights she would have had in the FCA action. Charte tried to intervene in the criminal proceeding to secure a share of the restitution. The Third Circuit affirmed the denial of the motion. A criminal proceeding does not constitute an “alternate remedy” to a civil qui tam action, entitling a relator to intervene and recover a share of the proceeds. Allowing intervention would be tantamount to an interest in participating as a co-prosecutor in a criminal case. Even considering only her alleged interest in some of the restitution, nothing in the FCA suggests that a relator may intervene in the government’s alternative-remedy proceeding to assert that interest. The text and legislative history regarding the provision indicate that the court overseeing the FCA suit determines whether and to what extent a relator is entitled to an award. View "United States v. Wegeler" on Justia Law

States may provide certain home-based services through Medicaid's Home and Community Based Waiver program, 42 U.S.C. 1396n(c). Illinois operates a waiver under which it contracts with non-profit organizations (ISCs) to provide case management services for adults with developmental disabilities receiving home- and community-based services as part of Medicaid. Illinois awarded 17 ISC contracts through a non-competitive, annual renewal process. The plaintiffs had received contracts for at least 25 years. In 2018, the state announced a new competitive bidding process to begin on July 1, 2019. The plaintiffs submitted bids but learned in January that their contracts would not be renewed. They sued under 42 U.S.C. 1983, alleging violations of Medicaid’s free-choice-of-provider provision, 42 U.S.C. 1396a(a)(23). On June 5, 2019, with new contracts to go into effect in less than 30 days, they sought a preliminary injunction. The district court denied their motion on June 25, reasoning that ISCs were not “qualified providers” under the statute. The plaintiffs appealed that same day. Four days later, they sought emergency injunctive relief pending appeal, which the Seventh Circuit denied. Months later, at oral argument, plaintiffs’ counsel acknowledged that vacating the new contracts would be too disruptive. The Seventh Circuit dismissed the appeal. With the plaintiffs no longer challenging the denial of their preliminary injunction, it is unnecessary to address the meaning of “qualified providers” or determine what kinds of services the plaintiffs provide. The passage of time has rendered the issue moot. View "Western Illinois Service Coordination v. Illinois Department of Human Services" on Justia Law

Ron Koenig was the superintendent and principal of the Warner Unified School District (the district). He and the district entered an agreement to terminate his employment one year before his employment agreement was due to expire. Under the termination agreement, Koenig agreed to release any potential claims against the district in exchange for a lump sum payment equivalent to the amount due during the balance of the term of his employment agreement, consistent with Government Code section 53260. The district also agreed to continue to pay health benefits for Koenig and his spouse "until Koenig reaches age 65 or until Medicare or similar government provided insurance coverage takes effect, whichever occurs first." The district stopped paying Koenig's health benefits 22 months later. Koenig then sued to rescind the termination agreement and sought declaratory relief he was entitled to continued benefits pursuant to his underlying employment agreement, which provided that Koenig and his spouse would continue receiving health benefits, even after the term of the agreement expired. After a bench trial, the trial court determined the district's promise in the termination agreement to pay health benefits until Koenig turned 65 violated section 53261, was unenforceable, and rendered the termination agreement void for lack of consideration. Both Koenig and the district appealed the judgment entered after trial. Koenig contended the trial court properly determined the termination agreement was void but should have concluded he was entitled to continued health benefits until the age of 65. The district contended the trial court erred when it concluded the termination agreement was void; rather, the trial court should have severed the termination agreement's unenforceable promise to continue paying benefits, enforced the remainder of the termination agreement, and required Koenig to pay restitution for benefits paid beyond the term of the original agreement. The Court of Appeal concluded the termination agreement's unlawful promise to pay health benefits in excess of the statutory maximum should have been severed to comply with sections 53260 and 53261, Koenig did not establish he was entitled to rescind the termination agreement, and the district was entitled to restitution for health benefits paid beyond the statutory maximum. Judgment was reversed and the trial court directed to enter judgment in favor of the district for $16,607. View "Koenig v. Warner Unified School District" on Justia Law

S. Mark Booth petitioned the Alabama Supreme Court for a writ of mandamus directing the the trial court to dismiss an action filed against him by the City of Guin. In 2008, Booth and the City entered into a contract entitled "Commercial Development Agreement." The agreement provided that the City would sell Booth approximately 40 acres of real property located in Marion County at a price of $5,000 per acre. Booth, in turn, promised to subdivide the property into lots for commercial development. The agreement included a provision granting the City the right to repurchase the property should Booth fail to develop the land within three years following the execution of the agreement. In 2017, the City sued Booth, asserting a claim for specific performance pursuant to the agreement's repurchase option. The City alleged Booth failed to construct at least one commercial facility on the property within three years from the effective date of the agreement. The City alleged that it had "timely tendered the purchase price to [Booth] and requested a conveyance of the real property described in the contract but [that Booth] refused to accept the tender or to make the conveyance." Booth moved to dismiss, arguing that, although he had fulfilled his obligations under the agreement by developing a hotel on the property, the City's complaint seeking to specifically enforce the repurchase of the property pursuant to its option to repurchase in Section 4.4(b) of the agreement was time-barred by the two-year statutory limitations period for such options in 35-4-76(a), Ala. Code 1975. After review, the Supreme Court granted Booth's petition as to the City's claims for specific performance, and its claims alleging fraud and breach of contact; the trial court was ordered to dismiss those claims. The Court denied Booth's petition relating to the City's rescission claim. View "Ex parte S. Mark Booth." on Justia Law