Justia Government Contracts Opinion Summaries

Global Rescue Jets, which does business as Jet Rescue, billed Kaiser at Jet Rescue’s usual and customary rates. Kaiser paid only a fraction of the billed amount, however, because in its view Jet Rescue’s services were covered by Medicare and thus subject to payment at the much lower Medicare-approved rates. Jet Rescue brought this action against Kaiser to recover the additional sums Kaiser allegedly owes. Jet Rescue argues that it was not required to exhaust administrative remedies before filing suit and that the exhaustion requirement should have been excused in any eventThe circuit court affirmed the district court’s dismissal, reasoning original Medicare beneficiaries must exhaust their administrative remedies before seeking judicial review of a claim for benefits. The panel also rejected Jet Rescue’s contention that the exhaustion requirement should be excused. The panel held that the exhaustion requirement may be excused if three conditions are satisfied: (1) the plaintiff’s claim is wholly collateral to a claim for Medicare benefits; (2) the plaintiff has made a colorable showing of irreparable harm; and (3) exhaustion would be futile. The panel concluded that Jet Rescue failed to meet the first and third requirements. Thus, the circuit court rejected both arguments and affirmed the district court’s judgment. View "GLOBAL RESCUE JETS, LLC V. KAISER FOUNDATION HEALTH PLAN" on Justia Law

Appellant, a California critical access hospital, sought Medicare reimbursement for the cost of keeping specialty doctors on call. Under the federal Emergency Medical Treatment and Active Labor Act, hospitals providing emergency room service must stabilize patients before releasing them or transferring them to another hospital. Additionally, California law requires all hospitals to perform certain procedures, including surgery. Appellant claims that it cannot comply with both state and federal law unless it can pay on-call compensation to specialists in surgery, obstetrics, pediatrics, and cardiology.Affirming the district court’s ruling, the D.C. Circuit held that Appellant is not entitled to Medicare reimbursement for the cost of keeping various specialty doctors on call. Appellant’s federal obligation to stabilize patients before release does not necessarily imply the need for various specialists. Thus, the Provider Reimbursement Review Board (“the Board”) reasonably concluded that Appellant had the ability to stabilize patients with existing emergency room physicians and that specialists were not required to be on call.Regarding Appellant’s state obligations, the Board’s conclusion that Appellant could satisfy the requirements by keeping a physician with surgical training on-site was reasonable. View "St. Helena Clear Lake Hospital v. Xavier Becerra" on Justia Law

In a suit under the False Claims Act (FCA), Proctor alleged that Safeway knowingly submitted false claims to government health programs when it reported its “retail” price for certain drugs as its “usual and customary” price, although many customers paid less than the retail price because of discount and price-matching programs. The district court granted Safeway summary judgment, concluding that Safeway’s pricing practices were “objectively reasonable” and no “authoritative guidance” cautioned against its interpretation of Medicare and Medicaid regulations.While the case was pending, the Seventh Circuit held that a defendant does not act with reckless disregard as long as its interpretation of the relevant statute or regulation was objectively reasonable and no authoritative guidance warned the defendant away from that interpretation. Failure to satisfy that standard for reckless disregard precludes liability under FCA’s actual knowledge and deliberate indifference provisions, which concern higher degrees of culpability.The Seventh Circuit then affirmed summary judgment in favor of Safeway. A footnote in a Centers for Medicare and Medicaid (CMS) manual does not constitute “authoritative guidance.” CMS can (and did) revise the manual at any time, and a single footnote in a lengthy manual does not support treble damages liability in this case. The other sources of guidance Proctor identified are unpersuasive because they do not come from the agency. View "Proctor v. Safeway, Inc." on Justia Law

Relators brought qui tam claims against dozens of defendants alleging healthcare fraud against the federal government in April 2017. H.I.G. Capital, LLC and H.I.G. Surgery Centers, LLC (“H.I.G.”) were among the defendants. Plaintiffs amended their complaint in January 2019.Previously, another group of relators filed qui tam claims against several of the same defendants; however, they did not name H.I.G. in their initial complaint. The federal government intervened, resulting in a $41 million settlement which included the defendants and both sets of relators. The settlement agreement released H.I.G. insofar as any independent conduct outside their status as investors in or owners of the defendants included in the settlement. Relators then amended their complaint a second time, narrowing their allegations to focus only on H.I.G.The district court granted H.I.G.’s motion to dismiss based on the first-to-file rule. The district court determined that, because the settled claim was pending at the time Relators filed their initial complaint, Relators’ complaint was barred if the actions were related. The district court found the cases were related and dismissed Relators’ claims.The Eleventh Circuit affirmed. Relators filed their complaints while the action that was eventually settled was pending. Thus, Relators’ case must be dismissed if the actions were related. The court then adopted the “same material elements” test relied upon by other circuit courts. Finding that the two cases contained the same material elements of fraud, the court concluded the district court properly dismissed Relators’ claims. View "Sheldon Cho, et al v. H.I.G. Capital, LLC, et al" on Justia Law

In 2012, United Healthcare of Mississippi (United) entered into provider agreements with Mississippi’s fourteen Community Mental Health Centers (CMHCs) to provide Medicaid services under the Division of Medicaid’s (DOM’s) managed care program. From 2012 until 2019, United paid the CMHCs an agreed upon amount for Medicaid services - 100 percent of the medicaid fee schedule rates. In July 2019, United unilaterally imposed a 5 percent rate cut, retroactive to January 1, 2019, and later demanded that the CMHCs refund 5 percent of all payments made from July 1, 2018, through December 31, 2018, all of which totaled more than $1 million. The CMCHs demanded that United immediately cease and desist from the 5 percent rate cut and recoupments. When United refused, the CMHCs filed a Complaint for Damages and Injunctive Relief, specifically requesting, inter alia, a preliminary injunction. United responded with a motion to compel arbitration and to stay the proceedings. After a two-day evidentiary hearing, the circuit court denied United’s motion to compel arbitration, granted the CMHCs’ request for injunctive relief, and issued a preliminary injunction. The limited issues presented to the Mississippi Supreme Court were whether the trial court properly enjoined United from imposing a 5 percent rate cut and whether the trial court erred by denying arbitration. After review, the Supreme Court affirmed the trial court’s decision to grant a preliminary injunction and to deny the motion to compel arbitration. View "United Healthcare of Mississippi Inc. et al. v. Mississippi's Community Mental Health Commissions, et al." on Justia Law

Magnolia, a managed care organization that contracted with the State to provide Medicaid services, applied what it saw as a statutory five percent reduction in Medicaid rates to Mississippi’s fourteen regional mental health providers. The regional providers responded by filing a complaint against Magnolia in which they sought injunctive relief and monetary damages. On February 18, 2020, Magnolia Health Plan, Inc., and Cenpatico Behavioral Health, LLC (collectively, “Magnolia”), filed a timely notice of appeal after a circuit court denied Magnolia’s motion to compel arbitration, and granted a preliminary injunction against it in favor of Defendants, Mississippi’s fourteen regional health commissions. The notice of appeal included both orders. As to the first, the order denying Magnolia’s motion to compel arbitration, at oral argument before the Mississippi Supreme Court panel, Magnolia abandoned the issue. As to the second, the order granting Magnolia’s request for a permanent injunction, the order was not a final, appealable judgment. Accordingly, the Supreme Court concluded it did not have jurisdiction for further review. View "Magnolia Health Plan, Inc. et al. v. Mississippi's Community Mental Health Commissions, et al." on Justia Law

The 1949 Federal Property and Administrative Services Act is intended to facilitate the “economical and efficient” purchase of goods and services on behalf of the federal government, 40 U.S.C. 101. In November 2021, the Safer Federal Workforce Task Force, under the supposed auspices of the Act, issued a “Guidance” mandating that employees of federal contractors in “covered contract[s]” with the federal government become fully vaccinated against COVID-19. Ohio, Kentucky, and Tennessee and Ohio sheriffs’ offices sued, alleging that the Property Act does not authorize the mandate, that the mandate violates other federal statutes, and that its intrusion upon traditional state prerogatives raises federalism and Tenth Amendment concerns.The district court enjoined enforcement of the mandate throughout the three states and denied the federal government’s request to stay the injunction pending appeal. The Sixth Circuit denied relief. The government has established none of the showings required to obtain a stay. The government is unlikely to succeed on claims that the plaintiffs lack standing and the plaintiffs likely have a cause of action under the Administrative Procedure Act. The court noted the plaintiff’s concerns about disruptions to the supply chain if workers leave their jobs rather than receiving vaccinations and also stated: Given that expansive scope of the Guidance, the interpretive trouble is not figuring out who’s “covered”; the difficult issue is understanding who, based on the Guidance’s definition of “covered,” could possibly not be covered. View "Commonwealth of Kentucky v. Biden" on Justia Law

Mamalakis, a Wisconsin anesthesiologist, filed a qui tam lawsuit (False Claims Act, 31 U.S.C. 3729), alleging that Anesthetix, his former employer, fraudulently billed Medicare and Medicaid for services performed by its anesthesiologists. His central allegation is that the anesthesiologists regularly billed the government using the code for “medically directed” services when their services qualified for payment only at the lower rate for services that are “medically supervised.” A magistrate judge held that the complaint did not provide enough factual particularity to satisfy the heightened pleading standard for fraud claims, FED. R. CIV. P. 9(b). Mamalakis filed an amended complaint that included 10 specific examples of inflated billing, each identifying a particular procedure and anesthesiologist and providing details about how the services did not qualify for payment at the medical-direction billing rate. Six examples included a specific allegation that the anesthesiologist billed the services using that code; the other four relied on general allegations regarding the group’s uniform policy of billing at the medical-direction rate. The judge dismissed the case with prejudice.The Seventh Circuit reversed. Although Rule 9(b) imposes a high pleading bar to protect defendants from baseless accusations of fraud, Mamalakis cleared it. The examples, read in context with the other allegations in the amended complaint, provide sufficient particularity about the alleged fraudulent billing to survive dismissal. View "Mamalakis v. Anesthetix Management LLC" on Justia Law

Dr. Polansky was an official at the Centers for Medicare and Medicaid Services (CMS) before consulting for EHR, a “physician advisor” company that provides review and billing certification services to hospitals and physicians that bill Medicare. Polansky became concerned that EHR was systematically enabling its client hospitals to over-admit patients by certifying inpatient services that should have been provided on an outpatient basis.In 2012, Polansky filed suit under the False Claims Act (FCA), 31 U.S.C. 3729, alleging EHR was causing hospitals to bill the government for inpatient stays that were not “reasonable and necessary” for diagnosis or treatment as required by the Medicare program, 42 U.S.C. 1395y(a)(1)(A). His complaint remained under seal for two years while the government conducted its own investigation and ultimately determined it would not participate in the case.In 2019, the government notified the parties that it intended to dismiss the entire action under 31 U.S.C. 3730(c): “[t]he Government may dismiss the action notwithstanding the objections of the [relator]” so long as the relator receives notice and an opportunity to be heard on the Government’s motion. The district court eventually granted the motion. The Third Circuit affirmed. The government is required to intervene before moving to dismiss and its motion must meet the standard of FRCP 41(a). The district court acted within its discretion in granting the government’s motion. View "Polansky v. Executive Health Resources Inc" on Justia Law

Owsley. a nurse for Care Connection, a company providing home healthcare to Medicare patients, alleged that she observed, firsthand, documents showing that her employer had used fraudulent data from Fazzi to submit inflated claims for payment to the federal and Indiana state governments. She sued both companies under the False Claims Act, 31 U.S.C. 3729(a)(1)(A), (B), (C), (G), and an Indiana statute.The Sixth Circuit affirmed the dismissal of the suit. Owsley’s complaint provided few details that would allow the defendants to identify any specific claims—of the hundreds or likely thousands they presumably submitted—that she thinks were fraudulent, and did not meet the requirements of Civil Rule 9(b). While Owsley’s allegations describe, in detail, a fraudulent scheme: Fazzi fraudulently upcoded patient data, which Care then used to submit inflated requests for anticipated Medicare payments, that information does not amount to an allegation of “particular identified claims” submitted pursuant to the fraudulent scheme. View "Owsley v. Fazzi Associates., Inc." on Justia Law