Articles Posted in US Court of Appeals for the Seventh Circuit

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Berkowitz's company, Complete Packaging, holds a General Service Administration (GSA) multiple award schedule contract, under which it sells office supplies to government agencies. The defendants hold competing GSA schedule contract. Vendors with GSA schedule contracts must comply with the Trade Agreements Act (TAA), 19 U.S.C. 501, which requires that a vendor only offer and sell U.S.-made or other designated country end products to governmental agencies. Federal Acquisition Regulations identify the designated countries and require that a vendor’s GSA agreement contain a “Trade Agreements Certificate,” certifying that each end product is compliant and listing the other products that are not. Vendors with GSA schedule contracts upload their price lists to the GSA Advantage online portal, GSA’s shopping system. Berkowitz claims that other vendors offered and sold products from non-designated countries, such as China or Thailand, although they filed Trade Agreements Certificate and that any invoices they submitted to the government for TAA noncompliant products constitute material false statements under the False Claims Act (FCA), 31 U.S.C. 3730. The Seventh Circuit affirmed the dismissal of his FCA suit. Berkowitz cannot allege that the defendants made any express misrepresentations; his claims are premised on an implied false certification theory and do not allege specific facts demonstrating what occurred at the individualized transactional level. That defendants may have sold non-compliant products in violation of the TAA does not equate to making a knowingly false statement in order to receive money from the government. View "Berkowitz v. Automation Aids, Inc." on Justia Law

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University Park hired Linear as its Village Manager through May 2015, concurrent with the term of its Mayor. In October 2014 the Village extended Linear’s contract for a year. In April 2015 Mayor Covington was reelected. In May, the Board of Trustees decided that Linear would no longer be Village Manager. His contract provides for six months’ severance pay if the Board discharges him for any reason except criminality. The Village argued that the contract’s extension was not lawful and that it owes Linear nothing. The district court agreed and rejected Linear’s suit under 42 U.S.C. 1983, reasoning that 65 ILCS 5/3.1-30-5; 5/8-1-7 prohibit a village manager's contract from lasting beyond the end of a mayor’s term. The Seventh Circuit affirmed on different grounds. State courts should address the Illinois law claims. Linear’s federal claim rests on a mistaken appreciation of the role the Constitution plays in enforcing state-law rights. Linear never had a legitimate claim of entitlement to remain as Village Manager. His contract allowed termination without cause. His entitlement was to receive the contracted-for severance pay. Linear could not have a federal right to a hearing before losing his job; he has at most a right to a hearing to determine his severance pay--a question of Illinois law. View "Linear v. Village of University Park" on Justia Law

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RTSI produces and maintains traffic safety systems. Rosenberg was RTSI’s Vice President of Sales. RTSI contracted to manage Chicago's automated red light enforcement program. In 2012, the Chicago Tribune published articles, disclosing an improper relationship between a city employee (Bills) and RTSI. The city removed RTSI’s bid for the new contract. The City Office of Inspector General (OIG) investigated the bribery scheme. RTSI conducted an independent investigation and provided OIG with information. OIG advised Rosenberg that he had a duty to cooperate and that his statements would not be used against him in a criminal proceeding. Rosenberg described the bribery scheme between RTSI and Bills. RTSI terminated Rosenberg’s employment.The Tribune reported that RTSI courted Bills with thousands of dollars in free trips. Rosenberg sued RTSI under the qui tam provision of the City’s False Claims Ordinance, alleging that RTSI engaged in bribery and other illegal activities to obtain a city contract. The city intervened, making additional claims. The court dismissed Rosenberg as relator. The remaining parties settled and moved for dismissal with prejudice. Rosenberg unsuccessfully sought an award of a relator’s share of the settlement and attorney’s fees for his lawyer’s contributions to the case. The Seventh Circuit affirmed, noting that Rosenberg helped to perpetrate the fraud and referring to Rosenberg’s “audacity.” Rosenberg was neither the original source of the information nor was he a volunteer under the ordinance. View "Rosenberg v. Redflex Traffic Systems, Inc." on Justia Law

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RTSI produces and maintains traffic safety systems. Rosenberg was RTSI’s Vice President of Sales. RTSI contracted to manage Chicago's automated red light enforcement program. In 2012, the Chicago Tribune published articles, disclosing an improper relationship between a city employee (Bills) and RTSI. The city removed RTSI’s bid for the new contract. The City Office of Inspector General (OIG) investigated the bribery scheme. RTSI conducted an independent investigation and provided OIG with information. OIG advised Rosenberg that he had a duty to cooperate and that his statements would not be used against him in a criminal proceeding. Rosenberg described the bribery scheme between RTSI and Bills. RTSI terminated Rosenberg’s employment.The Tribune reported that RTSI courted Bills with thousands of dollars in free trips. Rosenberg sued RTSI under the qui tam provision of the City’s False Claims Ordinance, alleging that RTSI engaged in bribery and other illegal activities to obtain a city contract. The city intervened, making additional claims. The court dismissed Rosenberg as relator. The remaining parties settled and moved for dismissal with prejudice. Rosenberg unsuccessfully sought an award of a relator’s share of the settlement and attorney’s fees for his lawyer’s contributions to the case. The Seventh Circuit affirmed, noting that Rosenberg helped to perpetrate the fraud and referring to Rosenberg’s “audacity.” Rosenberg was neither the original source of the information nor was he a volunteer under the ordinance. View "Rosenberg v. Redflex Traffic Systems, Inc." on Justia Law

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Brown, the manager of a company that provided home physician visits, and Talaga, who handled the company’s billing, were convicted of conspiracy to commit health-care fraud, 18 U.S.C. 1349; six counts of health-care fraud, 18 U.S.C. 1347; and three counts of falsifying a matter or providing false statements, 18 U.S.C. 1035(a). The district court sentenced Mr. Brown to 87 months’ imprisonment, 34 months below the Guidelines’ range, stating that a significant sentence was warranted because of the duration of the scheme, the amount of the fraud, the need for general deterrence, and Brown’s failure to accept responsibility. Ms. Talaga was sentenced to 45 months. The Seventh Circuit affirmed, rejecting Brown’s argument that the court’s assumptions about the need for general deterrence were unfounded and constituted procedural error and Talaga’s arguments that the court calculated the amount of loss for which she was responsible by impermissibly including losses that occurred before she joined the conspiracy. The district court was under no obligation to accept or to comment further on Brown’s deterrence argument. Talaga, as a trained Medicare biller, knew that that the high-volume billings were fraudulent. View "United States v. Talaga" on Justia Law

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In 2014, following investigations by the Indiana Attorney General and FBI, a grand jury indicted Shorter and her company, Empowerment, which provided transportation to Medicaid patients, for health care fraud, 18 U.S.C. 1347, and three counts of misusing a means of identification, 18 U.S.C. 1028A. The government submitted evidence of Shorter’s personal involvement in Empowerment’s billing practices; the results of an Indiana Attorney General Investigation into Empowerment’s billing practices; an FBI search of Empowerment’s records; and the experiences of Empowerment employees and of clients who used its services. The Seventh Circuit affirmed her convictions rejecting arguments challenging the indictment, the admission of certain evidence at trial and the sufficiency of the evidence as a whole. The court noted “powerful” circumstantial evidence that permitted the jury to convict her, especially because the jury could reasonably infer from the evidence that she “caused” the fraudulent billings. View "United States v. Shorter" on Justia Law

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Hartgrove, a psychiatric hospital, is enrolled with the Illinois Department of Healthcare and Family Services to receive Medicaid reimbursement. Hartgrove agreed to comply with all federal and state laws and “to be fully liable for the truth, accuracy and completeness of all claims submitted.” Upon receipt of Medicaid reimbursements, Hartgrove is required to certify that the services identified in the billing information were actually provided. On 13 occasions in 2011, adolescent patients suffering from acute mental illness were placed in a group therapy room, rather than patient rooms, sleeping on roll-out beds until patient rooms were available. Hartgrove submitted Medicaid claims for inpatient care for those patients. Bellevue, a Hartgrove nursing counselor until 2014, voluntarily provided the information on which his allegations are based to federal and state authorities, then filed a qui tam action under the False Claims Act (FCA), 31 U.S.C. 3729, and the Illinois False Claims Act. Both declined to intervene. The district court dismissed and denied Bellevue’s motion to reconsider in light of the Supreme Court’s 2016 “Universal Health” holding that an implied false certification theory is a viable basis for FCA liability. The Seventh Circuit affirmed. Bellevue’s allegations fall within the FCA's public‐disclosure bar; the information was available in audit reports and letters. View "Bellevue v. Universal Health Services of Hartgrove, Inc." on Justia Law

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Plaintiffs purchased Illinois nursing homes and obtained new state licenses and federal Medicare provider numbers. Most of the residents in the 10 homes qualify for Medicaid assistance. The Illinois Department of Healthcare and Family Services (IDHFS) administers Medicaid funds under 42 U.S.C. 1396-1396w-5, reimbursing nursing homes for Medicaid-eligible expenses on a per diem basis. The rate must be calculated annually based on the facility's costs. When ownership of a home changes, state law requires IDHFS to calculate a new rate based on the new owner’s report of costs during at least the first six months of operation. The Medicaid Act requires states to use a public process, with notice and an opportunity to comment, in determining payment rates. The owners allege that IDHFS failed to: recalculate their reimbursement rates; provide an adequate notice-and-comment process; and comply with the state plan, costing them $12 million in unreimbursed costs. The Seventh Circuit affirmed denial of a motion to dismiss. Section 1396a(a)(13)(A) confers a right that is presumably enforceable under 42 U.S.C. 1983; it benefits the owners and is not so amorphous that its enforcement would strain judicial competence. While the Eleventh Amendment may bar some of the requested relief, if it appears that owners have been underpaid, that does not deprive the court of jurisdiction over the case as a whole. View "BT Bourbonnais Care, LLC v. Norwood" on Justia Law

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Nightingale provided home health care and received Medicare reimbursements. The Indiana State Department of Health (ISDH) visited Nightingale’s facility and concluded that Nightingale had deficiencies that placed patients in “immediate jeopardy.” ISDH recommended that the Centers for Medicare & Medicaid Services (CMS), terminate Nightingale’s Medicare agreement. ISDH conducted a revisit and concluded that Nightingale had not complied. Before CMS terminated the agreement, Nightingale filed a petition to reorganize in bankruptcy and commenced sought to enjoin CMS from terminating its provider agreement during the reorganization, to compel CMS to pay for services already provided, and to compel CMS to continue to reimburse for services rendered. The bankruptcy court granted Nightingale relief. While an appeal was pending, ISDH again found “immediate jeopardy.” The injunction was dissolved. A Medicare ALJ and the Departmental Appeals Board affirmed termination. After failing to complete a sale of its assets, Nightingale discharged patients and closed its Indiana operations by August 17, 2016. On September 16, 2016, the district court concluded that the bankruptcy court had lacked subject-matter jurisdiction to issue the injunction and stated that the government could seek restitution for reimbursements for post-injunction services. CMS filed a claim for restitution that is pending. Nightingale separately initiated a civil rights action, which was dismissed. In consolidated appeals, the Seventh Circuit vacated the decisions. The issue of whether the bankruptcy court properly granted the injunction was moot. Nightingale’s constitutional claims were jurisdictionally barred by 42 U.S.C. 405(g). View "Nightingale Home Healthcare, Inc. v. United States" on Justia Law

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Moshiri, other physicians, and hospital administrators were charged (42 U.S.C. 1320a-7b(b)) based on a kickback scheme. The former director of the podiatry residency program (Noorlag) testified that teaching contracts were a vehicle to pay physicians for referrals. Moshiri received $2,000 per month and was named as the Director of External Podiatric Office Rotations. Another doctor was named to that position at the same time. According to Noorlag, neither doctor was considered to hold that position, and neither performed the related duties. The Chair of the Counsel on Podiatric Medical Education, which oversees and certifies residency programs nationally and publishes standards, offered an expert opinion that teaching stipends are uncommon for attending physicians at residency programs and that he had never heard of such a physician being paid $2,000 per month. According to multiple witnesses, Moshiri did not conduct workshops and did not manage external rotations. Moshiri worked with residents about three times per month, while 11 other program physicians averaged 10 cases per month with residents. During the period at issue, the Hospital billed Medicare and Medicaid $482,000 for patients Moshiri treated. The Hospital’s Chief Operating Officer had recorded conversations in which Moshiri discussed his referrals. The agent who arrested Moshiri testified that Moshiri said that “the contract turned into basically paying for patients.” The Seventh Circuit upheld Moshiri’s conviction, rejecting challenges to the sufficiency of the evidence and to the expert testimony. View "United States v. Moshiri" on Justia Law