Justia Government Contracts Opinion Summaries

The Council handles contracts for over 200 New Jersey municipalities, police departments, and school districts. Mid-American sells bulk road salt. The Council's members estimated their salt needs for the 2016-17 winter. The Council issued a comprehensive bid package, anticipating the need for 115,000 tons of rock salt. MidAmerican won the contract, which stated: There is no obligation to purchase [the estimated] quantity. As required by the contract, Mid-American obtained a performance bond costing $93,016; imported $4,800,000 worth of salt from Morocco; and paid $31,250 per month to store the salt and another $58,962.26 to cover it. Mid-American incurred at least another $220,000 in finance costs and additional transportation costs. Council members purchased less than five percent of the estimated tonnage. Mid-American claims “several” Council members purchased salt from MidAmerican’s competitors, who lowered their prices after MidAmerican won the contract.Mid-American sued the Council and 49 of its members, alleging breach of contract, breach of the covenant of good faith and fair dealing, and bad faith under UCC Article 2. The Third Circuit affirmed the denial of relief. No valid requirements contract existed here because the contract was illusory. These sophisticated parties were capable of entering into precisely the contract they desired. Neither the Council nor its members ever promised to purchase from Mid-American all the salt they required View "Mid-American Salt LLC v. Morris County Cooperative Pricing Council" on Justia Law

Care Alternatives provides hospice care to New Jersey patients, employing “interdisciplinary teams” of registered nurses, chaplains, social workers, home health aides, and therapists working alongside independent physicians who serve as hospice medical directors. Former Alternatives employees filed suit under the False Claims Act, 31 U.S.C. 3729–3733 alleging that Alternatives admitted patients who were ineligible for hospice care and directed its employees to improperly alter those patients’ Medicare certifications to reflect eligibility. They retained an expert, who opined in his report that, based on the records of the 47 patients he examined, the patients were inappropriately certified for hospice care 35 percent of the time. Alternatives’ expert testified that a reasonable physician would have found all of those patients hospice-eligible. The district court determined that a mere difference of opinion between experts regarding the accuracy of the prognosis was insufficient to create a triable dispute of fact as to the element of falsity and required that the plaintiffs provide evidence of an objective falsehood. Upon finding they had not adduced such evidence, the court granted Alternatives summary judgment. The Third Circuit vacated, rejecting the objective falsehood requirement for FCA falsity. The plaintiffs’ expert testimony created a genuine dispute of material fact as to falsity. View "Druding v. Care Alternatives" 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

University of Pittsburgh Medical Center includes 20 hospitals. Its more than 2,700 doctors are employed by Medical Center subsidiaries. Each surgeon had a base salary and an annual Work-Unit quota. Every medical service is worth a certain number of Work Units, which are one component of Relative Value Units (RVUs). RVUs are the units that Medicare uses to measure how much a medical procedure is worth. The surgeons were rewarded or punished based on how many Work Units they generated. The number of Work Units billed by the Neurosurgery Department more than doubled in 2006-2009. The relators accuse the surgeons of artificially boosting their Work Units: The surgeons said they acted as assistants on surgeries and as teaching physicians when they did not and billed for procedures that never happened. They did surgeries that were medically unnecessary or needlessly complex. Most of the surgeons reported total Work Units that put them in the top 10% of neurosurgeons nationwide. Whenever a surgeon did a procedure at one of the hospitals, the Medical Center billed for hospital and ancillary services. The United States intervened in a suit as to the physician services claims, settling those claims for $2.5 million. It declined to intervene in the hospital services claims. The Third Circuit reversed the dismissal of those claims. The relators adequately pleaded violations of the Stark Act, 42 U.S.C. 1395nn(b)(4), which forbids hospitals to bill Medicare for certain services when the hospital has a financial relationship with the doctor who requested those services. It is likely that the surgeons' pay is so high that it must take referrals into account. Stark Act exceptions work like affirmative defenses; the burden lies with the defendant, even under the False Claims Act, 31 U.S.C. 3729(a)(1)(A). View "United States v. University of Pittsburgh Medical Center" on Justia Law

Chang filed a qui tam action against the Center, asserting claims on behalf of the United States and the state under the False Claims Act (FCA). and the Delaware False Claims Act. Chang alleged that the Center had sought and received funding from the state and federal governments by misrepresenting material information. Both governments declined to intervene as plaintiffs. Chang filed an amended complaint and the Center answered. Nearly three years after Chang filed his original complaint, the U.S. and Delaware moved to dismiss the case, asserting that they had investigated Chang’s allegations and discovered them to be “factually incorrect and legally insufficient.” The court granted the motions without conducting an in-person hearing or issuing a supporting opinion. The Third Circuit affirmed. If the government chooses not to intervene, the relator may still “conduct the action” but the government may still “dismiss the action notwithstanding the objections of the person initiating the action if the person has been notified by the Government of the filing of the motion and the court has provided the person with an opportunity for a hearing on the motion,” 31 U.S.C. 3730(c)(2)(A). Chang never requested a hearing; the FCA does not guarantee an automatic in-person hearing to relators before their cases may be dismissed. View "Chang v. Children's Advocacy Center of Delaware" on Justia Law

Charte, a district manager, became aware of American Tutor’s questionable billing and recruiting practices and expressed her concerns to the company's officers. Charte was terminated. Charte contacted the New Jersey Department of Education and the U.S. Department of Education about the practices she had observed. American Tutor sued Charte in state court for defamation, tortious interference with advantageous economic relations, and product disparagement. While that state lawsuit was pending, Charte brought this qui tam action on behalf of the United States. As required by the False Claims Act, 31 U.S.C. 3729(a)(1)(A), the action remained under seal for seven years while the government investigated. The state court action was dismissed after the parties settled. The federal government did not intervene. The district court unsealed the complaint, then found that the qui tam action was barred by New Jersey’s equitable entire controversy doctrine. The Third Circuit vacated, finding the doctrine inapplicable. The qui tam suit did not belong to Chartre when she entered into the settlement agreement; she could not unilaterally settle and dismiss the qui tam claims during the government’s investigation. Charte followed every statutory requirement, including filing the qui tam action under seal and not disclosing its existence; she was “not trying to hide the ball.” Application of the entire controversy doctrine to this case, where the relator was the defendant in a previously filed private suit, would incentivize potential False Claims Act defendants to “smoke out” qui tam actions by suing potential relators and then quickly settling. View "Charte v. American Tutor Inc" on Justia Law

Nita and her husband, Kirtish, pled guilty to defrauding Medicare (18 U.S.C. 1347), based on having forged physicians’ signatures on diagnostic reports and having conducted diagnostic testing without the required physician supervision. The government then brought this civil action for the same fraudulent schemes against Nita, Nita’s healthcare company (Heart Solution), Kirtish, and Kirtish’s healthcare company (Biosound). The district court granted the government summary judgment, relying on the convictions and plea colloquies in the criminal case, essentially concluding that Nita had admitted to all elements and issues relevant to her civil liability. Nita and Heart Solution appealed. The Third Circuit affirmed Nita’s liability under the False Claims Act, 31 U.S.C. 3729(a)(1)(A) and for common law fraud but vacated findings that Heart Solution is estopped from contesting liability and damages for all claims and Nita is estopped from contesting liability and damages for the remaining common law claims. The district court failed to dissect the issues that were determined in the criminal case from those that were not, lumping together Nita and Heart Solution, even though Heart Solution was not involved in the criminal case. It also failed to disaggregate claims Medicare paid to Nita and Heart Solution from those paid to Kirtish and Biosound. The plea colloquy did not clarify ownership interests in the companies; who, specifically, made certain misrepresentations; nor whether one company was paid the entire amount or whether the payments were divided between the companies. View "Doe v. Heart Solution PC" on Justia Law

Silver’s qui tam action, filed under the False Claims Act (FCA), 31 U.S.C. 3729–33, alleged that PharMerica, which owns and operates institutional pharmacies serving nursing homes, unlawfully discounted prices for nursing homes’ Medicare Part A patients (reimbursed by the federal government to the nursing home on a flat per-diem basis) in order to secure contracts to supply services to patients covered by Medicare Part D and Medicaid (reimbursed directly to the pharmacy by the government on a cost basis) in the same nursing homes--a practice called swapping. The district court dismissed, based on the FCA’s public disclosure bar. The Third Circuit reversed. The district court improperly determined that documents publicly describing the generalized risk of swapping in the nursing home industry served to bar his specific claim, which depended on non-public information that PharMerica was actually engaging in swapping in specific contracts. The district court also erred in concluding, on the basis of Silver’s testimony, that he relied upon certain publicly available information to reach his conclusion and that the information itself disclosed the fraud, without independently determining that the relevant public document did, in fact, effectuate such a disclosure. View "Silver v. Omnicare Inc" on Justia Law

From 1996-2011 Pennsylvania claimed the costs of a training program, the Pennsylvania Restraint Reduction Initiative, “to train long-term care facility staff in the use of alternative measures to physical and chemical restraints,” as administrative costs under its Medicaid program, 42 U.S.C. 1396b(a)(7) . The Centers for Medicare & Medicaid Services (CMS) reimbursed Pennsylvania for about $3 million. After an audit, CMS sought a return of the money on the ground that funds spent on training programs are not reimbursable as administrative costs under Medicaid. CMS relied heavily on a 1994 State Medicaid Director Letter. The Appeals Board, district court, and Third Circuit rejected the state’s arguments that the 1994 Letter was an invalid substantive rule, that the Letter’s text does not exclude the training costs from reimbursement, that the Letter imposed an ambiguous condition on a federal grant, that the Appeals Board abused its discretion in denying discovery, that the HHS Grants Administration Manual limits the disallowance period to three years, and that the district court should have taken judicial notice of the 2015 CMS Question and Answer document concerning training costs. The court noted CMS could have reimbursed Pennsylvania if Pennsylvania factored the amount into its rate-setting scheme instead of claiming it as administrative costs. View "Commonwealth of Pennsylvania Department of Human Services v. United States" on Justia Law

Relator claimed (False Claims Act, 31 U.S.C. 3729-3733) that C&D manufactured and shipped 349 defective batteries to the U.S. government for use in intercontinental ballistic missile launch controls. The matter settled for $1.7 million, about six percent of the amount demanded in a Second Amended Complaint, entitling Relator to reasonable attorneys’ fees and costs. The parties were unable to agree on attorneys’ fees. The district court concluded that both parties’ counsel were uncooperative and did not act in good faith. Relator eventually increased his fee demand to $3,278,115.99, “almost $1 million more than the fees [he] sought a year ago and almost twice the dollar amount of the settlement [he] reached.” Relator used hourly rates that he “extrapolated” from actual Community Legal Services rates, which were higher than those that he originally used to calculate his demand. The court reduced Relator’s recoverable attorney hours for depositions, document review, summary judgment motions, a motion for reconsideration, Daubert motions, and travel time expenses, and applied a 10 percent reduction for lack of success on the merits. The parties agreed that for the purposes of the fee award, the court could use $1,794,427.27 for fees and $164,585.49 for costs. The Third Circuit remanded for consideration of “fees on fees” but otherwise affirmed. View "Palmer v. C & D Technologies, Inc" on Justia Law