The False Claims Act (FCA) is one of the sharpest tools in regulators’ toolbox for holding health-care entities accountable.
But there’s now a push from a Florida court to blunt it.
Broadly, FCA deputizes whistleblowers to shine a light on fraud, waste and abuse that happen at their organizations. Overall, there are hundreds of FCA cases each year, many of which result in settlements with million-dollar price tags.
It’s not uncommon to see home medical equipment (HME) companies named in FCA cases, either.
In 2017, for example, Lincare agreed to pay $20 million to settle claims that it violated the FCA by overbilling Medicare for respiratory equipment and services. A year later, Rotech settled an FCA case for $9.68 million.
More recently, in 2020, ResMed – a manufacturer of durable medical equipment such as CPAP devices – agreed to pay $37.5 million to settle allegations it violated the FCA by providing illegal kickbacks to suppliers and other health-care providers, encouraging them to use its products.
Overall, settlements and judgments under the False Claims Act exceeded $2.68 billion in the fiscal year ending Sept. 30, 2023, according to the U.S. Department of Justice (DOJ). During that period, the government and whistleblowers were party to 543 settlements and judgments – the highest number of settlements and judgments in a single year ever.
Recoveries between 1986 and the end of fiscal year 2023 totaled more than $75 billion.
Of the $2.68 billion recovered in fiscal year 2023, at least $1.8 billion related to matters that involved the health-care sector, according to the DOJ.
So why is the FCA’s future suddenly in jeopardy? A recent ruling by Florida Judge Kathryn Kimball Mizelle found that the False Claims Act’s statute deputizing an individual to act on behalf of the executive branch is unconstitutional.
In her ruling, Mizelle explained that such whistleblowers should attain “proper appointment” from an executive branch official.
The whistleblower – Clarissa Zafirov – in the case is likely to appeal the ruling, which would bump the case to the U.S. Court of Appeals for the 11th Circuit. Then, if the 11th Circuit upholds the ruling, it could next go to the Supreme Court.
“Zafirov is the first decision to invalidate the FCA’s qui tam authority and has considerable implications for the future of FCA litigation,” a legal brief from A&O Shearman posted in JD Supra emphasized.
“The Zafirov decision will undoubtedly be appealed to the Eleventh Circuit and could end up before the U.S. Supreme Court. For now, this decision provides an additional argument for dismissal of qui tam suits,” the brief continued.
HME stakeholders will need to follow the legal proceedings closely, as it could change the nature of enforcement in the space moving forward.
