DOJ Defends Motion to Dismiss Eleven Qui Tam Suits

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A corporation, Health Choice Group, has filed more than a dozen False Claims Act (FCA) lawsuits alleging health care fraud on behalf of the United States government. The cases filed by Health Choice Group alleged that 38 different defendants devised and participated in various fraudulent schemes to induce doctors caring for patients with cancer and other grave illnesses to prescribe their products, in violation of anti-kickback and antifraud statutes. Since the filing of the lawsuits, the DOJ has refused to intervene, and now has also taken the new and unusual step to file a motion to dismiss the claims, in an attempt to prevent them from continuing forward. This article outlines the court filings that have laid out the DOJ’s position, as well as the response from Health Choice Group.

Initial Motion to Dismiss

In December 2018, after investigating the schemes and determining that the allegations were unwarranted, the Department of Justice (DOJ) filed a motion to dismiss eleven of the qui tam suits brought by the corporation, alleging that the corporation is a “shell company” controlled by “investors and former Wall Street investment bankers.” According to the DOJ, Health Choice Group is a company that was solely established to act as the relator in FCA cases.

The motion to dismiss quoted a Wired magazine article about the National Health Care Analysis Group (NHCA), of which Health Choice Group is a subsidiary, saying “NHCA Group created a database of resumes, ‘scraped and extracted from publicly-available sources,’ which the organization uses to identify ‘potential informants.’” NHCA then contacts the individuals saying they are running a “research study” of the pharmaceutical industry, offering to pay the individuals to participated in a “qualitative research study.” Instead, however, the information is actually being collected for use in the qui tam suits filed by the NHCA Group through various subsidiaries.

Health Choice Group’s Response

Health Choice Group responded, defending itself in January 2019, arguing that the DOJ cares more about its own business practices than about the substance of the allegations. According to the brief filed by Health Choice Group, “The accuracy of the record (Health Choice) developed pre-suit is not genuinely disputed, and the government’s agreement or disagreement with relator’s research methodology (or business model) is immaterial. Suffice it to say that, over the last few years, the government has intervened and recovered millions for taxpayers in multiple qui tam lawsuits involving healthcare fraud that was uncovered — by NHCA affiliates — through the same standard research methodology.”

Health Choice Group referenced previous settlements in which its own subsidiaries served as whistleblowers, to battle the DOJ allegations. According to its own opposition brief, “For years, NHCA has worked transparently, openly, and ethically with numerous government attorneys throughout the country.”

DOJ’s Reply Brief

Then, in February 2019, the DOJ filed a reply brief defending its motion to dismiss, adding new details to the fight over the DOJ’s new policy of moving to dismiss some FCA cases after declining to intervene. The DOJ noted in the reply brief that Health Choice Group’s motives are far from irrelevant, but also that lawyers from several different offices “devoted considerable time and resources” to investigating the allegations and all agreed that they fall short of establishing a viable FCA claim.

Conclusion

Previously, the DOJ would typically allow the relators/whistleblowers to continue with fraud cases on the government’s behalf when it did not intervene. However, last year, DOJ’s civil fraud chief, Michael Granston, issued a memo instructing DOJ lawyers to be more aggressive in their policing of dubious claims brought in the name of the United States government. In September 2018, the memo was incorporated into an updated manual for U.S. attorneys.

With the new DOJ policy in effect – and seemingly being used – it will be interesting to see how many FCA cases the agency attempts to dismiss versus allow to move forward without its intervention. Perhaps the new DOJ policy will cut down on frivolous FCA claims.

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