Sunday, March 13, 2011

Orthofix (Rule 9(b) and express certification issues) (the law firm of Kelley Drye Warren, LLP) has an excellent analysis of a recent DME qui tam case (U.S. ex rel. Bierman v. Orthofix) addressing legal issues that are very important to the qui tam bar (click here).  Whistleblowers often have just a few pieces of thefraud jigsaw puzzle.  Yet the law requires them to plead their qui tam cases with particularity, which is a high burden considering that people don't openly commit fraud and go to great lengths to cover their tracks.  That presents a problem when filing a qui tam lawsuit that will survive scrutiny by a federal judge.

Below is the's post (again, well done).  At the very end I post the whistleblower's amended qui tam complaint and the judge's order denying Orthofix's motion to dismiss.

On December 8, 2010, in United States ex rel. Bierman v. Orthofix International, N.V. et al., Civil Action Nos. 05-10557-EFH, 08-11336-JLT, 2010 WL 4973635 (D. Mass.), a District of Massachusetts court denied several medical device manufacturers’ motions to dismiss pursuant to Fed. R. Civ. P. 12(b)(6) and 9(b) for reimbursement-related false claims under the False Claims Act associated with the sale versus rental of certain bone growth stimulators.

The relator, a co-owner of a business that provides medical billing and related services to health care providers, filed a qui tam complaint under seal in the District of Massachusetts in March 2005 against four medical device companies that manufacture and supply bone growth stimulators that are reimbursed by Medicare.  The qui tam complaint was amended in December 2007, unsealed in April 2009, and amended again in June 2010.  The government did not intervene in the suit.

According to the court, one such Medicare regulation is Supplier Standard Regulation Number 5 which requires a supplier to “advise beneficiaries that they may either rent or purchase inexpensive or routinely purchased durable medical equipment.”  42 C.F.R. § 424.57(c)(5).  The court rejected the defendants’ argument that no falsity occurred because the certification contained in the Medicare Enrollment Application is too broad to constitute an express certification of compliance with Supplier Standard Regulation Number 5 and held:

[A] supplier violates the FCA if it certifies compliance with applicable conditions of participation by Medicare, knowing at the time of certification that it would not abide by Supplier Standard Regulation Number 5….[T]he allegations with respect to this theory can serve as both a violation of section 3729(a)(1) and 3729(a)(2).  The false express certification constitutes both a false claim for payment under section 3729(a)(1) and a false statement made to get a false claim paid under section 3729(a)(2).

Here is the qui tam relator's amended complaint:
US Ex. Rel. Bierman v. Orthofix (2nd Complaint)                                                                                                   
Here is the judge's order denying Orthofix's motion to dismiss:
US Ex. Rel. Bierman v. Orthofix (Order)                                                                                                   


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