The Qui Tam Blog

 By: Joel Androphy, Rachel Grier, and Stephanie Gutheinz         

A district court in the Southern District of Texas recently held that nothing in the text of the FCA or its legislative history prevents employment-related retaliation claims from being arbitrated under a valid and enforceable arbitration agreement.  Under the Federal Arbitration Act, a valid agreement to arbitrate certain disputes is valid and enforceable unless Congress has precluded arbitration of the statutory right at issue.  The relator argued that the FCA precludes arbitration of retaliation claims because arbitration of such claims would allow defendants to immunize themselves against relator-initiated claims of FCA violations, undermining the purpose of the FCA to protect whistleblowers.  The relator further argued that such arbitration proceedings could constitute public disclosures, thereby unfairly triggering the public disclosure bar.  The court reasoned, however, that relators can avoid this issue by filing their retaliation claims with or after the qui tam claims.  The case is United States ex rel. Cassaday v. KBR, Inc.

By: Joel Androphy, Rachel Grier, and Stephanie Gutheinz 

In order to be successful, a relator must establish that a fraudulent statement or record was material to the government’s decision to pay a false claim.  For claims reimbursed under a diagnosis related group (“DRG”) code system, only identifying line items on a patient’s bill may fall short of this materiality requirement.  Reimbursement under the DRG system provides a fixed payment based on the patient’s DRG, which is calculated based on the patient’s diagnosis and age.  In most circumstances, the DRG rate satisfies full payment for all services provided, including prescription drugs.  Thus, under the DRG system, individual prescriptions are immaterial to the amount the government pays for the treatment of a given patient because payment is based solely on the DRG rather than any individual charges on the patient’s bill.  As such, those line item charges cannot serve as the basis for FCA liability under these circumstances.  The case is United States ex rel. Kennedy v. Aventis Pharmaceuticals, Inc., a court in the Northern District of Illinois.