Investigations Newsletter: Sixth Circuit Rules That Statute of Limitations for FCA Retaliation Claims Is Triggered by Decision To Terminate, Not Notice of Termination

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Sixth Circuit Rules That Statute of Limitations for FCA Retaliation Claims Is Triggered by Decision To Terminate, Not Notice of Termination

On Wednesday, January 12, 2022, the Sixth Circuit held in El-Khalil v. Oakwood Healthcare, Inc., 2022 WL 92565, --- F.4th --- (2022), that the decision to terminate an employee, rather than notice to an employee of the decision, triggers the statute of limitations for a retaliation claim under the False Claims Act. The plaintiff, a podiatrist who was required to re-apply for hospital privileges every two years, allegedly witnessed the submission of false Medicare claims by employees at the hospital where he worked and reported the alleged misconduct to the federal government. Subsequently, the hospital allegedly decided not to renew his privileges. The hospital's Medical Executive Committee rejected the plaintiff's appeal of the non-renewal decision on September 22, 2016, at which point the decision was "final." The plaintiff received notice of the decision on September 27, 2016, and filed suit three years after receiving notice, on September 27, 2019, alleging that the decision was retaliatory and violated the FCA.

On a motion to dismiss, the district court concluded that the plaintiff's retaliation claim was barred by the statute of limitations. The Sixth Circuit affirmed, concluding that the statute is clear—a retaliation claim "may not be brought more than three years after the date when the retaliation occurred," 31 USC § 3730(h)(3), i.e. when the retaliation actually happened. The Court found that the "retaliation occurred" on September 22, 2016, when the defendant denied the plaintiff's appeal and the non-renewal decision was "final." The plaintiff argued that he did not have actual or constructive notice until September 27, 2016, and therefore did not have a complete cause of action on September 22, 2016. The Court rejected the argument, however, finding no notice requirement in the text of the statute.

The Sixth Circuit’s decision is here.

New York and New Jersey Surgery Centers Settle FCA Lawsuit for $7.5 Million

On Wednesday, January 12, 2022, the Department of Justice (DOJ) announced a nearly $7.5 million False Claims Act settlement with several affiliated health offices and surgery centers allegedly owned by Dr. Amit Poonia. In a qui tam action filed by two former employees, the facilities were alleged to have filed false claims to Medicare and FEHBP relating to procedures performed with electro-acupuncture devices. The procedures involved placing needles that transmit electrical pulses just under the skin on a patient's ear. The government alleged that federal guidelines do not consider acupuncture reimbursable, and the facilities used an incorrect billing code to obtain reimbursement. DOJ reported that, in addition to paying the civil settlement, Dr. Poonia and the relevant entities agreed to enter into an Integrity Agreement with HHS-OIG.

The USAO press release is here.

University Health System Pays Nearly $3 Million To Resolve FCA Claims

On January 11, 2022, DOJ announced that UC San Diego Health had paid $2.98 million to resolve allegations that it violated the False Claims Act. According to the complaint, UC San Diego Health allegedly ordered and submitted referrals for unnecessary genetic tests to be performed by CQuentia Arkansas Labs, CQuentia NGS, and Total Diagnostic II between December 2015 and October 2019, resulting in the submission of false claims to Medicare.

"Ordering unnecessary genetic tests creates a drain on vital government-funded health care programs like Medicare," said U.S. Attorney Randy Grossman for the Southern District of California. "This settlement is another example of this office's commitment to work with our law enforcement partners to hold medical providers accountable when their conduct leads to taxpayers bearing the cost of improper billing practices," he added.

The DOJ press release is here

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