November 21, 2014 Articles

Where Do Whistleblowers Stand with FCA "Worthless Services" Cases?

Substandard healthcare provider services do not equate to worthless services

by Maria C. Rivera-Lupu

Whistleblower suits brought pursuant to the False Claims Act (FCA) have increased dramatically within the last few years. The numbers are staggering. According to Department of Justice statistics, qui tam relators (the technical term for FCA whistleblowers) filed 753 FCA actions in 2013, 101 more than the previous year, amounting to 89 percent of FCA actions brought in FY 2013. Whistleblower recoveries have also ballooned, amounting to $345 million in that same time period.This trend shows no signs of slowing down, especially in cases involving healthcare fraud, which accounted for 66 percent of the qui tam cases initiated in 2013. U.S. Dep't of Justice, Fraud Statistics (Dec. 23, 2013).

Symptomatic of this trend, relators are experimenting with increasingly aggressive theories of FCA liability, including the "worthless services" theory, which seeks to establish that the services provided or performed were so deficient that they were tantamount to no service at all. A recent Seventh Circuit decision, United States ex rel. Absher v. Momence Meadows Nursing Center, Inc., 764 F.3d 699, reh'g en banc denied (7th Cir. 2014), however, circumscribes this potentially expansive theory in significant ways and provides important lessons to litigants and counsel.

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