October 26, 2021

Volume XI, Number 299

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October 25, 2021

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Missouri Federal Judge Limits False Claims Act Claims Involving Vague Medicare Regulations

A Missouri federal judge has issued a summary judgment order that could serve as an important limitation on the U.S. Department of Justice’s expanding use of the False Claims Act and penalties aimed at recovering funds from government contractors. If you provide any services to the United States in a federally regulated field then this ruling could provide critical guidance in your interpretations of any binding ambiguous regulations.

The False Claims Act poses a significant risk of financial penalties to all government contractors even if uncovered violations were not intentional. A single violation can be penalized by as much as $11,000 plus damages and result in potential permanent expulsion from participation in federally funded programs. Most lawsuits are filed and pursued by whistleblowers, known as relators, who receive a significant percentage of any recovery under the False Claims Act’s qui tam provisions.

The recent order by U.S. District Judge Greg Kays of the Western District of Missouri dismisses a qui tam False Claims Act case against Anesthesia Associates of Kansas City (AAKC) accusing AAKC of failing to comply with certain Medicare regulations (U.S. ex rel. Donegan v. Anesthesia Associates of Kansas City PC). The rules at issue require anesthesiologists to document their participation in emergence, the period of time when a patient is recovering from anesthesia. However, the scope of emergence is disputed and it has never been expressly defined by the Medicare regulations. The suit alleged that emergence was limited in time and that the AAKC’s anesthesiologists interpreted the term too broadly and thus never participated in emergence.

While Judge Kays commented that he believed the anesthesiologists’ broader interpretation of emergence to be opportunistic and financially motivated, he concluded that AAKC could not be held liable for taking advantage of a disputed legal question. In granting summary judgment, he ruled that a government contractor’s reasonable interpretation of any ambiguity inherent in the applicable regulations belies the knowledge necessary to establish a claim for fraud under the False Claims Act.

© Copyright 2021 Armstrong Teasdale LLP. All rights reserved National Law Review, Volume V, Number 174
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About this Author

Kevin W. Prewitt, Armstrong Teasdale, Franchise lawyer, Antitrust Attorney
Associate

Kevin Prewitt, a member of the firm’s Litigation practice group, focuses on franchise, distribution and antitrust matters. His experience includes defending franchisees against claims brought under the Missouri Merchandising Practices Act. He also handles general litigation cases including those involving employment and labor issues. In that area, he defends employers under claims pursuant to the Missouri Human Rights Act and Title VII. Dedicated to effective case management, Kevin is well-versed in all phases of discovery, trial preparation and negotiation of...

816.472.3146
 Megan J. Ochs, Armstrong Teasdale, Real Estate Litigation Lawyer
Associate

Megan Ochs is an attorney based in Armstrong Teasdale’s Kansas City office where she is a member of the firm’s Litigation practice group.

Primarily, Megan focuses her practice on real estate litigation. She defends real estate brokers and agents against a broad spectrum of claims involving alleged negligence, breach of contract, breach of fiduciary duty, negligent misrepresentation, fraudulent misrepresentation, fraudulent concealment, failure to supervise and violations of the Missouri Merchandising Practices Act and Kansas Consumer Protection...

816.472.3129
David A. Jermann II, Armstrong Teasdale, Franchise Attorney, Litigation Lawyer
Partner

David Jermann is an accomplished litigator focusing on complex business litigation specifically involving franchise disputes. He thoroughly understands the high stakes involved in these matters and provides strategic and creative resolutions.

Before trial and appellate courts throughout the country, David counsels franchisors—most often in the hotel and real estate arena—in a wide variety of issues arising under franchise agreements and state franchise statutes. He has guided domestic and international franchisors in high profile litigation...

816.472.3176
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