FALSE CLAIMS ACT – QUI TAM

United States, ex rel. Schmidt v. Zimmer, Inc., No. 03-3695 (3d. Cir. Oct. 6, 2004)

A physician serving a qui tam relator brought a claim against a hospital and an orthopedic implant manufacturer alleging violations of the Medicare Anti-kickback statute, the Stark bill and the False Claims Act. The claims against both defendants were dismissed due to a failure to state a claim. The relator appealed that dismissal. Before the Appellant Court could rule, the qui tam relator settled his claims against the hospital. However, when the appeal involving the dismissal of the manufacturer was considered by the United States Court of Appeals, Third Circuit, the Appellate Court reversed that dismissal. The parties must now proceed with discovery to see whether the qui tam relator is able to prove his allegations against the implant manufacturer. The Court of Appeals held that if the relator satisfies his burden of proof, the distributor could be held responsible for the hospital's false Medicare claims because the distributor allegedly initiated the marketing scheme.