U.S. ex rel. Conroy v. Select Med. Corp. — Feb. 2017 (Summary)

FALSE CLAIMS ACT

U.S. ex rel. Conroy v. Select Med. Corp.
No. 3:12-cv-00051-RLY-DML (S.D. Ind. Feb. 3, 2017)

The United States District Court for the Southern District of Indiana denied a defendant hospital’s motion for interlocutory appeal in a False Claims Act (“FCA”) action.  Former employees alleged that the defendant-hospital had perpetrated a scheme to defraud Medicare, in violation of the FCA.

The FCA, a fraud enforcement statute for entities participating in federal programs, allows the Executive Branch to oppose the dismissal of a claim if the allegations were previously publicly disclosed.  This is part of the “public disclosure bar” doctrine.  On appeal, the hospital argued that if the allegations had indeed been publicly disclosed, the public disclosure bar would prohibit a federal court from hearing the case.  Looking to the language of the statute, the court found that Congress had clearly not intended for public disclosure to serve as a reason for stripping federal courts of their ability to hear a case.  The unanimous decisions of other circuits bolstered the court’s rationale.

The court also addressed whether the Executive Branch’s involvement in consensual dismissal of an FCA action constituted a separation of powers violation.  Because both the court and attorney general must give written consent for the voluntary dismissal of a qui tam FCA claim, the hospital claimed this created an impermissible “built-in condition” that required Executive Branch approval before dismissing a case.  The court disagreed, holding that no such approval is required in cases of involuntary dismissal and, therefore, the Executive Branch approval in voluntary dismissal by a qui tam relator does not run afoul of the separation of powers doctrine.  This is because the government, which has been injured by the violative conduct, has a right to intervene where an otherwise meritorious FCA claim might be dismissed by a defendant on public disclosure grounds.

Accordingly, the court denied the hospital’s motions for interlocutory appeal on the questions of law presented.