United States Ex Rel. Matheny v. Medco Health Solutions, Inc.
2012 U.S. App. LEXIS 3508
11th Cir.2012Background
- Relators allege reverse false claims under FCA 31 U.S.C. § 3729(a)(7) related to overpayments identified under PolyMedica's CIA with HHS OIG.
- Overpayments were identified in 2006–2008 but not remitted, allegedly concealed via datafix or shifting funds to fictitious or other accounts.
- Compliance Officer certified in 2008 that the Defendants complied with the CIA, despite the alleged overpayments.
- Discovery Samples were manipulated (false samples created) to pass IRO reviews, avoiding full audits.
- Relators assert two related schemes: (Count I) false Certification of Compliance; (Count II) false Discovery Samples; both aim to conceal obligations to remit Overpayments.
- District court dismissed for failure to state a claim; the Eleventh Circuit reverse-ds and allows Counts I and II to survive
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Existence of an obligation to remit Overpayments | Matheny/Loveland allege an express CIA obligation to remit within 30 days | Defendants argue no identifiable obligation under the CIA | Relators pleaded an express contractual obligation to remit Overpayments |
| Knowledge for reverse false claim liability | Relators allege willful/knowing scheme by Parazella, Dolan, and Ramey | Not specifically challenged; allegations insufficient | Rule 9(b) satisfied; knowledge alleged generally but plausibly |
| Certification of Compliance falsehood (Count I) | Certification misrepresented CIA compliance | Certification accuracy not proven | Certification was false and material; Count I stated with particularity |
| Materiality of the misrepresentation | Certification affected government decision-making by concealing Overpayments | Materiality contested | Certification materially concealed the obligation to remit Overpayments |
| Discipline of Discovery Sample (Count II) | Defendants manipulated Discovery Samples to avoid audits | Some specifics lacking about who sent the samples | Relators pled substantial elements; Count II survives with particularity |
Key Cases Cited
- Pemco Aeroplex, Inc. v. United States, 195 F.3d 1234 (11th Cir. 1999) (defining materiality and obligation in reverse false claim context)
- Clausen v. LABCORP of Am., Inc., 290 F.3d 1310 (11th Cir. 2002) (Rule 9(b) particularity and pleading specifics for fraud)
- Hopper v. Solvay Pharm., Inc., 588 F.3d 1318 (11th Cir. 2009) (time/place; sufficiency of allegations under Rule 9(b))
- Walker v. R&F Properties of Lake County, Inc., 433 F.3d 1349 (11th Cir. 2005) (personal knowledge can support FCA pleading)
- Neder v. United States, 527 U.S. 1 (Sup. Ct. 1999) (materiality defined by likelihood to influence decisionmaker)
- Barlow v. United States?, 531 F.3d 1159 (9th Cir. 2008) (U.S. v. Bourseau; example of reverse false claim standard)
- In re United States ex rel. Cullins v. Astra, Inc., 2010 WL 625279 (S.D. Fla. 2010) (cited for 'make, use, or cause to be made or used' analysis (distinguishing presentment)})