United States v. Caremark, Inc.
634 F.3d 808
5th Cir.2011Background
- Government and State Appellants alleged Caremark violated the FCA by denying Medicaid reimbursements for dual-eligible individuals.
- District court granted 54(b) final judgment on Government FCA claims and several partial summaries against State Appellants.
- Caremark sought declaratory judgment in Goetz v. Caremark to resolve preexisting restrictions (card-presentation, timely filing, out-of-network).
- Sixth Circuit Goetz framework distinguished procedural versus substantive restrictions and their enforceability against Medicaid.
- The appeal consolidated eight certified State Appellants’ orders; the court addressed whether Goetz governs, whether plan-restrictions can be false statements, and Arkansas FCA liability.
- Court remands or reverses on several issues, including applicability of § 3729(a)(7) to this context and Arkansas reverse-false-claims liability.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does Caremark violate § 3729(a)(7) by denying state Medicaid reimbursements? | Ramadoss argues Caremark’s false statements impaired the Government’s obligations. | Caremark contends it did not owe an obligation to the Government for denials; Goetz framework controls. | Yes, potentially liable; statements could impair Government obligations through state actions. |
| Does the Government’s complaint-in-intervention relate back to the relator’s complaint? | Government contends relation back applies under Goetz/FERA. | Caremark argues no relation back under prior understanding. | Relates back under FERA; vacate district court’s related ruling. |
| Were Caremark’s plan-restriction denials false statements under the FCA? | State Appellants/Government contend denials based on plan restrictions can be false statements. | Caremark argues statements are factually true; legality is disputed. | Factually true statements about denials are not false; no FCA liability on that ground. |
| Did Goetz’s Goetz procedural-versus-substantive test apply to out-of-network/preauthorization/billed-amount restrictions? | State Appellants/Government contend Goetz applies to render denials false. | Caremark argues Goetz should govern; some restrictions are substantive. | Out-of-network resolved; preauthorization remanded for factual development; billed-amount issues not reached. |
| Can Arkansas FCA support reverse false-claims liability? | Arkansas FCA provisions could reach reverse false claims. | Arkansas FCA not aligned with § 3729(a)(7) concept. | Arkansas §20-77-902(8)(B) can support reverse false-claims liability; remand. |
Key Cases Cited
- United States ex rel. Riley v. St. Luke’s Episcopal Hosp., 355 F.3d 370 (5th Cir. 2004) (FCA liability for causing government to pay claims grounded in fraud.)
- Smith v. United States, 287 F.2d 299 (5th Cir. 1961) (indirect reverse false claims recognized under FCA.)
- Allison Engine Co. v. United States ex rel. Sanders, 553 U.S. 662 (U.S. 2008) (concerning governmental obligation and related falsity in FCA.)