1. FCA Enforcement: United States Department of Justice
Linda A. Kontos
Assistant United States Attorney
U.S. Attorney’s Office
Civil Fraud Section
Central District of California

2. Overview: Background Re: Government False Claims Act Investigation
Recent Amendments to the federal FCA (2009 & 2010)
Questions
*** The views expressed today, in this oral and PowerPoint presentation and in conversation with you, are those only of Linda Kontos personally, and are not, and should not be taken as, official positions of either the Office of the U.S. Attorney or the Department of Justice.

3. FEDERAL FALSE CLAIMS ACT BACKGROUND & INVESTIGATION PHASES
TOPIC 1:
FEDERAL FALSE CLAIMS ACT BACKGROUND & INVESTIGATION PHASES

4. Our Main Tool: FCA Elements required to prove FCA case:
CLAIM FOR PAYMENT TO THE GOVERNMENT (e.g., Medicare/Medicaid)
FALSITY
MATERIALITY
REQUIRED STATE OF MIND (“SCIENTER”)
Potential Exposure:
TREBLE the amount of damages sustained by the US +
Civil penalty per false claim &/or false statement: $5-11K +
Exclusion/debarment from program (admin. remedy)

5. Mechanics of a Qui Tam (Whistleblower) Action
Suit is Filed Under Seal (Confidential)
Government Investigates
Government Intervenes or Declines Intervention
Case Either Settles or Proceeds to Trial

6. The Investigation - Phase 1 Different Tools - Examples
Civil
CIDs
Documents
Interrogatories
RFAs
Agency (OIG) Subpoenas
Criminal
Search Warrants
AIDs
Grand Jury Subpoenas
Administrative
Suspension of Payments
Seizure Warrants and Asset Forfeiture
(Civil or Criminal)

7. The Investigation - Phase 2
Putting the Evidence Together
Document Review
Witness Interviews
CID Depositions
Experts/Consultants
If Criminal Component
Consensual monitoring
Undercover operations

8. The Investigation – Phase 3
Settlement
Intervention or Declination (Qui Tam)
Gear Up for Trial (discovery)
Motions (dismissal, summary judgment)
Trial

9. TOPIC 2: FEDERAL FALSE CLAIMS ACT AMENDMENTS –
The Fraud Enforcement and Recovery Act – May 2009 (“FERA”): CIDs & “Reverse” False Claims
The Patient Protection & Affordable Care Act – March 2010 (“PPACA”): Kickbacks

10. FERA / CIDs
Primary Purpose: To overrule judicial decisions with which Congress disagreed
Prior FCA: CIDs sparingly issued for docs/rogs/depos
FERA (§ 3733(a)(1)) + Regs (75 FR 14070) =
CID authority delegated to U.S. Attorneys

11. FERA: “Reverse” False Claims
Former § 3729 (a)(7):
New § 3729 (a)(1)(G):
False statement required
Not required for clause 2
Liability: “knowingly, makes, uses or causes to be made or used, a false record or statement to conceal, avoid, or decrease an obligation to pay or transmit money or property to the Government” (emphasis added)
“[1] knowingly makes, uses or causes to be made or used, a false record or statement material to an obligation to pay or transmit money or property to the Government, or
[2] knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay or transmit money or property to the Government”

12. FERA: “Reverse” False Claims cont’d.
Clause 2 (new): knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay or transmit money or property to the Government
No false statement necessary
Liability for retaining federal funds you are not entitled to have (e.g., Medicare overpayments)
Knowing retention of overpayment: FCA liability if funds initially improperly paid OR if funds legitimately received initially but later required to be returned

13. The Patient Protection & Affordable Care Act (“PPACA”): KICKBACKS
FCA actions based on underlying violation of the Anti-Kickback Statute (“AKS”) – 42 U.S.C. § 1320a-7b
AKS: criminal offense to “knowingly and willfully” exchange remuneration for a referral for medical items/services that may be paid for by a federal health care program (e.g., Medicare/Medicaid). 13

14. AKS – Ninth Circuit Specific Intent
Hanlester Network v. Shalala, 51 F.3d 1390 (9th Cir. 1995) required prosecutors in the Ninth Circuit to show that ∆:
“(1) kn[e]w that [the AKS] prohibits offering or paying remuneration to induce referrals, and
(2) engage[d] in prohibited conduct with the specific intent to disobey the law.” Id. at 1400 (emphasis added). 14

15. PPACA: No Specific Intent Under AKS
Appears to legislatively overrule Hanlester: no specific intent required
PPACA § 6402(f) adds language to the AKS –
“(h) a person need not have actual knowledge of [the AKS] or specific intent to commit a violation of this section.”
Practical effect: easier to prove kickback cases 15

16. QUESTIONS??? Linda A. Kontos Assistant United States Attorney
United States Attorney's Office
Central District of California
Civil Fraud Section