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From Health Law Daily, February 18, 2014

Relators cannot share in recovery of criminal proceeding filed before FCA suit

By Melissa Skinner, JD

A qui tam suit alleging violation of the federal False Claims Act (FCA) filed after the commencement of criminal proceedings against the individuals accused in the FCA case was not considered an alternate remedy under the Act and, therefore, the relators in the qui tam suit could not share in the restitution awarded in the criminal matter. The Fifth Circuit determined that the FCA suit was not an alternate remedy under the FCA because it did not come before the filling of the criminal proceeding. The court relied on the plain language of the FCA and previous interpretations of that language by other courts, both of which implied that to be considered an alternate remedy under the statute, an FCA suit must exist at the time  the alleged alternate remedy  is commenced (U.S. ex rel Babalola v Sharma, February 14. 2014, Benavides, F).

Background. Samuel Babalola and Kayode Samuel Adetunmbi (the relators) were medical assistants to Dr. Arun Sharma and Dr. Kiran Sharma (the Sharmas). The relators sent an anonymous letter to various government agencies alleging the Sharmas submitted fraudulent claims to Medicare, Medicaid, and private insurance companies. Based on the allegations in that letter and the criminal investigation that followed, the Sharmas were charged with 64 counts of conspiracy, health care fraud, and other federal crimes. The Sharmas pleaded guilty to certain counts and were ordered to pay over $43 million in restitution. The Sharmas appealed the amount of that award and while that appeal was pending, the relators filed a qui tam action against the Sharmas alleging violations of the FCA. The government did not intervene but filed a motion for summary judgment after the relators attempted to compel depositions of certain Department of Justice officials. In that motion, the government argued that the relators were not able to share in the restitution that was a result of the criminal proceeding because the alternate remedy provision of the FCA did not give the relators that right.  

Alternate remedy. Section 3730 of the FCA allows individuals to bring civil acts alleging violation of the statute and also provides that if the government chooses to pursue an alternate remedy against those accused in the civil suits, the relators have the same rights in those alternate proceedings. In other words, if the government fails to intervene in a relator’s qui tam civil suit and instead engages in an alternate proceeding against the same defendants, the relators still have a right to share in the recovery, which result from the alternate proceeding.

Holding. The Fifth Circuit found that since the criminal proceeding was initiated first, it could not be considered an alternate remedy because “for a remedy to be ‘alternate’ to the qui tam proceeding, there must have been two proceedings from which to choose.” Thus, in order for the proceeding to be considered an alternate remedy under the FCA, it must be shown that the qui tam action existed before the alternate proceeding. In so finding, the Fifth Circuit relied heavily on the interpretations of the alternate remedy provision according to the Sixth Circuit, which presumed an existing qui tam action in order for the alternate remedy provision to apply.

The case number is 13-20182.

Attorneys: Joel M. Androphy (Berg & Androphy) for Samuel Babalola. Christine Noel Kohl, US Dept. of Justice, for the USA. Chris Flood (Flood & Flood) for Arun Sharma. Dan Lamar Cogdell (Cogdell Law Firm) for Kiran Sharma.

Companies: USA ; Arun Sharma; Kiran Sharma; Allergy Asthma Arthritis & Pain Center 

MainStory: TopStory CaseDecisions QuiTamNews FCANews FraudNews CMSNews MedicaidNews PaymentNews LouisianaNews MississippiNews TexasNews

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