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From Health Law Daily, October 20, 2014

Too much too soon, court will revisit $90M FCA judgment

By Bryant Storm, JD

A district court granted a motion for a new trial on damages related to a default judgment that was entered as a result of false claims violations by a physician and a health care provider for cancer treatments that were unnecessary or never performed. The court held that the final judgment setting the amount of damages owed by the defendants at $89.6 million exceeded the scope of the allegations in the whistleblowers complaint and was therefore improper. The court held because the complaint did not support the conclusion that every claim submitted for every patient over a two year period was fraudulent, the basis for the damage calculation in the final judgment was inappropriate. To remedy the inaccurate judgment, the court ordered additional discovery and a new trial to arrive at a proper damage calculation (U.S. ex rel. McBride v Makar, et al., October 15, 2014, Whittemore, J).

FCA. Whistleblower Joseph McBride brought a False Claims Act (FCA) (31 U.S.C. sec. 3730) claim against Wasfi Makar, M.D. and American Cancer Treatment Centers, Inc. (ACTC) alleging that Makar submitted false Medicare claims for services related to image guided radiation therapy (IGRT), intensity modulated radiation thereby (IMRT) and port films that were unnecessary, never performed, or improperly administered. After the United States declined to intervene and the defendant’s did not contest the allegations, the court entered default judgments against Makar and the ACTC. In response to a motion for entry of a final judgment against Makar and the ACTC, Makar appeared on his own behalf and contested the entry of the final judgment on the grounds that he thought his bankruptcy proceedings had stayed the FCA proceedings. At the hearing, McBride submitted a spreadsheet containing amounts paid by the government related to claims submitted by Makar and the ACTC between December 2009 and February 2012.

Judgement. The court declined to accept any of Makar’s excuses and entered a final judgment in favor of McBride, adopting McBride’s positon that the entirety of prescribed treatment plans for every patient on the spreadsheet between December 2009 and February 2012 was fraudulent. The final judgment was entered against Makar and the ACTC in the amount of $89,631,473.75. Makar and the ACTC then filed a motion for a new trial on damages and to vacate the final judgment on the grounds that the damages did not reflect the actual scope of the fraudulent conduct.

Fraud. The defendants contended that the court was obligated to restrict its judgment to the conduct alleged in McBride’s complaint. Evaluating the complaint, the court agreed with Makar and the ACTC and concluded that the final judgment’s damage calculation had exceeded the allegations of the compliant because the complaint did not support the conclusion that entirety of every patient’s treatment over the two year period resulted in fraudulent claims. Specifically, the court reasoned that although the compliant contained evidence of fraud—for example, that Medicare was billed for impossible services that would have required Makar to be in two places at once—Makar could have been in one of the two alleged places, which meant that the scope of the fraud was less than the entirety of the treatment plan for every patient between December 2009 and February 2012.

New trial. To rectify the overly inclusive scope of the original damage determination, the court ordered additional discovery and a new trial to evaluate which of the claims that gave rise to the $90 million figure were fraudulent and which were appropriate. The court listed five specific categories of claims that could be supported by McBride’s complaint and that would be the subject of the new trial. The categories included claims like those paid for IGRT when IGRT was not performed on a patient and claims for IMRT at a location and time where there was no functional IMRT equipment.

The case number is No. 8:12-cv-792-T-27MAP.

Attorneys: Barbara Perez (Aronovitz Law) for Joseph McBride. Chad K. Alvaro (Mateer & Harbert, PA) for Wasfi A. Makar, and American Cancer Treatment Centers, Inc. Lacy R. Harwell, Jr., U.S. Attorney's Office, for United States of America.

Companies: American Cancer Treatment Centers, Inc.; United States of America

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