Difference between revisions of "False Claims Act"

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In June 2019, Rialto Capital Management LLC (Rialto) and its former affiliate RL BB-IN KRE LLC (RL BB) agreed to pay $3.6 million to resolve allegations that Rialto and the Kentuckiana Medical Center (KMC), an Indiana-based hospital owned by RL BB, violated the Anti-Kickback Statute, the Stark Law, and the False Claims Act by engaging in illegal financial arrangements with two doctors who referred patients to KMC. According to the DOJ’s [https://www.justice.gov/opa/pr/rialto-capital-management-and-current-owner-indiana-hospital-pay-36-million-resolve-false press release], “KMC, under the direction of Rialto, provided personal loans to two referring doctors and then repeatedly forbore from requiring repayment of those loans” and “the hospital’s failure to collect on loans to key referral sources constituted a form of remuneration prohibited by both the AKS and the Stark Law.”
In June 2019, Rialto Capital Management LLC (Rialto) and its former affiliate RL BB-IN KRE LLC (RL BB) agreed to pay $3.6 million to resolve allegations that Rialto and the Kentuckiana Medical Center (KMC), an Indiana-based hospital owned by RL BB, violated the Anti-Kickback Statute, the Stark Law, and the False Claims Act by engaging in illegal financial arrangements with two doctors who referred patients to KMC. According to the DOJ’s [https://www.justice.gov/opa/pr/rialto-capital-management-and-current-owner-indiana-hospital-pay-36-million-resolve-false press release], “KMC, under the direction of Rialto, provided personal loans to two referring doctors and then repeatedly forbore from requiring repayment of those loans” and “the hospital’s failure to collect on loans to key referral sources constituted a form of remuneration prohibited by both the AKS and the Stark Law.”
=='''Fraudulent Inducement of a Contract and False Claims Act Liability'''==
Where a contract was “procured by fraud,” [https://www.zuckermanlaw.com/false-claims-act-resources-corporate-whistleblowers/ False Claims Act liability] flows from fraudulent inducement.  Examples of fraudulent inducement include:
*the contractor knowingly provides the government with price lists and discounts containing false information in order to induce it to enter into the contract;
*the contractor makes an initial misrepresentation about its capability to perform the contract in order to induce the government to enter into the contract; or
*a party makes promises at the time of contracting that it intends to break.
Where a defendant causes a contract to be procured by fraud, all claims for payment made under that contract are deemed false for purposes of the False Claims Act, even if the claims do not themselves contain a false statement. ''U.S. ex rel. Marcus v. Hess'', 63 S. Ct. 379, 384 (1943)(holding the initial act of fraud to induce government contract “tainted” every subsequent claim for payment); see also ''U.S. ex rel. Main v. Oakland City Univ.'', 426 F.3d 914, 917 (7th Cir. 2005).  The core issue is whether the defendant entered into a government contract with the intent not to perform or with the knowledge that it could not perform as promised.” ''U.S. ex rel. Blaum v. Triad Isotopes, Inc.'', 104 F. Supp. 3d 901, 914 (N.D. Ill. 2015).


='''Materiality and the False Claims Act'''=
='''Materiality and the False Claims Act'''=