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Fraud Suit Funding Deal Negates $255 Million Win, Defendants Say

July 17, 2020, 1:45 PM

Skilled nursing companies found liable for overbilling Medicare say the Eleventh Circuit should recognize that a whistleblower’s lawsuit funding deal negates her recent False Claims Act damages victory.

Angela Ruckh’s $4 million agreement with a private litigation funding entity forfeited her standing to pursue claims in the government’s name, and requires dismissal of the suit altogether, the defendants told the U.S. Court of Appeals for the Eleventh Circuit in a petition for rehearing en banc.

The FCA expressly prohibits assignment of government claims to third parties who don’t qualify as whistleblowers, the defendants said.

The court’s conclusion that Ruckh retained a sufficient interest over the suit allows for the “creation of a secondary market for clandestine trading and selling of the government’s FCA claims to the highest bidders, without any discernible limits or even the government’s knowledge,” they said.

The court’s three-judge panel said June 25 that a Florida jury reasonably found that Consulate Health Care and others overbilled and misled Medicare as to the necessity of services.

The ruling directed a district court to reinstate the jury’s verdict as it pertains to Medicare fraud, which would be $255 million in trebled damages plus penalties.

The court also said Ruckh’s litigation funding agreement with ARUS 1705-556 LLC didn’t deprive her of standing to pursue the appeal.

This ruling contravenes limits in the FCA that allow the government to maintain control and ensure alignment of interest between the government and whistleblower, the defendants said in their petition.

Allowing a whistleblower to unilaterally reassign all or part of the government’s interest without knowledge or oversight violates the text and structure of the FCA, they said.

Skadden, Arps, Slate, Meagher & Flom LLP represent the defendants.

The case is Ruckh v. Salus Rehab. LLC, 11th Cir., No. 18-10500, petition for rehearing en banc 7/16/20.

To contact the reporter on this story: Daniel Seiden in Washington at dseiden@bloomberglaw.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Patrick L. Gregory at pgregory@bloomberglaw.com

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