A recent $12 million default judgment demonstrates the importance of filing an appearance in a False Claims Act (FCA) case, McGuireWoods Chicago partners Brett Barnett and Timothy Fry and associate Micaela Enger wrote in a Dec. 14, 2023, article in Westlaw Today. The analysis was originally posted on The FCA Insider, a McGuireWoods blog featuring insights on FCA litigation.
The authors analyzed the government’s suit against AZ Diabetic and the company owner. The government claimed FCA violations stemming from over $600,000 in reimbursement claims related to prescriptions, patient referrals and qualified leads allegedly purchased by AZ Diabetic. The company’s owner filed an appearance in federal court, but the company did not.
After AZ Diabetic failed to file an appearance, the government moved for a default judgment, which the Eastern District of Virginia entered. As a result, AZ Diabetic was liable for just over $12 million in civil penalties and treble damages under the FCA for violations of the Anti-Kickback Statute (AKS), based on the minimum civil penalty for each of the 923 allegedly illegal claims submitted to Medicare. The owner settled with the government.
“This case serves as another reminder to healthcare providers and medical equipment suppliers that healthcare fraud is costly, and the damages and penalties are steep. Any arrangements involving referrals should comply with the AKS and associated safe harbors,” the McGuireWoods authors wrote.