June 15, 2015
A federal court has ordered discovery regarding the circumstances of a Medicare payment suspension by CMS only one week after failed settlement negotiations between a cardiology practice and the Department of Justice (DOJ) to resolve a pending False Claims Act (FCA) lawsuit. The provider petitioned the court for a preliminary injunction following what it claims was a retaliatory suspension of its Medicare payments, after an impasse in settlement talks with the DOJ. Arguing that the DOJ improperly coordinated with CMS to implement the payment suspension, the provider alleged it was being penalized for exercising its Fifth Amendment right to defend itself against the government's accusations of fraud. The federal court found that the temporal proximity of the suspension decision and the breakdown of settlement discussions "raises the index of suspicion of concerted action between the DOJ and CMS." The judge then ordered limited discovery regarding the CMS decision to suspend payment.

The key takeaway from this decision is that providers who reach an impasse in FCA settlement negotiation with the DOJ might have payment suspended by CMS, if CMS can establish that a "credible allegation of fraud" exists. Despite the court's receptivity to the provider's arguments and its order to allow discovery regarding the circumstances of the CMS decision to suspend payment, this decision may also signal a new and troubling prospect of increased coordination between CMS and the DOJ in active FCA matters.

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