MSP False Claims Action Reaching Its Conclusion

Medicare Set-Aside Blog, MSP Litigation, MSP News on January 18, 2017
Posted by Jennifer Jordan, JD, MSCC

On January 18, 2017, the Second Circuit Court of Appeals brought an end to Kent Takemoto’s dreams of whistle blower riches. The Court upheld the District Court’s adoption of the Magistrate’s recommendation to dismiss the false claims action, finding that he failed to plead facts as to each defendant’s obligation to repay the government. Although Mr. Takemoto faulted the district court for failing to assume his allegations were true, he failed to allege facts admitting an inference of a reimbursement obligation on the part of any defendant and therefore presented no plausible claims. The FCA defines “obligation” as “an established duty, whether or not fixed, arising from an express or implied contractual, grantor-grantee, or licensor-licensee relationship, from a fee-based or similar relationship, from statute or regulation, or from the retention of any overpayment.” 31 U.S.C. § 3729(b)(3). Allegedly failing to adopt an adequate compliance program, or more importantly failing to retain a consultant to accomplish the same, is not the same as failing to meet a legal obligation. As it is highly unlikely that the United States Supreme Court will take cert on this matter, this should be the end of this costly and pointless saga.

United States ex rel. Kent Takemoto v. Nationwide Mut. Ins. Co., 2017 U.S. App. LEXIS 822 (Jan. 18, 2017).