Criminal – Medicaid Fraud – Civil Suit

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In the wake of defendant dentist’s criminal conviction of crimes related to a scheme to defraud Medicaid, an Abingdon U.S. District Court says the government may bring a civil suit against the dentist under state and federal false claims acts.

The complaint pleads with sufficient particularity the fraud committed by defendant. Further, language of the Virginia Fraud Against Taxpayers Act, Va. Code §§ 8.01-216.1-19, and the federal False Claims Act encompasses fraudulent claims submitted to private contractors working for state-run Medicaid programs. Thus, the agencies to which defendant submitted claims constitute the government for purposes of the Virginia and federal false claims statutes.

Defendant argues he was economically prejudiced because the civil suit was not filed until he was convicted, went to prison and was stripped of his dental license. Plaintiffs are correct in arguing that the law precludes the use of this affirmative defense for claims brought by the state acting in its governmental capacity.

Earlier, when the parties were in discussions in an attempt to avoid litigation, they executed a Tolling Agreement that tolled the statute of limitations and other time-based defenses between Jan. 1, 2009 and Oct. 1, 2009. Defendant now argues this action is time-barred and the Tolling Agreement is invalid. Plaintiffs correctly assert that the Tolling Agreement was validly executed in exchange for valuable consideration. The limitations period is not at issue for the VFATA claims because prior to 2007, the VFATA contained no statute of limitations. The claims here date from 2003 to 2006. Thus, there is no time bar to these claims. The FCA’s statute of limitations is six years from the date of filing a false claim. Due to the Agreement, plaintiff had approximately two months after Oct. 1, 2009 to file suit on a claim submitted on Feb. 23, 2003. The government filed this complaint Nov. 6, 2009, which is within the limitation period as defined by the FCA and the Tolling Agreement.

The court also rejects defendant’s arguments that allowing this civil suit in addition to his criminal prosecution and conviction would violate the Double Jeopardy Clause or the doctrine of res judicata.

It does not appear the 4th Circuit has considered the FCA and the question of double jeopardy since Hudson v. U.S., 522 U.S. 93 (1997), but other courts have held that penalties under the FCA are not criminal punishment for the purpose of the Double Jeopardy Clause of the Fifth Amendment.

U.S. v. Shelburne (Jones, J.) No. 2:09cv00072, June 24, 2010; USDC at Abingdon, Va.; Rick A. Mountcastle, ASUA; Joseph E.H. Atkinson, AAG; Roy Shelburne, pro se. VLW 010-3-335, 13 pp.