United States of America et al v. North East Medical Services

Filing 257

STANDARD FALSE CLAIMS ACT SETTLEMENT TERMS. Signed by Judge Claudia Wilken on 8/19/15. (jebS, COURT STAFF) (Filed on 8/19/2015)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA

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UNITED STATES OF AMERICA and
STATE OF CALIFORNIA ex rel. LOI
TRINH and ED TA-CHIANG HSU,

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Plaintiffs,

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No. C 10-1904 CW
STANDARD FALSE
CLAIMS ACT
SETTLEMENT TERMS

v.
NORTHEAST MEDICAL SERVICES, INC.,

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Defendant.
________________________________/

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No. C 12-2895 CW
United States District Court
For the Northern District of California

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NORTHEAST MEDICAL SERVICES, INC.,

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Plaintiff,
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v.
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CALIFORNIA DEPARTMENT OF HEALTH
CARE SERVICES, et al.,

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Defendants.
________________________________/

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The standard False Claims Act (FCA) settlement agreement
terms are:
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Subject to the exceptions in paragraph 3, below, in

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consideration of the obligations of NEMS in the parties'
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agreement and conditioned upon NEMS's full payment of the
settlement amount, the United States (on behalf of itself,

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its officers, agents, agencies, and departments) releases

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NEMS, and its present and former directors, officers,

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employees and agents, to the extent they acted in their

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official capacities, from any civil or administrative
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monetary claims that the United States has or may have for

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the civil claims against NEMS arising from false claims to

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the Medi-Cal program for wraparound or supplemental

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payments from 2001 through 2008, as specified in the

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Amended Complaint in Intervention ("Covered Conduct"),

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including without limitations, claims under the federal
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FCA, 31 U.S.C. §§ 3729-3733; the Civil Monetary Penalties
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Law, 42 U.S.C. § 1320a-7a; the Program Fraud Civil

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United States District Court
For the Northern District of California

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Remedies Act, 31 U.S.C. §§ 3801-3812; and/or the common

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law theories of payment by mistake, unjust enrichment, or

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fraud.

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2.

Subject to the exceptions in paragraph 3, below, in
consideration of the obligations of NEMS in the parties'

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agreement and conditioned upon NEMS's full payment of the
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settlement amount, California (on behalf of itself, its
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officers, agents, agencies, and departments) releases

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NEMS, and its present and former directors, officers,

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employees, and agents, to the extent they acted in their

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official capacities, from all civil claims that California

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has or may have for the Covered Conduct, including,

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without limitations, claims under the California FCA,
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Government Code §§ 12650-12656, and/or the common law
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theories of payment by mistake, unjust enrichment, and
fraud.
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3.

Notwithstanding the releases given in paragraphs 1 and 2,

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above, or any other term of the parties' agreement, the

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following claims of the United States and California are

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specifically reserved and are not released:

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a. Any liability arising under Title 26, U.S. Code
(Internal Revenue Code), or under California's Revenue

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and Taxation Code;
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b. Any criminal liability;
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c. Except as explicitly stated in the parties' agreement,

United States District Court
For the Northern District of California

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any administrative liability, including mandatory or

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permissive exclusion from federal or state health care

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programs;

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d. Any liability to the United States or California (or
their agencies) for any conduct other than the Covered

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Conduct;
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e. Any liability for express or implied warranty claims or
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other claims for defective or deficient products or
services, including quality of goods and services;
f. Any liability for failure to deliver goods or services
due;
g. Any liability for personal injury or property damage or

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for other consequential damages arising from the Covered
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Conduct;
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h. Any liability based upon obligations created by the
parties' agreement.
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4.

Relators and their heirs, successors, attorneys, agents,

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and assigns shall not object to the parties' agreement and

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agree and confirm that the parties' agreement is fair,

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adequate, and reasonable under all circumstances, pursuant

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to 31 U.S.C. § 3730(c)(2)(B) and California Government

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Code § 12652(e)(2)(B).

Conditioned upon Relators' receipt

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of their share of the settlement amount, Relators and
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their heirs, successors, attorneys, agents, and assigns
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fully and finally release, waive, and forever discharge

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United States District Court
For the Northern District of California

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the United States and California, their agencies,

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officers, agents, employees, and servants, from any claims

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arising from the filing of the Civil Action under 31

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U.S.C. § 3730, or under California Government Code

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§ 12652, and from any claims to a share of the proceeds of

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the parties' agreement and/or the Civil Action.
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5.

NEMS waives and shall not assert any defenses NEMS may

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have to any criminal prosecution or administrative hearing

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relating to the Covered Conduct that may be based in whole

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or in part on a contention that, under the Double Jeopardy

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Clause in the Fifth Amendment of the Constitution, or

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under the Excessive Fines Clause in the Eighth Amendment

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of the Constitution, or under Article I Sections 15 and 24
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of the California Constitution, the parties' agreement
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bars a remedy sought in such criminal prosecution or
administrative action.

Nothing in this paragraph or any
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other provision of the parties' agreement constitutes an
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agreement by the United States concerning the

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characterization of the settlement amount for purposes of

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the Internal Revenue laws, Title 26 of the United States

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Code.

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6.

NEMS fully and finally releases the United States and

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California, their agencies, officers, agents, employees,
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and servants, from any claims (including attorneys' fees,
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costs, and expenses of every kind and however denominated)

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United States District Court
For the Northern District of California

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that NEMS has asserted, could have asserted, or may assert

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in the future against the United States and California,

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their agencies, officers, agents, employees, and servants,

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related to the Covered Conduct and the United States' and

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California's investigation and prosecution thereof.

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7.

NEMS fully and finally releases the Relators and their

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heirs, successors, attorneys, agents, and assigns, from
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any claims, damages, allegations, demands, actions or

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causes of action whatsoever, including attorneys' fees,

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costs, and expenses of every kind and however denominated,

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known or unknown, fixed or contingent, in law or in

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equity, in contract or in tort, under any federal or state

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statute or regulation, or under common law, that NEMS
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otherwise would have standing to bring, including, without
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limitation, any claim that NEMS has asserted, could have
asserted, or may assert in the future against Relators,
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related to the Covered Conduct and the Relators'
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investigation and prosecution thereof.

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8.

The settlement amount shall not be decreased as a result

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of the denial of claims for payment now being withheld

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from payment by any Medi-Cal contractor (e.g. fiscal

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intermediary, carrier) or any California payer, related to

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the Covered Conduct; and NEMS agrees not to resubmit to
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any Medi-Cal contractor or any California payer any
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previously denied claims related to the Covered Conduct,

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United States District Court
For the Northern District of California

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and agrees not to appeal any such denials of claims.

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settlement amount shall not be decreased as a result of

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any actions taken as a result of the auditing process

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established and executed by and with the California

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The

Department of Health Care Services.

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9.

All identifiable costs (as defined in the Federal

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Acquisition Regulation, 48 C.F.R. section 31.205-47; and
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in Titles XVIII and XIX of the Social Security Act, 42

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U.S.C. sections 1395-1395hhh and 1396-1396v; and the

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regulations and official program directives promulgated

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there-under) incurred by or on behalf of NEMS, its present

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or former officers, directors, employees, shareholders,

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and agents in connection with the following shall be
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"Unallowable Costs" on government contracts and under the
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Medicare Program, Medicaid Program, TRICARE Program, and
Federal Employees Health Benefits Program (FEHBP):
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a. the matters covered by the parties' agreement;
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b. the United States' and California's audit(s) and civil

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investigation(s) of the matters covered by the parties'

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agreement;

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c. NEMS's costs of investigation, defense, and corrective

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actions undertaken in response to the United States' and

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California's audit(s) and civil investigation(s) in
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connection with the matters covered by the parties'
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agreement (including attorneys' fees);

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d. the costs of negotiation and performance of the parties'

United States District Court
For the Northern District of California

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agreement; and

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e. the settlement amount, any payments that NEMS may make

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to Relator, including costs and attorneys' fees, and any

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additional payments NEMS may make in connection with the

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parties' agreement.
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10.

These Unallowable Costs shall be separately determined and

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accounted for in non-reimbursable cost centers by NEMS and

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NEMS shall not charge such Unallowable Costs directly or

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indirectly to any contracts with the United States or any

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State Medicaid program, or seek payment for such

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Unallowable Costs through any cost report, cost statement,

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information statement, or payment request submitted by
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NEMS or any of its subsidiaries or affiliates to the
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Medicare, Medicaid, TRICARE, or FEHBP Programs.

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If applicable, NEMS shall, within ninety (90) days of the

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date of this judgment, identify to applicable Medicare and

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TRICARE fiscal intermediaries, carriers, and/or

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contractors, and Medicaid and FEHBP fiscal agents, any

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Unallowable Costs (as defined in this paragraph) included

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in payments previously sought from the United States, or

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any State Medicaid program, including, but not limited to,
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payments sought in any cost reports, cost statements,
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information reports, or payment requests already submitted

United States District Court
For the Northern District of California

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by NEMS, or any of its subsidiaries or affiliates, and

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shall request, and agree, that such cost reports, cost

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statements, information reports, or payment requests, even

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if already settled, be adjusted to account for the effect

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of the inclusion of the Unallowable Costs.

NEMS agrees

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that the United States and California, at a minimum, shall
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be entitled to recoup from NEMS all remedies including
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overpayment, plus applicable interest and penalties, to

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which they may be entitled under the law, as a result of

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the inclusion of such Unallowable Costs on previously-

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submitted cost reports, information reports, cost

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statements, or requests for payment.

Any payments due

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after the adjustments have been made shall be paid to the
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United States, California, and/or the affected agencies,
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pursuant to the direction of the United States Department
of Justice, the California Department of Justice, and/or
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the affected agencies.

The United States and California

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reserve their rights to disagree with any calculations

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submitted by NEMS, or any of its subsidiaries or

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affiliates on the effect of inclusion of Unallowable Costs

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(as defined in this paragraph) on NEMS or any of its

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subsidiaries or affiliates' cost reports, cost statements,

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or information reports.
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12.

Nothing in the parties' agreement shall constitute a

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waiver of the rights of the United States or California to

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United States District Court
For the Northern District of California

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audit, examine, or re-examine NEMS's books and records to

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determine that no Unallowable Costs have been claimed in

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accordance with the provisions of this paragraph.

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13.

NEMS warrants that it has reviewed its financial situation
and that it currently is solvent within the meaning of 11

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U.S.C. §§ 547(b)(3) and 548(a)(1)(B)(ii)(I), and shall
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remain solvent following payment of the settlement amount.
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Further, the parties warrant that, in evaluating whether

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to execute their agreement, they (a) have intended that

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the mutual promises, covenants, and obligations set forth

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constitute a contemporaneous exchange for new value given

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to defendants, within the meaning of 11 U.S.C.

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§ 547(c)(1), and (b) conclude these mutual promises,
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covenants, and obligations do, in fact, constitute such a
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contemporaneous exchange.

Further the parties warrant

that the mutual promises, covenants, and obligations set
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forth herein are intended to and do, in fact, represent a
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reasonably equivalent exchange of value that is not

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intended to hinder, delay or defraud any entity to which

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NEMS was or became indebted on or after the date of this

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transfer, within the meaning of 11 U.S.C. § 548(a)(1).

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14.

The parties' agreement is intended to be for the benefit

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of the parties only.

The parties do not release any

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claims against any other person or entity, except to the
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extent provided for in paragraph 15, below.

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United States District Court
For the Northern District of California

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15.

NEMS waives and shall not seek payment for any of the

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health care billings covered by the parties' agreement

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from any health care beneficiaries or their parents,

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sponsors, legally responsible individuals, or third party

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payors based upon the claims defined as Covered Conduct.

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16.

Each party freely and voluntarily entered into the

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parties' agreement without any degree of duress or
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compulsion.

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17.

The parties' agreement is governed by the laws of the

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United States.

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any dispute relating to the parties' agreement is the

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The exclusive jurisdiction and venue for

United States District Court for the Northern District of

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California.

For purposes of construing the parties'

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agreement, the agreement is deemed to have been drafted by
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all parties to the agreement and shall not, therefore, be

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construed against any party for that reason in any
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subsequent dispute.

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transferees, heirs, and assigns.

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The parties' agreement is binding on NEMS's successors,

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The parties' agreement is binding on Relators' successors,
transferees, heirs, and assigns.

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All parties consent to the United States' and/or

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California's disclosure of the parties' agreement, and
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information about the parties' agreement, to the public.

United States District Court
For the Northern District of California

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Dated: August 17, 2015

CLAUDIA WILKEN
United States District Judge

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