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Weil Scores Another Victory for Farmers Insurance in Medicare False Claims Act Case

On April 4, 2017, Weil obtained a major victory for Farmers Insurance when the U.S. Court of Appeals for the Second Circuit affirmed a February 2016 district court ruling that upheld a Report and Recommendation of dismissal with prejudice of an industry-wide False Claims Act whistleblower action. Both the Second Circuit and the district court adopted a Magistrate Judge’s finding that the plaintiff had violated Federal Rule of Civil Procedure 11 by acting in subjective bad faith, and his resultant recommendation that plaintiff’s claims be dismissed with prejudice. Along with another victory before the Second Circuit in a similar, parallel action in January 2017, Weil has secured four consecutive wins vindicating Farmers Insurance and its affiliates.

The plaintiff brought this qui tam action on behalf of the federal government against more than 60 insurance companies, claiming personal knowledge that the companies were not compliant with their statutory obligations to reimburse the government for payments made to Medicare beneficiaries. The plaintiff alleged that he knew “from conversations with defense counsel, insurance carrier representatives[,] and other attorneys[] of the Defendant insurance companies’ company-wide and nationwide failure to notify Medicare of liability case resolutions…”

After the plaintiff admitted to the possibility that some of the defendants were not involved in the alleged fraud, a Magistrate Judge found that the plaintiff had acted in bad faith by claiming personal knowledge of wrongdoing by each of the defendants, and was in violation of Rule 11 of the Federal Rules of Civil Procedure. In October 2014, the judge issued the Report and Recommendation dismissing the action with prejudice, which was subsequently upheld by the U.S. District Court for the Western District of New York in February 2016.

The Weil team was led by David Yohai, co-head of Weil’s Complex Commercial Litigation practice, who argued the appeal on behalf of all the insurers, including Farmers Insurance. The New York-based team also included partners Lori Pines and John Mastando, and associates Jodi Barrow and Tracy Ederer.