January 26, 2016
On January 20, 2016, Weil obtained a significant victory for Farmers Insurance and several of its affiliates when the U.S. District Court for the Western District of New York accepted a Magistrate Judge’s June 2015 Report and Recommendation of dismissal with prejudice of an industry-wide whistleblower action alleging violations of the federal False Claims Act. The court accepted in its entirety the Report and Recommendation – in which the Magistrate Judge found that plaintiff failed to state a plausible claim for relief and denied plaintiff leave to replead, and concluded that plaintiff lacked a good faith basis for the allegations – and denied plaintiff’s objections.
Plaintiff initially filed this qui tam lawsuit on behalf of the U.S. federal government in 2011. He asserted that a number of major insurance companies violated the False Claims Act for allegedly failing to reimburse the government for payments it made to Medicare beneficiaries – as mandated by the Medicare Secondary Payer (MSP) statute. Plaintiff’s claims rested primarily on his allegations that “[e]very year, Defendants issue a settlement, judgment, or award for tens of thousands of claims involving Medicare beneficiaries” while in “only a small fraction of these cases did either the beneficiary or the primary payer make payments to CMS, as required by the MSP statute” – implying that the defendants avoided their obligation to repay the government for a large fraction of beneficiaries who allegedly had not made hundreds of millions of dollars in payments to CMS.
The U.S. District Court for the Western District of New York ordered the plaintiff’s complaint unsealed in April 2014 after the U.S. government elected not to intervene in the proceedings. In October 2014, plaintiff filed an amended complaint naming nearly two dozen insurers, third party claims administrators, self-insured companies, and other risk managers as defendants. After defendants’ motions to dismiss plaintiff’s amended complaint were briefed in full, the Court heard oral arguments in early June, 2015.
The Weil team was led by David Yohai, co-head of Weil’s Complex Commercial Litigation practice, partner John Mastando, and partner Lori Pines, who argued the joint motion to dismiss before the Magistrate Judge. The team also included associates Jodi Barrow, Luna Ngan, and Tracy Ederer, all in New York.