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Envision to Sell to KKR for $9.9 Billion

We represented Envision Healthcare Corporation (NYSE: EVHC) in its definitive agreement to sell to KKR in an all-cash transaction for $9.9 billion, including debt. KKR will pay $46 per Envision share in cash to buy the company, marking a 32 percent premium to the company's volume-weighted average share price from November 1, when Envision announced it was considering its options. The transaction is expected to close the fourth quarter of 2018. Read more

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Six Things to Know Before Buying a Physician Practice spotlight

Dermatology, ophthalmology, radiology, urology…the list goes on. Yet, in any physician practice management transaction, there are six key considerations that apply and, if not carefully managed, can derail a transaction. Download the 6 Things to Know Before Buying a Physician Practice to keep your physician practice management transactions on track.

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Takeaways from the Sixth Circuit's False Claims Act Decision in Renal Care


October 25, 2012

Providers striving to comply with complex and ambiguous billing regulations and/or evaluating potential liability for False Claims Act violations in such situations will likely find their positions significantly bolstered when they have dealt with the government in a good faith and transparent way, courtesy of a recent opinion by the United States Court of Appeals for the Sixth Circuit.

In U.S. ex rel. Williams v. Renal Care Group, 2012 WL 4748104 (6th Cir. Oct. 5, 2012), the Sixth Circuit provided considerable insight as to the type of proof required to show falsity, knowledge, and materiality under the False Claims Act. In evaluating those issues in a case involving the propriety of billing by a diabetes supply company, the Sixth Circuit reversed the district court's grant of summary judgment in favor of the United States and vacated the $83 million award of damages and penalties against the defendants. Based on the facts before the Court, the Sixth Circuit then went a step further and entered summary judgment on behalf of the defendants with respect to the two primary False Claims Act counts brought by the government.

In examining the question of falsity, the Sixth Circuit characterized the government's argument as an "obsessive[]" focus on the fact that the defendants pursued reimbursement for diabetic supply services "for the sole purpose of increasing its profit margins." The Sixth Circuit had little difficulty in rejecting this motive as providing proof that the claims submitted by the defendant supply company were false. When examined in the context of the regulatory framework at issue, the Court's reasoning could not have been clearer: "Why a business ought to be punished solely for seeking to maximize profits escapes us."

The Sixth Circuit then tackled the question of the type of proof required to show that a defendant acted "knowingly" under the False Claims Act, where the government argues that a defendant acts with reckless disregard of the fact that the submission of the claims at issue violated Medicare regulations. In what is likely to be the most important takeaway from the Court's opinion, the Sixth Circuit held that the defendants were not in reckless disregard of the truth or falsity of their claims where the defendants: (1) consistently sought clarification of whether billing for the claims at issue was proper; (2) followed industry practice in attempting to decipher ambiguous regulations; (3) were forthright with the government regarding the business practices surrounding the claims at issue; and (4) sought guidance from outside counsel on the manner in which the regulations at issue should be interpreted. As the Court unequivocally concluded, "[t]o deem such behavior 'reckless disregard' of controlling statutes and regulations imposes a burden on government contractors far higher than what Congress intended" in amending the False Claims Act to allow reckless disregard to satisfy the Act's knowledge requirement.

Finally, the Sixth Circuit evaluated whether a supposed violation of a condition of participation could render a claim materially false. The Court had little difficulty in reaching the conclusion that the violation of a condition of participation does not render a claim materially false under the False Claims Act and, therefore, cannot lead to False Claims Act liability. Again, the Court's reasoning was straightforward: "[t]he False Claims Act is not a vehicle to police technical compliance with complex federal regulations."

Providers can take heart that good faith compliance with complex and/or ambiguous regulations typically should not give rise to False Claims Act liability, particularly where providers seek advice as to the legality of their actions and deal transparently with the government. And, while the Sixth Circuit's Renal Care decision reversed an award of summary judgment, the principles set forth in the Court's opinion undoubtedly apply equally at the motion to dismiss stage of False Claims Act litigation and certainly will bolster arguments for dismissal at the outset of such litigation.

Bass, Berry & Sims attorneys Michael Dagley, Matthew Curley and Brian Roark represented the defendants in this matter.

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