Kaitlyn Downs is a Associate in Holland & Knight's Orlando office.

In Carrel v. Aids Healthcare Found., Inc., 898 F.3d 1267 (11th Cir. 2018), the court of appeals affirmed the lower court's grant of summary judgment in favor of AIDS Healthcare Foundation for certain claims and dismissal of other claims brought by employees as relators under the False Claims Act (FCA). In this qui tam action, the relators alleged that incentives offered to employees and patients were unlawful kickbacks that rendered false any claims for federal reimbursement. The foundation provided medical services to individuals with HIV/AIDS and offered financial incentives to employees who referred HIV-positive individuals to other clinics and pharmacy services provided by the foundation. The foundation received approximately half of its revenue from Medicare, Medicaid and programs established by the Ryan White Comprehensive AIDS Resources Emergency (CARE) Act. The relators specifically alleged that an HIV-positive patient was assigned to a foundation employee, that the employee referred the patient to a foundation clinic and that the foundation paid the employee for successfully linking the patient to treatment with the foundation. The foundation later told the patient that CARE Act funds were used to pay for the patient's treatment.

The court held that referral payments made to employees fell within the employee exemption of the AKS. The court reasoned that the AKS exempts "any amount paid by an employer to an employee ... for employment in the provision of covered items or services." The AKS also exempts "any payment practice specified by the Secretary [of the Department of Health and Human Services] in regulations." Because the employee worked for the foundation, and the CARE Act covered the referral of HIV-positive individuals to appropriate healthcare providers, the foundation was entitled to pay the employee for referring patients. The court also held that the relators' other allegations failed to state a claim for lack of particularity. The court opined that the relators offered only circumstances consistent with their allegations that the foundation made false claims. The relators did not put forth evidence supporting a convergence of circumstances in which the foundation violated the AKS and billed the government for the services provided to that patient. The court noted that the relators conceded that they did not know the number of illegally referred patients; instead, the relators relied on general allegations about standard operating procedures at the foundation.

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