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Chicago City Hall Hiring Fraud Defendants Challenge Honest Services Fraud Convictions Former IGA employee Timothy McCarthy and his codefendants have challenged their mail fraud convictions in the City Hall Hiring probe on the grounds that they received no personal gain for their role in the patronage scheme and because the government failed to prove that the City of Chicago suffered any monetary loss. McCarthy is being represented on appeal by Patrick E. Deady, head of the firm's litigation practice, Kelly McCloskey Cherf, one of the firm's senior litigation partners, and associate J. Michael Tecson. Ms. Cherf, Messrs. Deady and Tecson and senior partner Edward M. Hogan were all part of the defense team during Mr. McCarthy's two-month jury trial last year. McCarthy was sentenced to eighteen months in custody by the district court. On January 19, 2007, a three-judge panel granted McCarthy's motion to remain free on bond pending the appeal, finding that McCarthy's challenges to his mail fraud conviction raised substantial legal issues which, if resolved on appeal in McCarthy's favor, would likely result in a reversal of his conviction or a new trial. In his opening brief filed January 30, 2007, McCarthy also argued the government's multiple frauds alleged in one of the counts may have resulted in a non-unanimous verdict, and that the government's decision to add a new mail fraud charge on the eve of trial was solely to obtain a tactical advantage denying McCarthy his right to a fair trial. Briefing by all defendants and the government is expected to be completed by March 15, 2007, with oral argument in the United States Court of Appeals for the Seventh Circuit to be scheduled later this spring. To read McCarthy's opening brief, click here. For codefendant Robert Sorich's opening brief, click here. Anti-Kickback Claims Defeated Hogan Marren, Ltd. recently participated in a joint defense effort that defeated whistleblower claims brought under the Federal False Claims Act and Medicare Anti-Kickback Statute by former employees of ambulance transport companies against nine Chicago area community hospitals. Litigation partners Patrick Deady and Laura Liu obtained summary judgment in favor of two of the Chicago community hospitals alleged to have participated in the kickback and false statement scheme. The whistleblowers alleged that the hospital defendants violated the False Claims Act by knowingly causing false or fraudulent claims to be presented for payment or approval by Medicare . Purportedly, the hospital defendants made false certifications on their Medicare cost reports by indicating their compliance with the Anti-Kickback Statute, 42 U.S.C. § 1320a-7b(b), when, in fact, they supposedly had knowledge of an alleged kickback scheme involving discounted rates paid by the hospitals in exchange for referrals of Medicare and Medicaid ambulance transport services. The whistleblowers claimed that the hospitals violated the Anti-Kickback Statute by knowingly and willfully receiving illegal remuneration in the form of discounted ambulance rates from the ambulance companies in exchange for the hospitals’ referrals of Medicare and Medicaid ambulance business. On September 30, 2006, the United States District Court Judge Mark Filip ruled that the hospital defendants were entitled to summary judgment as a matter of law. Klaczak v. Consolidated Medical Transport, 2006 WL 2849734 (N.D. Ill., Sept. 30, 2006). In its 120-page memorandum opinion and order, the Court pointed to three “global” defects, which were fatal to the whistleblowers’ case. First, the whistleblowers failed to demonstrate that any alleged discounts in the fees for ambulance transports constituted illicit remuneration under the Anti-Kickback Statute. Second, the whistleblowers failed to create a triable issue with respect to the statute’s heightened scienter requirements for “knowing” and “willful” misconduct. Third, the whistleblowers’ theory was “fundamentally implausible.” Thus, despite the extensive discovery pursued by the whistleblowers, there were no triable issues to present to a jury. The district court dismissed all claims and terminated the litigation.» View September 30th Filip Decision Hogan Marren's attorneys help defeat a $250 million antitrust claim made in arbitration proceedings against Advocate Health Care Network, Advocate Health Partners and Advocate Health and Hospital Corporation. On November 18, 2005, after nearly two years of litigation, a three-member panel of the American Arbitration Association ("AAA") denied all of United's claims including antitrust claims that Advocate had engaged in illegal price-fixing, group boycott, refusal to deal, tying and market allocation violations between 1999 and 2004. The Panel found that United's price-fixing claims relating to the 2000-2002 Advocate physician contracts were barred by the "equal responsibility doctrine" since United sought a joint contract with Advocate's employed and independent physicians. The Panel found United benefited from the "substantial administrative efficiencies" in Advocate's network that made it attractive to United and its customers. Although not required for their decision, the Panel concluded that Advocate's joint contract was not a per se violation of the antitrust laws, finding that Advocate had offered sufficient evidence that the joint contracting "provided United and other payers competitive benefit sufficient to offset any potential harm to consumers." The Panel also found United was unable to establish that Advocate had the necessary "market power" to fix prices and concluded that United would not have prevailed on its price-fixing claim under a Rule of Reason analysis, even in the absence of the equal responsibility defense. The arbitrators also found that Advocate's attempt in August, 2003 to jointly contract for its physicians with United in a "clinically integrated" contract to begin January 1, 2004, was not a violation of the antitrust laws. The Panel considered extensive testimony of Advocate's development of a clinical integration program and found that the evidence presented at the hearing established that Advocate was prepared as of January, 2004 to provide a "clinically integrated" product for fee-for-service patients. The Panel found that the proposed benefits from such a program, as recognized by six other health care insurers who entered into clinically integrated contracts with Advocate between 2003 and 2005, "sufficiently justified Advocate's conduct in attempting to reach a joint contract with United." The remainder of United's antitrust claims were barred, the Panel found, primarily because United had failed to establish that Advocate's fifteen percent (15%) share of the hospital and physician markets in metropolitan Chicago constituted "market power." |