Southern District of Florida: US suit against Christi Sulzbach barred by statute of limitations

by Ben Vernia | April 19th, 2010

In an April 16 decision, Judge Kenneth A. Marra granted summary judgment to Sulzbach, a former attorney and corporate integrity program director at Tenet Healthcare Corp. The US sued Sulzbach, alleging that she violated the False Claims Act by certifying the company’s compliance with healthcare laws despite knowing of Stark violations relating to agreements with primary care physicians at a Tenet-owned Florida hospital.

As the court’s decision recounts, the relevant history of the case is complex, and dates back to an investigation into the physician agreements which Tenet commissioned while purchasing the entity which owned the hospital. At around that same time, a Tenet employee, Sal Barbera, hired to oversee physician practices was terminated, and in 1997, he filed a wrongful termination suit and a whistleblower case. That same year, the Court found, the company’s outside counsel drafted a report analyzing its possible exposure for the physicians’ arrangement. During this period, Tenet issued certifications under a corporate integrity agreement which dated back to an even earlier case (the National Medical Enterprises case).

The US intervened in Barbera’s qui tam in 2001, and during lengthy litigation, it sought to compel production of the outside attorney’s report and argued that the crime-fraud exception applied, referring at times directly to Sulzbach’s role.

Although not described in the Court’s decision, the government’s September, 2007, complaint against Sulzbach came about precisely because, although the US failed in the Barbera litigation to obtain the attorney-client privileged documents, Tenet agreed to turn them over in a 2006 settlement agreement covering a variety of claims.

With regard to the statute of limitations, the US argued that it was not until the 2006 settlement that it had knowledge sufficient to trigger the three-years post-knowledge limitations period, and that under this analysis, its 2007 complaint was timely. The Court disagreed, writing:

The Court disagrees. First, based on the undisputed facts regarding the evidence of Defendant’s scienter that the government did have prior to 2003, the government knew or should have known of the facts material to its cause of action. Moreover, in the government’s attempt to prove that Tenet had knowing violated the False Claims Act in the prior case, the government made multiple statements to the Court that Sulzbach knowingly made false certifications and that Tenet was bound by Sulzbach’s knowledge.

Referring to the government’s statements in the Barbera qui tam, the Court noted:

The government cannot on the one hand attempt to impute Sulzbach’s intentional fraudulent conduct to Tenent in order to hold Tenent liable, or to prove a waiver of the attorney-client privilege based upon a crime-fraud exception, and on the other hand now claim that they were unaware of Sulzbach’s fraudulent intent. These statements made by the government in the Barbera case make it clear that years prior to receiving the McDermott report in 2006, the government had formed the belief that Sulzbach had knowingly made false certifications and pointedly and repeatedly made those statements to the court.

The Court granted Sulzbach summary judgment on all counts.

Comment: Although the government’s case against Sulzbach is over, it’s clear that the facts which gave rise to this case will have a lasting impact, particularly in the area of OIG-HHS’s settlement practices. OIG now typically demands certifications not just from the compliance officer, but from other compliance employees and compliance committees of corporate boards, effectively exposing anyone with oversight to personal liability for failures in corporate integrity programs.

2 Responses to “Southern District of Florida: US suit against Christi Sulzbach barred by statute of limitations”

  1. So what is the statute of limitations for this? I thought the statute of limitations for fraud was tolled during periods of war……

  2. That’s a good question. 28 USC 2416(d) tolls the statute of limitations while “the United States is in a state of war declared pursuant to article I, section 8, of the Constitution of the United States.” There’s two problems applying this to the government’s complaint in the Sulzbach case, though: First and foremost, the 2416(d) wartime exclusion only applies to limitations periods under 28 USC 2415, which include contract and tort actions by the United States. It doesn’t apply to the False Claims Act’s limitations period, codified at 31 USC 3731(b). Second, I’m not aware of any cases interpreting 2416(d) in the context of the Authorization for the Use of Military Force enacted after the 9/11 terrorist attacks. Arguably, this doesn’t equal a Constitutional Declaration of War.

Leave a Reply

Recent Posts

Recent Comments