Federal Judge Tosses False Claims Act Lawsuit Against Zuckerman Spaeder Client Health First

U.S. District Court Judge Roy A. Dalton has dismissed with prejudice a whistleblower’s False Claims Act (“FCA”) lawsuit brought against Zuckerman Spaeder client Health First. The dismissal of a third amended FCA complaint brought by relator Omni Healthcare comes after a January ruling by the same court, which dismissed Omni’s second amended complaint because it lacked crucial details. 

Health First is Central Florida’s only fully integrated delivery network and the largest health provider in Brevard County. The non-profit company operates a health insurance plan, four hospitals, a multi-specialty physician group, and is home to Brevard County’s only Level II trauma center. 

Omni alleged that its principal, Dr. Craig Deligdish, had firsthand knowledge of purported anti-kickback and Stark Law violations. While the government had the opportunity to join the whistleblower lawsuit, it declined to do so after a review of Omni’s alleged evidence. Omni persisted, leading to the January dismissal by Judge Roy B. Dalton of the U.S. District Court for the Middle District of Florida. Judge Dalton ruled that Omni failed to provide specific evidence necessary to support the lawsuit, saying the court “cannot be left wondering whether a plaintiff has offered mere conjecture or a specifically pleaded allegation on an essential element of the lawsuit.”

In his most recent decision, Judge Dalton dismissed Omni’s third amended complaint, this time with prejudice, because Omni had entered into a stipulation in which it agreed not to file any further amended complaints. In exchange for that agreement, Health First agreed to not oppose Omni’s filing of the second amended complaint. However, in direct contravention of the stipulation, Omni filed a third amended complaint after its second amended complaint was dismissed. The court rejected Omni’s arguments, including that it should not be bound by the stipulation because it was litigating the FCA claims on behalf of the government, which is the real party in interest in FCA cases.  

“The Court’s decision confirms that, while FCA relators may be litigating their claims on behalf of the government, they don’t have license to break agreements in the name of the government,” said partner Marcos E. Hasbun, who led the Zuckerman Spaeder team. 

“Health First is committed to improving the wellness and health of those we serve. Zuckerman Spaeder helped us to end costly litigation and allowed Health First to remain focused on healing,” said Health First Senior Vice President and Chief Legal Officer Nicholas Romanello. 

The case is Omni Healthcare Inc. v. Health First Inc. Robert T. Rhoad and Andy Liu of Nichols Liu LLP served as co-counsel.