Circuit OK’s $64 Million False Claims Judgment

CHICAGO (CN) - The 7th Circuit upheld a $64 million judgment against Peter Rogan, principal manager of the now-defunct Edgewater Medical Center, who admittedly took part in a scheme to pay kickbacks for referrals, pad bills, and receive $17 million from the government by submitting 1,812 false claims.

Six other Edgewater defendants pleaded guilty to fraud, but Rogan was never indicted. Instead, the government filed a civil action against him under the False Claims Act. Rogan did not deny that illegal referrals had occurred, that kickbacks were paid, that the claims omitted this information, and that he knew what was going on. He argued that the omissions were not material, because the government might have paid the illegal claims, anyway.

"Rogan's assertion that some disbursing officer had to testify that the United States does not pay illegal claims is just a repackaged version of the materiality argument and fails," Judge Easterbrook wrote.

The court also rejected Rogan's claim that the $64 million award was excessive, since it is less than four times the actual damage. And without knowing the appropriate multiplier, "for all we can tell, Rogan's penalty may be too low," Easterbrook concluded.

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