DOJ Continues to Leverage Polansky in Seeking (c)(2)(A) Dismissals

As discussed here, there is new leadership at DOJ and last week we got insight into when DOJ is moved to exercise its dismissal authority under 31 U.S.C. § 3730(c)(2)(A).  In March, DOJ moved to dismiss the relator’s FCA case in United States ex rel. Vermont National Telephone Co. v. Northstar Wireless LLC.  The district court referred the motion to a magistrate judge and the magistrate recommended that the district court grant DOJ’s motion.  The magistrate’s recommendation was grounded in the Supreme Court’s decision in United States ex rel. Polansky v. Executive Health Resources (previously covered here), which holds that DOJ is entitled to substantial deference in seeking dismissal of qui tam actions when it offers reasonable arguments that the burdens of continued litigation outweigh its benefits.  The relator objected to the magistrate’s decision and, on June 25, DOJ filed its response (the “Response”).

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Major Change at the U.S. Department of Justice Civil Division – Consequences for False Claims Act Enforcement in the Second Trump Administration

This past week saw a major change of the guard at the U.S. Department of Justice – one that may have significant impacts for the Civil Division’s use of the False Claims Act in the second Trump administration.

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DOJ Launches Initiative Leveraging the False Claims Act to Target DEI Programs

In a May 19, 2025 memorandum, Deputy Attorney General Todd Blanche announced the Civil Rights Fraud Initiative, which aims to use the False Claims Act (FCA) to investigate and “pursue claims against any recipient of federal funds that knowingly violates federal civil rights laws” via “racist preferences, mandates, . . . and activities”—including diversity, equity, and inclusion (DEI) programs. (more…)

Another Court Requires But-For Causation for AKS/FCA Claims; Cuts Nationwide Case Down to Two Physicians

Last week, the Northern District of Illinois issued a significant opinion in a False Claims Act (“FCA”) qui tam action alleging a nationwide kickback scheme by a pharmaceutical manufacturer to promote its gastrointestinal drugs.  United States ex rel. Wilkerson & Jackson v. Allergan Limited, No. 22-CV-3013 (N.D. Ill. Apr. 23, 2025).  The court provided important guidance on the pleading standards and causation requirements for FCA claims predicated on alleged Anti-Kickback Statute (“AKS”) violations.  Specifically, the court became the latest court to require that a kickback be the but-for cause of claims to establish those claims “resulted from” an AKS violation such that they are false under the FCA.  In adopting that standard, the Court largely followed the reasoning in the recent First, Sixth, and Eighth Circuit decisions requiring but-for causation (reported on here, here, and here).  The court’s subsequent, rigorous application of that standard to the relators’ complaint resulted in dismissal of the bulk of the relators’ AKS-based claims.

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Eleventh Circuit Condemns “Shotgun Pleadings” in Florida FCA Suit

The Eleventh Circuit once again put effect to Rule 9(b), insisting on clarity and specificity in False Claims Act pleadings for them to survive.  In Vargas v. Lincare, Inc., 24-11080, 2025 WL 1122196 (11th Cir. Apr. 16, 2025), the Eleventh Circuit reiterated the importance of pleading facts “showing that a false claim was actually submitted to the government” instead of merely “sketch[ing] out a theory.”  In addition, the panel opinion’s author—the long-serving Judge Tjoflat—offered a concurrence condemning “shotgun pleadings” that “lump[] multiple claims together in one count,” imploring district courts to sua sponte strike such complaints “at the outset.”

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Seventh Circuit Clarifies the Bounds of Anti-Kickback Statute Elements

This week, the Seventh Circuit reversed a conviction under the Anti-Kickback Statute (AKS) because the payments at issue—to advertisers—did not reflect an intent “to induce.”  United States v. Sorensen, No. 24-1557 (7th Cir. Apr. 14, 2025).  The advertisers, after all, wielded no influence over healthcare decisions.  And advertising cannot be an AKS-prohibited “referral” in the first place.  In reaching these holdings, the Seventh Circuit notably circumscribed the “outer boundaries” of the AKS—violations of which are among the most important drivers of FCA liability.

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Second Circuit Upholds District Court Ruling that FCA and AKS Scienter Is Not Present Where Defendant Previously Received Favorable HHS-OIG Advisory Opinions

This week, the Second Circuit upheld a dismissal from the Southern District of New York holding that a defendant did not fulfill the False Claims Act (“FCA”) or Anti-Kickback Statute (“AKS”) scienter requirements where the defendant sought and received favorable advisory opinions from the Department of Health and Human Services Office of Inspector General (“HHS-OIG”).  See United States ex rel. Stephen Sisselman v. Zocdoc, Inc., No. 24-2807 (2d Cir. Apr. 14, 2025).

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Fifth Circuit Concurrence Finds FCA’s Qui Tam Device Unconstitutional

The Fifth Circuit Court of Appeals recently vacated a $28.7 million verdict in a declined FCA qui tam because the district court improperly relied on the relators’ post-trial expert declarations to calculate damages. Writing separately in a concurrence, Judge Duncan also condemned the “constitutional flaws in the FCA’s qui tam device,” citing the logic of United States ex rel. Zafirov (discussed here), and adding to the number of judges voicing concerns over the constitutionality of the FCA’s qui tam provision. (more…)

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