Supreme Court Mulls the Scope of FCA Liability for Potential “Claims” Submitted to Private Entities Funded by Private Entities

On November 4, 2024, the Supreme Court heard oral argument in United States ex rel. Heath v. Wisconsin Bell. The question presented is whether reimbursement requests submitted to the private corporation administering the E-rate program are FCA “claims.” Under the statute’s definition of “claim,” the answer hinges on whether the Government “provides” the requested money. All funding for the program, established by Congress, comes from private contributions. Yet where private contributors incur debts owed to the corporation, the United States Treasury collects those debts and transmits the funds to the corporation. The Court’s questioning suggests that the Court will conclude that the Government “provides” at least the money that it disburses to the corporation. The Court, however, appeared reluctant to make any determination as to whether the Government “provides” the other money paid to the corporation—all private contributions paid directly to the private corporation.

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District Court Rules FCA Qui Tam Provision Unconstitutional

Yesterday evening Judge Kathryn Mizelle in the Middle District of Florida granted a defense motion for judgment on the pleadings and dismissed an FCA case after concluding that the FCA’s qui tam provision is unconstitutional.  See U.S. ex rel. Zafirov v. Fla. Medical Assoc. LLC, No. 19-cv-1236 (M.D. Fla. Sept. 30, 2024).

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DOJ Faces Pushback At First Circuit On Expansive Causation Standard for AKS-Based FCA Claims

On July 22, 2024, the First Circuit Court of Appeals heard oral argument on what the appropriate standard of causation is for AKS-based FCA claims—specifically, whether a “claim” under the FCA “result[s] from” a kickback only if the claim would not have included the items or services but for the kickback. The District of Massachusetts certified this issue for appellate review after adopting the but-for causation standard in United States v. Regeneron Pharma., Inc., 2023 WL 6296393 (D. Mass. Sept. 27, 2023), as we previously reported here. The panel was made up of Judges O. Rogeriee Thompson, William Kayatta, and Lara Montecalvo, and their questioning suggests some optimism for those advocating for the but-for standard.

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DOJ Reaches Settlement with Provider Based on Chronic Care Management Coding

Recently, DOJ, the State of Florida, and the State of Minnesota reached a nearly $15 million FCA settlement to resolve allegations that a provider knowingly submitted claims for services related to the management of patients in assisted living facilities (“ALFs”), group homes, and memory care units that did not comply with applicable federal healthcare program (“FHCP”) requirements.  This settlement is one of the first FCA settlements involving chronic care management (“CCM”) codes.  See United States ex rel. Loscalzo v. Bluestone Physician Servs. of Florida, LLC, 2:20-cv-00295 (M.D. Fla).

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Court Dismisses EMTALA-Based Qui Tam Over Relator’s Objections

DOJ recently secured dismissal of a qui tam complaint premised on alleged violations of EMTALA over the relator’s objections, with the district court affirming that DOJ satisfied the Polansky standard for Section 3730(c)(2)(A) dismissals by presenting a “reasonable argument.”  In this case, DOJ’s argument rested on perceived flaws in the viability of the relator’s legal theory, government litigation costs, and complex privilege issues that would need to be resolved during discovery.

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Ninth Circuit Reboots FCA Suit Based on Radiologist Use of Certain Computer Monitors

A panel of the Ninth Circuit recently issued a 2-1 opinion reversing, in part, a district court’s dismissal of a False Claims Act case premised on a radiology facility’s use of non-medical grade computer monitors for diagnostic readings.  In reviving the case, the majority concluded that the relator sufficiently pled a false certification theory of fraud from which the court drew a “strong inference” that the radiology facility’s use of the computer monitors did not meet Medicare’s “reasonable and necessary” requirement because the allegedly technologically inferior monitors the radiologists used undermined the efficacy of their diagnostic readings.  The decision is notable because the majority relied on tenuous inferences to establish falsity, as detailed by the dissent, and a watered-down materiality analysis to establish materiality.

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Court Dismisses Commercial Insurer’s Claims Premised on Conduct Covered by FCA Settlements

It is becoming increasingly common for private litigants to sue over conduct that was previously the subject of FCA actions.  In one such recent case, the defendants successfully defeated such a collateral suit, demonstrating that it was time-barred under the statutes of limitations.

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Seventh Circuit Rejects Constitutional Challenge to FCA Judgment, Recognizes Circuit Split on Causation Requirement for AKS-Based Claims

In a recent decision, the Seventh Circuit acknowledged—but declined to pick sides in—a circuit split regarding the degree of causation required to establish FCA claims premised on AKS violations.  In the same opinion, the Seventh Circuit rejected an Eighth Amendment challenge to the amount of an FCA judgment.

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