Welcome to Original Source: The Sidley Austin False Claims Act Blog

The False Claims Act (FCA) has long been a key enforcement tool for the federal government in matters involving government contracts or other expenditures of government funds. FCA enforcement has traditionally focused primarily on two industries receiving a substantial amount of government funds: healthcare and defense and other government contractors. Recently, however, FCA enforcement has expanded to other industries, including financial services. Through the False Claims Act Blog, lawyers in Sidley’s White Collar, Healthcare, FDA, Government Contracting, Financial Services, Appellate, and other practices will provide timely updates on new and interesting developments relating to FCA enforcement and litigation.

COVID-19 Uninsured Program Under the Microscope

DOJ has repeatedly emphasized its commitment to pursuing fraud relating to the COVID-19 public health emergency (as discussed further here).  But so far, little has been made public regarding enforcement scrutiny of payments from the Department of Health and Human Services Provider Relief Fund, which includes a designated fund for reimbursing providers for COVID-19 testing, treatment, and vaccination for the uninsured (“COVID-19 Uninsured Program”).

However, HHS officials recently announced that they had referred to the HHS Office of Inspector General a provider that is an outlier on reimbursement for treatment claims from the COVID-19 Uninsured Program.  Providers that have received payments from the COVID-19 Uninsured Program should take steps to ensure that they are in full compliance with the terms and conditions for payment, including the balance billing restriction.

Sidley lawyer Brenna Jenny recently authored an article, available here, discussing this enforcement development.

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Preparing for FCA Scrutiny of Pandemic Billing Flexibilities

Sidley lawyers Jaime L.M. Jones, Brenna E. Jenny, and Catherine D. Stewart recently published an article in Bloomberg Law entitled Tips for Responding to a DOJ Inquiry Into Pandemic Billing.  The Department of Health and Human Services extended significant billing flexibility to providers during the COVID-19 public health emergency, and law enforcement can be expected to closely examine how providers have exercised those more relaxed rules.  The article offers tips for the in-house legal and compliance functions of healthcare providers as to how they can best position their organizations for successfully engaging with DOJ and state attorneys general on False Claims Act investigations relating to the use of pandemic billing flexibilities.

A copy of the article is available here.

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Grassley Letter to AG Nominee Garland Previews Legislation To Curtail DOJ Dismissal Authority and Materiality Requirement

Senator Charles Grassley, who supported the nomination of Merrick Garland for Attorney General, sent the then-nominee a letter on February 24 to ask the Department of Justice to work to “further clarify and strengthen the False Claims Act.”  As we reported in previous posts (here, here, and here), Senator Grassley has publicly criticized DOJ’s position that its authority to dismiss FCA suits over relators’ objections is virtually unfettered, and has criticized the materiality standard established by the Supreme Court in Escobar as lending undue weight to role of government conduct (or lack thereof) in response to allegations of fraud.  The letter discloses that Senator Grassley is working with “a cadre of bipartisan Senate colleagues” to “strengthen” and “improve” the False Claims Act by narrowing the materiality requirement, and by requiring a court to assess the merits of a qui tam in deciding whether to grant a motion to dismiss filed by DOJ.  We will continue to monitor and report on any such legislation that may ultimately be proposed.

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Managing the Next Big False Claims Act Whistleblower: Your Data

Sidley lawyer Brenna Jenny, along with Mihran Yenikomshian and Paul Greenberg of Analysis Group, authored an article entitled “Health Companies Can Reduce FCA Risk by Leveraging Data,” available here.  One of the most notable recent trends in FCA enforcement is an evolution in how DOJ identifies cases for investigation.  No longer reliant solely on whistleblowers, DOJ has begun implementing increasingly sophisticated data analytics to initiate many of its own FCA cases, as discussed further here and here.  The article discusses how healthcare industry participants can defensively deploy their own data to identify potential problems through internal investigations before they become part of government investigations.

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Private Equity Settlement Highlights Risks for Investors in Life Sciences Industry

A recent settlement reinforces the potential liability facing private equity investors in the life sciences industry. As we previously reported, late last year The Gores Group (“Gores”) entered into a $1.5 million settlement agreement with the United States to resolve claims that the alleged off-label promotion by its portfolio company of combination drug-medical device systems for pediatric patients resulted in the submission of false claims to federal healthcare programs.  Last month, Gores entered into a separate $1.5 million settlement agreement with certain states to resolve claims that the same alleged conduct resulted in the submission of false claims to state Medicaid programs.  See U.S. ex rel. Johnson v. Therakos, Inc., Case No. 12-cv-1454 (E.D. Pa., filed Mar. 22, 2012).  The participating states in the more recent settlement have sixty days to agree to the terms of that agreement; thus far at least California has joined. The claims resolved in these settlements arose from a qui tam suit.

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