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.

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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District Court Issues Rare Rebuke Denying DOJ’s Belated Motion to Intervene

A federal district court recently issued a rare order denying the Department of Justice’s (DOJ) motion to intervene in a qui tam suit after the government’s initial declination months earlier.  See United States ex rel. Odom v. Southeast Eye Specialists, PLLC, 3:17-cv-00689 (M.D. Tenn. Feb. 24, 2021).  The False Claims Act allows the government to intervene in a case in which it previously declined to intervene upon “a showing of good cause.”  Although DOJ does so not frequently seek to intervene after previously declining to do so, courts are generally deferential to the government’s shift in position.  This decision provides important precedent for defendants in the position of arguing that a late intervention by DOJ is not appropriate.

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DOJ and HHS-OIG Dish on Defensive Strategies and Case Coordination

During the Federal Bar Association’s 2021 Qui Tam Conference, two senior government lawyers—Neeli Ben-David, the Civil Division Deputy Chief and Health Care Fraud Coordinator for the U.S. Attorney’s Office for the Northern District of Georgia and Karen Glassman, Senior Counsel at the U.S. Department of Health and Human Services Office of Inspector General (“HHS-OIG”)—provided insights into how defendants can position themselves for successful engagement with the government and how DOJ and HHS-OIG coordinate behind the scenes to investigate and resolve FCA cases.

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“Come Down with a Sledgehammer”: Sen. Grassley and Acting Civil Division Head Boynton Discuss FCA Priorities

Yesterday, Senator Grassley, the architect of the 1986 False Claims Act amendments, and Brian Boynton, the Acting Assistant Attorney General of DOJ’s Civil Division, delivered the opening remarks at the Federal Bar Association’s 2021 Qui Tam Conference, previewing Senator Grassley’s priority legislative changes to the FCA and DOJ’s enforcement priorities under the Biden administration.

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Courts Continue to Diverge on How Post-Complaint Government Conduct Affects Materiality Analysis Under Escobar

Two recent decisions by district courts in the Third Circuit illustrate the continued divide among courts regarding the extent to which the government’s declination decision bears on the materiality analysis set forth in Escobar and also underscore the challenges defendants can face in defeating materiality at the motion to dismiss stage.

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