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.

Department of Justice Intends To Scrutinize Role of Litigation Funding in Qui Tam Lawsuits

We recently reported on the Eleventh Circuit’s decision in Ruckh v. Salus Rehabilitation LLC, which was the first case to assess the role of litigation funding agreements in qui tam litigation.  In that case, the Eleventh Circuit rejected a challenge to the relator’s standing based on the existence of a litigation funding agreement.

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Current DOJ Enforcement Priorities, Focus on CARES Act Fraud

At a recent U.S. Chamber of Commerce, Institute for Legal Reform meeting, Principal Deputy Associate Attorney General Ethan Davis set forth the current enforcement priorities of the U.S. Department of Justice (DOJ), clarifying for corporations accessing stimulus funds or otherwise dealing with government programs or acting in regulated industries how it is focusing its efforts to target fraud in the midst of the COVID-19 pandemic. While Davis underscored DOJ’s commitment to using the False Claims Act (FCA) and other “weapons in [its] arsenal” to fight fraud against the various pandemic stimulus programs, he also emphasized DOJ’s commitment to exercise enforcement discretion in cases lacking the hallmarks of bad corporate intent.

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Eleventh Circuit Reinstates Bulk of $350 Million FCA Jury Verdict, Adds Further Gloss to the FCA’s Materiality and Causation Standards and Role of Litigation Funding

On June 25, 2020, the Eleventh Circuit affirmed in part and reversed in part a district court’s decision to set aside a jury’s $350 million verdict in favor of the relator.  In Ruckh v. Salus Rehabilitation, LLC, Angela Ruckh, a registered nurse, alleged that two skilled nursing facilities (“SNFs”) and two related management services companies violated various Medicare and Florida Medicaid SNF regulations.  The Eleventh Circuit’s decision adds further gloss to the FCA’s materiality and causation standards.

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DOJ Announces First Increase To FCA Civil Penalties Since 2018

The 2015 Balanced Budget Act (BBA) requires that federal agencies make inflationary adjustments to civil monetary penalties on a yearly basis to account for inflation using calculations based on the Bureau of Labor Statistics’ Consumer Price Index.  On June 19, 2020, DOJ issued a final rule that will increase the civil penalties in FCA actions for penalties assessed after this date.  The prior minimum False Claims Act penalty of $11,181 will be increased to $11,665 per claim.  The maximum penalty will also increase from $22,363 to $23,331 per claim. The revised civil penalties, once adopted, will apply to all assessments of FCA civil penalties after the effective date, including penalties associated with violation predating the adjustment, but assessed on or after the date that the increases go into effect.

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Fifth Circuit Affirms Dismissal of FCA Case Based on Inadequate Pleading of Upcoded Claims

On May 28, 2020, the United States Court of Appeals for the Fifth Circuit affirmed the dismissal with prejudice of a False Claims Act suit brought against Baylor Scott & White Health (“Baylor”), a network of acute care hospitals.  The suit, brought by Integra Med Analytics, alleged that Baylor submitted $61.8 million in fraudulent claims to Medicare by using unsupported “higher-value” diagnosis codes to inflate Medicare reimbursements.  The U.S. government previously declined to intervene in the suit.

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DOJ Updates Guidance on Evaluating Corporate Compliance Programs

On June 1, 2020, the Criminal Division of the U.S. Department of Justice (DOJ) publicized an updated version of its “Evaluation of Corporate Compliance Program” guidance. This is the third version of the document, with the DOJ having issued the guidance in 2017 (which we analyzed here) and revised it in April 2019 (which we analyzed here). This further revision is another reminder of the DOJ’s heightened focus and increasing sophistication regarding evaluating compliance programs during investigations. While the overall structure of the guidance generally remains consistent with the last version, the revisions provide additional insight into the DOJ’s expectations for corporate compliance programs. More specifically, the revisions highlight the importance of an adequately resourced and empowered compliance department, a constantly evolving compliance program based on the company’s current risk profile and relevant compliance issues, and the use of key compliance metrics to test the effectiveness of a compliance program.

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