Recent DOJ Amicus Brief Demonstrates Government’s Aggressive Approach to Expanding FCA Liability

Posted by HL Rogers and Kristin Koehler

The Department of Justice recently filed an Amicus brief on behalf of the United States and in support of a Relator in an action originally brought in the District of Massachusetts and now on appeal to the First Circuit, United States ex rel. Rost v. Pfizer, Inc. Brief for United State of America as Amicus Curiae Supporting Plaintiff-Appellant, United States ex rel. Rost v. Pfizer, Inc., No. 10-2215 (1st Cir. January 17, 2012) (“United States Amicus Brief”). The Amicus brief is notable in demonstrating how far the First Circuit recently has moved from its previous interpretation of the False Claims Act and how far it has distanced itself from several other circuits. Additionally, the Amicus brief is notable in showing how aggressive the Department of Justice has been in expanding the reach of the False Claims Act.

The District Court ruled on Defendant’s summary judgment motion on September 14, 2010. At the time of the decision, the District Court Judge was accurate in stating that “the implied false certification theory of liability under the FCA is an evolving area of the law” – particularly in the First Circuit. United States ex rel. Rost v. Pfizer, Inc., 736 F.Supp.2d 367, 375 (D.Mass. 2010). Since that time, both United States ex rel. Hutcheson v. Blackstone Medical, Inc., 647 F.3d 377 (1st Cir. 2011) in June 2011 and New York v. Amgen, Inc., 652 F.3d 103 (1st Cir. 2011) in July 2011 were decided by the First Circuit.

Therefore, in Rost, the District Court Judge could reject two of the government’s arguments that attempted to greatly expand the FCA: (1) “[W]hen you bill Medicaid you are impliedly certifying that no kickbacks have been paid in any of the underlying transactions;” and (2) “the payment of a kickback renders subsequent claims factually false under the FCA, without regard to who submits the claim or whether there is a certification that no such kickback was accepted.” Rost, 736 F.Supp.2d at 377 (quotation marks omitted). But with the issuance of Blackstone and Amgen, the First Circuit now has embraced the government’s position and expanded the FCA in exactly the manner the government pushed in Rost and outside the bounds set by the FCA’s statutory language.

The government now argues on appeal in Rost, with the recent support of Blackstone and Amgen, that a defendant is liable under the FCA even when “the third party [submitting the claim] has no knowledge of the underlying kickbacks or makes no express certifications regarding compliance with the [Anti-Kickback Statute, 42 U.S.C. § 1320-7b].” United States Amicus Brief at 13; see Blackstone, 647 F.3d at 386-87; Amgen, 652 F.3d at 110. This argument, and the opinions in Blackstone and Amgen, read out one of the most important limitations of the FCA’s plain language—that in order to violate the FCA, a party must make a claim that is factually incorrect or certify compliance with a statute or regulation with which it failed to comply. In other words, for liability under the FCA, a party must file a claim that is false. Under the Government’s theory, a party is liable if it submitted a claim for which any underlying conduct, no matter how remote, included some form of illegality—whether or not the claim itself is false. Not only is this approach expansive, but as the Government itself admits, it is also one that has been rejected by the Second and Ninth Circuits and restrained by the Tenth and D.C. Circuits. United States Amicus Brief at 17. Stay tuned.