The D.C. Circuit Court of Appeals recently overruled an earlier district court vacatur of the CMS Parts C/D Overpayment Rule, resulting in reinstatement of the rule. The decision adopted the government’s arguments in full and is likely a harbinger of renewed confidence by DOJ in pressing forward with FCA cases premised on Medicare Advantage “upcoding.”
In a 2-1 decision, the Seventh Circuit joined the Third, Eighth, Ninth, and D.C. Circuits in holding that the standard for “reckless disregard” under the Fair Credit Reporting Act (“FCRA”) established by the Supreme Court in Safeco Insurance Company of America v. Burr, 551 U.S. 47 (2007) applies equally to the False Claims Act (“FCA”). Applying Safeco, the Seventh Circuit also held that it was objectively reasonable for Defendants, a group of retail pharmacies, to charge the Medicare Part D and Medicaid programs their retail cash prices as their “usual and customary” prices for drugs rather than prices offered through competitor price-match discount programs.