Second Circuit Upholds District Court Ruling that FCA and AKS Scienter Is Not Present Where Defendant Previously Received Favorable HHS-OIG Advisory Opinions

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This week, the Second Circuit upheld a dismissal from the Southern District of New York holding that a defendant did not fulfill the False Claims Act (“FCA”) or Anti-Kickback Statute (“AKS”) scienter requirements where the defendant sought and received favorable advisory opinions from the Department of Health and Human Services Office of Inspector General (“HHS-OIG”).  See United States ex rel. Stephen Sisselman v. Zocdoc, Inc., No. 24-2807 (2d Cir. Apr. 14, 2025).

The defendant, ZocDoc, operates an online platform that allows patients to search for and schedule appointments with providers.  ZocDoc charges providers an annual fee to be listed on the platform and charges a separate fee for any new patient who schedules an appointment through the platform.  ZocDoc varied the new-patient fees based on provider specialties and altered its search rankings for providers who chose not to pay the new-patient fee or reached a self-imposed monthly fee cap.

ZocDoc requested two separate advisory opinions from HHS-OIG relating to these practices.  HHS-OIG issued favorable advisory opinions, concluding this fee structure did not violate the AKS and presented a low risk of fraud and abuse.  HHS-OIG’s advisory opinions also demonstrated its awareness of ZocDoc’s fee structure, including how new-patient fees can vary based on provider specialties and how search rankings can be impacted by fee payments.

The relator was a physician enrolled with ZocDoc.  The relator alleged that that the new-patient fees were actually referral fees that direct federal health care program beneficiaries to providers willing to pay the fees.  The relator also alleged that the new-patient fees varied by provider specialty rather than being consistent with fair market value, that ZocDoc secretly made providers more visible on the platform if they were willing to pay the new-patient fee, and that ZocDoc concealed this information from HHS-OIG when seeking advisory opinions.

The Second Circuit concluded that HHS-OIG’s advisory opinions show it was fully aware of these practices and still determined they did not violate the AKS.  The relator also did not plausibly allege that ZocDoc deceived HHS-OIG or acted inconsistently with either advisory opinion.

Furthermore, the Second Circuit concluded that the relator “does not plausibly allege that ZocDoc acted with the scienter required by the FCA and the AKS.”  Among other things, the court noted that ZocDoc sought HHS-OIG advisory opinions, and concluded “the Complaint describes an effort by ZocDoc to comply with the AKS and to receive the OIG’s approval before embarking in a practice that risked violating the AKS.”  United States ex rel. Sisselman v. ZocDoc, Inc., No. 22-CV-861 (PKC) (S.D.N.Y. Sept. 26, 2024).  This indicates that seeking HHS-OIG advisory opinions and receiving favorable responses can help demonstrate a lack of scienter for FCA defendants who follow the advisory opinions’ guidance.

A copy of the decision can be found here.

This post is as of the posting date stated above. Sidley Austin LLP assumes no duty to update this post or post about any subsequent developments having a bearing on this post.

Jaime L.M. Jones

Chicago

jaimejones@sidley.com

Brenna E. Jenny

Washington, D.C.

bjenny@sidley.com

Joseph T. McNally

Chicago

jmcnally@sidley.com

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