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.
Sunshine Act Enforcement on the Horizon
Yesterday during the Federal Bar Association’s 2021 Qui Tam Conference, Charlene Keller Fullmer, the Civil Assistant Chief for the Eastern District of Pennsylvania, discussed how enforcement actions involving violations of the Sunshine Act are poised to increase, aided by data analytics.
“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.
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.
Internal DOJ Memo Encourages Dismissal of More Non-Intervened Qui Tams
A recently leaked internal DOJ memo reveals a dramatic shift in DOJ’s approach to dismissal of non-intervened qui tam suits. Citing the “significant resources” that the government expends even in non-intervened cases, the memo—drafted by Commercial Litigation Branch Director Michael Granston—sets forth a series of factors for lawyers with DOJ and U.S. Attorneys’ offices to consider when evaluating whether to seek dismissal of a qui tam case. (more…)
District Court Vacates $350M Jury Verdict Under Escobar For Failure to Prove the Government Would Have Denied Payment
As discussed here and here, courts continue to grapple with how to resolve qui tam cases where the government continued purchasing from the defendant even after being made aware of the relator’s allegations of fraud. One judge recently vacated an “unwarranted, unjustified, unconscionable, and probably unconstitutional” $350 million jury verdict for the relator, finding the government’s continued payment of the defendants’ claims dispositive on the issue of materiality. United States ex rel. Ruckh v. Salus Rehabilitation LLC, No. 11-cv-1303 (M.D. Fla. Jan. 11, 2018). The case reinforces the important role that government purchasing histories play post-Escobar.
Second Circuit Finds That The Government’s Continued Payment In The Face of Fraud Allegations Undercuts Materiality
The Supreme Court emphasized in Escobar that questions of materiality are not “too fact intensive for courts” to decide through a motion to dismiss. Nonetheless, what facts a plaintiff must allege adequately to plead materiality consistent with Escobar’s “demanding” standard remains a hotly contested question. In a recent decision, the Second Circuit held that the relator’s failure to allege that CMS, the agency allegedly defrauded, changed its reimbursement practices after becoming aware of information supposedly withheld by the defendant, doomed the complaint on materiality grounds. See United States ex rel. Coyne v. Amgen, Inc., No. 17-1522 (2d Cir. Dec. 18, 2017). The decision underscores the significance of the materiality requirement at the motion to dismiss stage. (more…)
Court Walks Back Ruling That Would Require Laboratories to Independently Verify Medical Necessity
Clinical laboratories stand in a position of tension: although laboratory tests must be medically necessary to be reimbursable by federal healthcare programs, laboratories often do not directly engage with patients in a way that would permit them to assess medical necessity. A district court recently corrected its ruling regarding the extent to which laboratories can be held liable under the FCA when the tests for which they submit claims are not medically necessary. United States ex rel. Groat v. Boston Heart Diagnostics Corp., No. 15-cv-487 (D.D.C. Dec. 11, 2017). (more…)
FCA Attention Turns To Electronic Health Records
CMS has recently committed significant resources to advance the use of electronic health records (“EHR”) systems. One of the biggest initiatives is the “meaningful use” program, through which CMS offers incentive payments to healthcare providers who demonstrate and attest to using EHR systems that have certain qualities and satisfy specific objectives. (more…)
Fifth Circuit Reverses $663M Jury Verdict Based on Government’s Insistence That It Was Not Defrauded
If the government “repeatedly concludes that it has not been defrauded,” could fraud have nonetheless occurred? The Fifth Circuit grappled with this question when reviewing an appeal from a $663 million jury verdict against Trinity Industries, a manufacturer of highway guardrails. See United States ex rel. Harman v. Trinity Indus., No. 15-41172 (5th Cir. Sept. 29, 2017). In finding the relator’s allegations of materiality wanting, the Fifth Circuit’s grant of judgment as a matter of law for Trinity Industries reiterated that the Supreme Court’s Escobar decision “heightened” the materiality standard to “adjust tensions between singular private interests and those of government and cabin the greed that fuels” False Claims Act litigation.