The principles in the Yates Memo expressly extend to both criminal and civil enforcement matters (as discussed further here), but when it comes to cooperation credit, the application of these principles in the civil and criminal contexts is not on equal footing. Criminal matters are resolved in the context of the federal sentencing guidelines, which incorporate a clear framework for applying credit for cooperation. Credit for cooperation in the civil context is far more nebulous, which can create the perception that the benefits will not outweigh the costs. Last week, DOJ’s newly appointed acting Associate Attorney General, Bill Baer, addressed these concerns and offered insight into DOJ’s application of the Yates Memo principles to civil enforcement matters.
Sidley partner Joshua Hill recently published an article in the Daily Journal about the “implied certification” theory of falsity, which is at issue in the pending Supreme Court case Universal Health Services v. United States ex rel. Escobar, as discussed here. The Supreme Court heard oral argument in Escobar on April 19th, and its upcoming decision has important implications for the scope of the False Claims Act.
Sidley partners Jack Pirozzolo and Scott Stein, and associate Brenna Jenny, published an article in BNA’s Health Law Reporter analyzing the oral arguments in Escobar. We reflect on what the Court’s questioning may portend for its ultimate resolution of the case, and how the Court’s approach to redefining materiality will impact the future of implied certification cases.
A decision in the case is expected by the end of the term.
Last Thursday one of the subcommittees of the House Judiciary Committee held a hearing on Oversight of the False Claims Act. Four stakeholders represented the diverse viewpoints of the plaintiffs’ bar, a compliance program reform initiative, the defense bar, and in-house counsel (copies of their prepared written testimony can be found here, here, here, and here).
As we have discussed here and here, yesterday the Supreme Court heard oral arguments in Universal Health Services v. United States ex rel. Escobar, which presents questions over the viability and scope of the implied certification theory. The justices actively questioned the advocates, raising concerns over whether the position of the government and the respondents (“Escobar”) contains logical limitations, and pressing the petitioner (defendant Universal Health Services (“UHS”)) over whether the limitations it proposes truly are consistent with common understandings of fraud.
The Supreme Court recently ruled that plaintiffs under the Fair Labor Standards Act may, in at least certain circumstances, use statistical sampling to establish liability. See Tyson Foods v. Bouphakeo, 135 S. Ct. 2806 (2015). The Court’s embrace of the use of statistical sampling suggests that it would be unlikely to hold in the FCA context that sampling is per se inappropriate to demonstrate liability. However, Tyson Foods does not suggest that sampling is appropriate in every case, and the opinion provides helpful guidance as to the circumstances under which statistical sampling might not be appropriate to establish FCA liability. We explore these arguments in an article available here.
Today, the district court in the AseraCare case delivered the coup de grace to the Department of Justice, granting summary judgment for AseraCare after previously vacating a jury’s verdict in favor of DOJ. In so doing, the court’s brief order emphasizes that disagreements over medical necessity, standing alone, provide no basis for an FCA claim. See Order in United States v. AseraCare Inc., No. 12-cv-00245 (N.D. Ala. Mar. 31, 2016). The district court’s holding that “contradiction based on clinical judgment or opinion alone cannot constitute falsity under the FCA as a matter of law” buttresses potential defense arguments in suits involving issues of medical necessity or other judgment calls, including alleged upcoding.
As we reported here, the Fourth Circuit is currently facing a unique case presenting the question of whether the government has an unfettered veto authority over FCA settlements and, if not, whether the district court erred in rejecting the government’s objections to a settlement. See United States ex rel. Michaels v. Agape Senior Cmty., Inc., No. 15-2145 (4th Cir.). Notably, the government’s objections were premised on the use of statistical sampling to establish FCA liability, adding to the dispute a critical issue that has been generating significant debate.
A number of amici recently filed briefs in United States ex rel. Escobar v. Universal Health Services supporting the relator and asking the Supreme Court to uphold the implied certification theory of liability.
The Sixth Circuit recently issued a strongly worded rebuke to the government in response to its proposition that “actual damages” in a FCA suit premised on wage underpayment equals the full amount of the government’s payment for the contractor’s services. See United States ex rel. Wall v. Circle C Constr., No. 14-6150 (6th Cir. Feb. 4, 2016). The defendant contractor—hired to build warehouses for the Army—had certified to compliance with certain laws and regulations, including one requiring payment of above-market wages. The contractor underpaid several employees by a total of $9,900, and the government argued that the contractor’s noncompliance “tainted” all of its claims, resulting in damages equal to the full amount the government paid for the services. Trebling these so-called damages yielded a total FCA damages award in excess of $750,000.
After nearly four years, CMS has revised and finalized its proposed rule offering guidance to Medicare Part A and B providers and suppliers as to how they can fulfill their statutory obligations to report and return “identified” overpayments. CMS altered a number of its proposals, including adopting a six-year lookback period, rather than ten. Perhaps most critically for providers, the Agency departed from its earlier interpretation of “identified” to allow for some length of time—generally six months, except in extraordinary circumstances—to quantify overpayments before the sixty-day repayment clock begins to run.