District Court Relies on Azar’s Overruling of Overpayment Rule to Deliver Another Blow to DOJ’s MA Enforcement Efforts
On March 29, 2019, the United States District Court for the Central District of California denied the Department of Justice’s Motion for Partial Summary Judgment against UnitedHealth Group (“United”) in a False Claims Act suit alleging that United knowingly retained overpayments for unsupported diagnosis codes submitted for Medicare Advantage patients. In reaching its decision, the Court relied on the decision by the United States District Court for the District of Columbia to vacate a portion of CMS’s 2014 Final Overpayment Rule applicable to the Medicare Advantage program in UnitedHealthcare Insurance Co. v. Azar, 330 F. Supp. 3d 173 (D.D.C. 2018), which we previously discussed here.
Court Dismisses DOJ’s Complaint against Pharmacy and Private Equity Fund, But Permits Re-Pleading
As we previously reported here and here, DOJ is pursuing a compounding pharmacy and its private equity fund owner alleging the pharmacy filed claims with Tricare that were rendered false by alleged kickbacks.
In November, the Magistrate Judge filed an opinion recommending the FCA claims be dismissed for DOJ’s failure adequately to plead its claims on either an implied or express certification theory of liability. However, the Magistrate went on to hold that the allegations that the private equity fund and its principals knew of some of the alleged misconduct and caused the submission of false claims by the portfolio company were otherwise sufficient to state a claim against those defendants under the False Claims Act. (more…)
DOJ Files Complaint-in-Intervention in Medicare Advantage Case Against Sutter Health
On March 4, 2019, the Department of Justice filed its Complaint-in-Intervention against Sutter Health (“Sutter”) and its affiliate Palo Alto Medical Foundation (“PAMF”) in a False Claims Act suit alleging that the Defendants knowingly submitted and caused the submission of unsupported diagnosis codes for Medicare Advantage patients in order to increase reimbursements from Medicare. DOJ had previously announced its decision to intervene on December 11, 2018, as we previously discussed here.
Government Sufficiently Pleads Florida Pharmacy Owner Caused Submission of False Claims through Kickback Scheme; Suit Will Go Forward
The U.S. District Court for the Northern District of Florida recently held that a False Claims Act suit can proceed against a Florida pharmacy and its owner, rejecting in particular the owner’s arguments that the complaint did not sufficiently allege that he acted with improper intent or caused the submission of false claims.
District of Minnesota Decision Sides With Swift’s Interpretation of DOJ’s “Unfettered Right” To Dismiss A Declined Qui Tam Action
Since last year’s Granston Memo (discussed recently here and here), DOJ has actively sought dismissal of FCA cases that it believes do not serve the interests of the federal government. DOJ’s power to do so derives from Section 3730(c)(2)(A) of the FCA, which provides that the Government “may dismiss” a relator’s action if the realtor “has been notified by the Government of the filing of the motion and the court has provided the person with an opportunity for a hearing on the motion.” In United States ex rel. Davis v. Hennepin County, the court considered two questions about the scope of that statutory power: (1) whether the government must first intervene in a case before moving to dismiss the action, and (2) whether the government must show a valid purpose and a rational relationship between dismissal and the accomplishment of its stated purpose. The district court answered “no” to both questions and dismissed the relator’s suit. In so doing, the court signaled its view that the Eighth Circuit would side with the D.C. Circuit in the split over the standard that applies when the government seeks dismissal under Section 3730(c)(2)(A) (the circuit split is discussed here and here).
DOJ Adopts Brand Memo as Departmentwide Policy
The United States Department of Justice (DOJ) recently updated its Justice Manual and formalized the policies it had previously announced regarding reliance on subregulatory guidance in enforcement actions. (more…)
DOJ Official Outlines Enforcement Priorities Under the Food, Drug, and Cosmetic Act
James Burnham, the Deputy Assistant Attorney General for the Consumer Protection Branch (“CPB”), addressed the annual Food and Drug Law Institute Conference (“FDLI”) on December 13, 2018 about DOJ’s enforcement priorities and tools in the FDA-regulated space. As head of the branch within DOJ that has responsibility for bringing civil and criminal actions for violations of the Federal Food, Drug, and Cosmetic Act (“FDCA”), and that works with DOJ Civil Frauds to bring actions based on those violations under the False Claims Act (“FCA”), Burnham outlined the principles that motivate enforcement action, the CPB’s current enforcement priorities, and some of the “new” enforcement tools CPB has at its disposal with respect to opioids. (more…)
DOJ Intervenes in Medicare Advantage FCA Case Against Provider
On December 11, 2018, the Department of Justice announced that it has intervened in a False Claims Act suit against Sutter Health and its affiliate Palo Alto Medical Foundation. The suit, originally filed in March 2015 by a former Risk Adjustment Manager at Palo Alto Medical, alleges that Sutter knowingly submitted unsupported diagnosis codes for Medicare Advantage patients in order to increase reimbursements from Medicare. (more…)
Court Recommends Dismissal of FCA Claims Against Pharmacy and Private Equity Fund, But Provides Insight Into When Funds May Be Held Responsible For Conduct of Portfolio Companies
As we previously reported, the government has intervened in a qui tam suit against a compounding pharmacy and its private equity fund owner alleging the pharmacy filed claims with Tricare that were rendered false by kickbacks allegedly paid to marketing companies in exchange for patient referrals and directly to patients in the form of co-pay waivers. The government alleged the pharmacy executed a provider agreement with Tricare’s contracted pharmacy benefits manager in which it agreed to be bound by fraud waste and abuse laws and the provider manual, which also required compliance with the Anti-Kickback Statute and other laws. Defendants moved to dismiss and on November 30, the Magistrate Judge filed an opinion recommending the FCA claims be dismissed. U.S. ex rel. Medrano v. Diabetic Care Rx, LLC, Case No. 15-62617-CIV-BLOOM, S.D.Fl.
DOJ Announces Important Changes to Yates Memo
In a speech delivered yesterday, Deputy AG Rod Rosenstein announced important limitations to the policies regarding individual accountability for corporate wrongdoing set forth in the 2015 Yates Memo. Under the policy announced in that Memo, summarized here, DOJ limited the ability of its lawyers to offer any cooperation credit in civil or criminal matters to those corporations that provided “all relevant facts” regarding all of the individuals involved in the alleged corporate misconduct. Companies and counsel that have been engaged in DOJ investigations have experienced the challenges in complying with this standard and it was far from clear that DOJ itself did or even could adhere to the standard. In his speech, Rosenstein acknowledged the challenges and that “the policy was not strictly enforced in some cases because it would have impeded resolutions and wasted resources.” In light of those realities and a recognition that the Department’s “policies need to work in the real world of limited investigative resources,” Rosenstein announced a revised policy that “return[s] discretion to Department attorneys.” (more…)