By

Jaime L.M. Jones

07 September 2018

District Court Vacates 2014 Medicare Advantage Overpayment Rule and Curtails Potential Avenues for DOJ to Pursue False Claims Act Damages

On September 7, 2018, the United States District Court for the District of Columbia vacated CMS’s 2014 Final Overpayment Rule,[1] applicable to the Medicare Advantage program, granting summary judgment to UnitedHealthcare that the Final Rule violated the Medicare statute, was inconsistent with the Affordable Care Act (ACA) and the False Claims Act (FCA), and violated the Administrative Procedures Act (APA).  In broad strokes, the District Court confronted two statutory issues.  The first centered on the undisputed fact that the Final Rule did not account for known errors in the data (from traditional Medicare) used to calculate payments to Medicare Advantage plans.  The court found that this failure violates the statutory mandate of “actuarial equivalence” because, although “payments for care under traditional Medicare and Medicare Advantage are both set annually based on costs from unaudited traditional Medicare records,” the Final Rule “systematically devalues payments to Medicare Advantage insurers by measuring ‘overpayments’ based on audited patient records.”  As a result, the court concluded that the Final Rule “establishes a system where ‘actuarial equivalence’ cannot be achieved.”  On the same basis, the court found that the Final Rule violates the statutory requirement to use the “same methodology” in calculating expenditures in traditional Medicare and determining payments to Medicare Advantage plans.  The Final Rule “fails to recognize a crucial data mismatch and, without correction, it fails to satisfy [the Medicare statute].”  (more…)

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06 July 2018

Granston Memo Calls for DOJ to Dismiss More Declined Qui Tams; Courts Diverge on The Extent of DOJ’s Right to Do So

In the recently released Granston Memo, DOJ outlined its policy in favor of dismissing non-intervened qui tam suits when dismissal will advance other important government interests. [Reported on here].  While the FCA bar has been debating how much – if at all – the world of FCA enforcement will change in light of the Granston Memo, DOJ has been litigating over its right to act on the policy and dismiss declined qui tam suits.  In that regard, the statute appears straightforward:  “The Government may dismiss the action notwithstanding the objections of the person initiating the action if the person 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.”  31 USC § 3730(c)(2)(a).  However, in the last week DOJ lost and won this issue in sharply contrasting decisions regarding the government’s right not to pursue claims.  (more…)

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09 March 2018

DOJ Confirms Involvement in Opioid Litigation, Sheds Light on Potential Claims

In a series of speeches over the last week, DOJ has expanded on its commitment to organize enforcement efforts focused on manufacturers and distributors of opioids.  On February 27, AG Sessions announced the DOJ Prescription Interdiction & Litigation (“PIL”) Task Force, positioning it as a means aggressively to deploy “all available criminal and civil law enforcement tools . . . with a particular focus on opioid manufacturers and distributors.”  See https://www.justice.gov/opa/pr/attorney-general-sessions-announces-new-prescription-interdiction-litigation-task-force.  In that regard, Sessions suggested DOJ will leverage its decades of experience pursuing “off label” cases under the Food, Drug & Cosmetic Act (“FDCA”).  Specifically, “the PIL Task Force will build on and strengthen existing Department of Justice initiatives to ensure that opioid manufacturers are marketing their products truthfully and in accordance with Food and Drug Administration rules.”  (more…)

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07 December 2017

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…)

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29 August 2017

District Court Rules that Claims Without Specific Misrepresentations Fail to Meet Escobar’s Test But Can Proceed Based on Fraudulent Inducement

In Escobar, the Supreme Court upheld implied certification claims “at least where two conditions are satisfied,” namely specific misrepresentations and noncompliance with a material requirement.  Some courts have interpreted this phrase as defining two necessary conditions to establish implied certification liability under the FCA.  Other courts view the phrase as introducing one potential path to liability, where the first condition, specific misrepresentations, is not required.  Citing what has emerged as a “majority view” among district courts in the Second Circuit that the two conditions are mandatory, the Southern District of New York recently deepened the divide.  See United States ex rel. Forcier v. Computer Scis. Corp., No. 12-cv-1750 (S.D.N.Y. Aug. 10, 2017).  (more…)

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28 August 2017

Sixth Circuit Awards Defendant Nearly Half a Million Dollars in Attorneys’ Fees Despite Government’s FCA Victory

The Sixth Circuit recently awarded a defendant $468,704 in attorney’s fees, despite the government winning its FCA suit. The Court found that the defendant was entitled to recover its fees under the plain language of the Equal Access to Justice Act (“EAJA”), even though it was not the prevailing party, because the government’s demand for $1.6 million in damages was “unreasonable” and “substantially in excess” of the final judgment of $14,748.   (more…)

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18 July 2017

Ninth Circuit Affirms Viability of FCA Liability for Misrepresentations to FDA

Both before and after the Supreme Court’s decision in Escobar, courts have hesitated to accept “fraud on the FDA” theories of liability, which posit that misrepresentations aimed at FDA render subsequent requests to government payors false.  Breaking with a growing line of courts, the Ninth Circuit recently articulated a broad understanding of how noncompliance with FDA regulations can form the basis of FCA liability.  See United States ex rel. Campie v. Gilead Sciences, Inc., No. 15-16380 (9th Cir. July 7, 2017). (more…)

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09 June 2017

Recent DOJ Settlements Reflect Post-Yates Trend in Holding Individuals Financially Accountable

In the wake of the Yates memo eighteen months ago, DOJ offered an early signal that its commitment to focus more on individual accountability would have bite:  alongside a $125 million settlement with Warner Chilcott, DOJ also indicted the former president of the company’s pharmaceutical division for conspiring to violate the Anti-Kickback Statute (discussed here).  Since then, the government suffered a speedy loss at his trial, and DOJ’s focus on individuals has not always been so overt.  However, two recent settlements highlight the imprint of the Yates memo, and in particular, a new trend of DOJ holding owners of closely held companies personally liable for FCA settlements.

(more…)

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