By

Krystalyn Weaver

03 August 2022

DOJ Renews Interest in Fraud-on-the-FDA Theory

Over the past decade, whistleblowers have attempted to expand the long-established fraudulent inducement theory of FCA liability into a novel fraud-on-the-FDA theory of FCA liability.  DOJ embraced the theory during the Obama administration, but its enthusiasm became muted during the Trump administration.  DOJ now appears to have once again revisited its position, and DOJ’s renewed interest in supporting the viability of this theory may further encourage relators to advance these arguments in court, and may even preview DOJ’s willingness to intervene and litigate such a case.  In a recent Law360 article entitled DOJ’s Fraud-On-The-FDA Liability Theory is Problematic, Sidley lawyers Jaime Jones, Brenna Jenny, and Krystalyn Weaver discuss the weaknesses in DOJ’s theory of liability, the latest caselaw developments, and how life sciences companies can mitigate enforcement risk.

A copy of the article is available here.

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29 July 2022

Court Rejects “Tenuous” Connection Between FDCA Regulatory Violations and Claims for Payment

Recently, a district court in the Southern District of Florida dismissed with prejudice a qui tam complaint premised on the alleged sale of products adulterated and misbranded under the Food Drug and Cosmetic Act (“FDCA”). United States ex rel. Crocano v. Trividia Health Inc., No. 22-CV-60160-RAR (S.D. Fla. July 18, 2022).  In so doing, the court declined to embrace the arguments asserted in a Statement of Interest filed by DOJ and reiterated that “the False Claims Act is not the proper avenue for holding [companies] accountable” for violations of the FDCA, because “the FDA’s use of its regulatory enforcement  powers may be exercised fully to ensure further compliance.”

(more…)

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09 June 2022

DOJ Defends Viability of Fraud-on-the-FDA Theory in Statement of Interest

Over the past decade, relators have attempted to expand the long-established “fraudulent inducement” theory of liability into a novel “fraud-on-the-FDA” theory. The fraudulent inducement theory posits that when a defendant’s fraudulent conduct induces a government entity to enter into a contract with the defendant, the claims for payment submitted under that contract are false. However, the fraud-on-the-FDA theory stretches this causal chain by contending that fraudulent conduct directed at FDA can render false the claims for payment submitted to an entirely different government entity, such as CMS.  Courts have been divided as to the viability of this theory (as we have discussed here and here). (more…)

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13 April 2022

DOJ Settles FCA Case Alleging Medically Unnecessary Telehealth Visits, Claws Back PPP Money

This week DOJ announced one of the first civil settlements under the FCA involving abuse of the pandemic flexibilities that the Department of Health and Human Services used to authorize broader use of telehealth during the COVID public health emergency.  Physician Partners of America (“PPOA”) agreed to pay $24.5 million to resolve allegations that it violated the FCA by billing for medically unnecessary telehealth visits, and by submitting claims for medically unnecessary genetic, psychological, and urine drug tests and claims tainted by violations of the Stark Law.  While DOJ has previously engaged in criminal enforcement actions relating to abuse of the telehealth waiver flexibilities, as discussed further here, this case represents an expansion of telehealth enforcement scrutiny to the civil side. (more…)

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19 November 2021

Medicare Advantage Enforcement: DOJ Advances New Theories Based on Retrospective Chart Reviews

Over the past two months, DOJ has filed complaints-in-intervention in two FCA cases premised on allegedly fraudulent diagnosis codes submitted to CMS as a result of retrospective chart reviews.  These cases demonstrate how DOJ has begun to explore new legal theories that articulate a narrower view on the legality of retrospective chart reviews designed to add diagnosis codes. (more…)

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