By

Neil Nandi

05 August 2019

Eleventh Circuit Holds That It Is Relator’s Burden To Prove Lack of Fair Market Value As An Essential Element of AKS-Based Claims

Last week, the Eleventh Circuit issued an opinion holding that a Relator bringing an FCA claim premised on an AKS violation – at least when relating to lease arrangements – must show that the financial arrangements were not at fair market value.  See Bingham v. HCA, Inc., Case No. 1:13-cv-23671 (11th Cir. 2019).  Significantly, this ruling provides that proving fair market value (or lack thereof) is not a burden imposed solely on defendants as part of a safe harbor defense, but is instead an essential element to establishing the existence of remuneration in the first instance.  In the same opinion, the court also held that a Relator cannot rely upon information gleaned in discovery to satisfy Rule 9(b)’s pleading requirements.

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08 April 2019

Court Allows Off-Label Marketing Claims Against Individual Pharmaceutical Executives

Following a recent Florida case allowing an FCA suit to proceed against an individual pharmacy owner (on which we reported here), last week a judge in the District of Massachusetts ruled on a motion to dismiss an FCA action pending against nine individual defendants relating to allegations of off-label marketing of the Aegerion drug Juxtapid, which was approved to treat Homozygous Familial Hypercholesterolemia (“HoFH”).  See United States ex rel. Clarke v. Aegerion Pharms., Inc., Case No. 1:13-cv-11785.  The individuals filed a joint motion to dismiss, making arguments that applied to the complaint as a whole – such as causation and materiality – and also attacking the claims specific to the individuals.  The court denied the motion as to the broadly applicable arguments.  Most notable, however, is the Court’s discussion of whether the relators could pursue claims against individual defendants, including board members and executives of the manufacturer.

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18 January 2019

DOJ Announces Over $2.5 Billion in FY 2018 FCA Recoveries From Healthcare Industry

DOJ recently announced that it recovered over $2.8 billion from FCA cases in FY 2018.  Although this number continues a multi-year downtrend in overall FCA recoveries, healthcare fraud remains a major DOJ focus, with $2.5 billion of the recoveries – 87.25%, the highest proportion in at least the past decade – coming from healthcare cases: (more…)

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18 December 2018

Flexing Its Granston Muscle, DOJ Seeks Dismissal of Patient Support Services FCA Litigation

For the second time in three weeks, the Department of Justice has stepped in to seek the dismissal of high-profile FCA litigation being pursued by relators after the government initially declined to intervene.  DOJ’s recent action pertains to approximately a dozen lawsuits filed primarily in 2016 and 2017, which were unsealed over the last year as DOJ declined to intervene.  Each of the cases was filed by an LLC relator formed for the purpose of pursuing the litigation and alleging that pharmaceutical manufacturers, and third-party service providers who contracted with them, violated the Anti-Kickback Statute (and thus the FCA) by providing various support services for the manufacturers’ drugs.  The cases focused on three types of activity.  First, defendants deployed nurse educators who allegedly promoted the manufacturers’ drugs to physicians and patients through a “white coat marketing” scheme.  Second, the nurse educators allegedly instructed patients on proper use of medication.  Third, the defendants allegedly communicated with insurance companies to determine whether the plans would reimburse the manufacturers’ drugs for specific patients and what process was required to ensure such reimbursement.  The relators allege that the second and third categories of conduct violated the AKS because they provided physician practices with expense relief.  (more…)

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16 August 2017

Seventh Circuit Holds That 2009 CMS Letter Triggered Public Disclosure Bar for Pre- and Post-Letter Conduct

On August 8, 2017, the Seventh Circuit affirmed the dismissal of an FCA suit alleging that a psychiatric hospital (“Hartgrove”) submitted claims to Medicaid despite maintaining a higher patient census than Hartgrove was licensed to maintain, providing some important clarification on the scope of the public disclosure bar. (more…)

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16 December 2016

DOJ Announces Record Number of New FCA Cases, $4.7 Billion in Fraud Recoveries in FY 2016

DOJ recently announced that it recovered over $4.7 billion in settlements and judgments from civil fraud cases in the fiscal year ending September 30, 2016.  That recovery is significantly higher than the $3.5 billion that DOJ recovered in FY 2015.  The FY 2016 amount is the third highest annual fraud recovery ever.

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24 August 2016

District Court Rejects Argument That CID Should Be Quashed Because Government Has Unofficially Decided to Intervene

This month, a judge for the United States District Court for the Western District of Virginia rejected the argument of a private party, Beam Brothers Trucking, Inc. (“Beam”), that a Civil Investigative Demand (“CID”) issued by the United States should be quashed because the United States had already effected a de facto intervention in a qui tam action, despite neither formal intervention nor confirmation of the existence of the suit.  See In re Civil Investigative Demand 15-439, No. 5:16-mc-3 (W.D. Va. Aug. 12, 2016).  The government had been investigating Beam, which had government contracts for the transport of mail, to determine if Beam had used government-issued credit cards for non-government deliveries.  Approximately thirty federal agents executed a search warrant on Beam’s offices in February 2013, after which Beam met with civil and criminal government officials regarding the investigation.  Beam argued to the Court that the government recovered contracts and corporate records in the search that were responsive to the later-issued CID at issue before the Court.

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08 February 2016

New Suit Challenges CMS On When Overpayments Are “Identified”

A new lawsuit filed against CMS challenges the agency’s position on when a healthcare entity will be deemed to have “identified” an overpayment – an issue that has significant implications for “reverse” false claims liability under the FCA.  See UnitedHealthcare Ins. Co. v. Burwell, No. 1:16-cv-00157 (D.D.C. Compl. Filed Jan. 29, 2016).  Section 6402 of the Affordable Care Act imposes on entities an affirmative duty to return overpayments within sixty days of the overpayment being “identified.”  Failure to fulfill this obligation can subject an entity to FCA liability.  As we previously reported here, in 2014, CMS issued a Final Rule applicable to Medicare Advantage plans and Part D sponsors, in which it defines “identified” as meaning the time when the entity “has determined, or should have determined through the exercise of reasonable diligence,” that it received an overpayment.  The plaintiffs charge that the Final Rule is arbitrary and capricious because, they contend, the term “identified” in the statute applies only to obligations that “a plan affirmatively knows it has received,” not to obligations that the plan does not know about, but that the government claims it should have known about (i.e., constructive knowledge).  A ruling on the merits of this argument could have significant implications on the scope of reverse claims liability under the FCA.  How this lawsuit affects the timing of CMS’s anticipated publication of the overpayments rule affecting Medicare Part A and Part B, which had been expected this month, remains to be seen.  We will continue to monitor these developments.

A copy of the complaint against CMS can be found here.

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04 January 2016

First Circuit First-to-File Ruling Further Defines Carter’s Scope

A unanimous panel of the United States Court of Appeals for the First Circuit recently vacated and remanded a district court ruling that a relator’s suit against PharMerica Corp. was barred by the first-to-file rule.  See United States ex rel. Gadbois v. PharMerica Corp., No. 14-2164 (1st Cir. Dec. 16, 2015). The appellate court’s decision to permit leave to supplement the complaint addresses a key question left unanswered by the Supreme Court’s decision in Carter – whether the dismissal of a first-filed complaint cures the jurisdictional defect resulting when a second complaint is filed while the first complaint is pending.

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