Senator Charles Grassley, who supported the nomination of Merrick Garland for Attorney General, sent the then-nominee a letter on February 24 to ask the Department of Justice to work to “further clarify and strengthen the False Claims Act.” As we reported in previous posts (here, here, and here), Senator Grassley has publicly criticized DOJ’s position that its authority to dismiss FCA suits over relators’ objections is virtually unfettered, and has criticized the materiality standard established by the Supreme Court in Escobar as lending undue weight to role of government conduct (or lack thereof) in response to allegations of fraud. The letter discloses that Senator Grassley is working with “a cadre of bipartisan Senate colleagues” to “strengthen” and “improve” the False Claims Act by narrowing the materiality requirement, and by requiring a court to assess the merits of a qui tam in deciding whether to grant a motion to dismiss filed by DOJ. We will continue to monitor and report on any such legislation that may ultimately be proposed.
On January 14, 2021, Acting Assistant Attorney General Jeffrey Bossert Clark of the Department of Justice (DOJ) announced that the Civil Division recovered over $2.2 billion in settlements and judgments under the False Claims Act (FCA) for fiscal year 2020. This represents a more than $850 million decrease from last year’s figure and a $3.9 billion decrease from the all-time recovery record in 2014. Detailed statistics on FCA cases from 1986 through FY 2020 are available here.
On November 19, 2020, the Illinois Supreme Court issued an opinion broadly construing relators’ standing to sue under the Illinois Insurance Claims Fraud Prevention Act (“Act”) (740 ILCS 92/1 et seq.). The Act is similar to the Illinois False Claims Act, but allows private citizens (“interested persons”) to sue on behalf of the State to remedy alleged fraud against private insurers. As with the Illinois False Claims Act, the State retains ultimate control over the litigation under the Act whether or not it intervenes, but the relator is entitled to a portion of the proceeds of any settlement or judgment if the litigation succeeds.
The Eastern District of Pennsylvania recently ruled on a summary judgment motion in a case that has been pending in the federal courts since 2002, involving alleged conduct by the defendant drug manufacturer from 1996-2004, when the pharmaceutical industry and compliance programs were vastly different than they are in 2020. U.S. ex rel. Gohil v. Sanofi U.S. Services Inc’s, No. 02-cv-02964 (E.D. Pa. Nov. 12, 2020). In its ruling, the court adopted an expansive definition of remuneration and a low bar to satisfy the causation element of FCA claims premised on underlying alleged violations of the Anti-Kickback Statute. On this basis, the court is allowing the relator to proceed to trial on allegations that his former employer caused the submission of false claims by paying kickbacks in the form of fees to physicians to participate in advisory boards and speaker programs, educational grants, and meals and gift baskets, while granting summary judgment for the defendant based on allegations related to preceptorships and other alleged kickbacks.
On July 10, 2020, a federal magistrate judge in the District of Minnesota issued a 39-page decision sanctioning DOJ (and the defendants) for various discovery violations in an FCA case based on alleged violations of the Anti-Kickback Statute.
As previously reported here, the Defendants Paul Ehlen (“Ehlen”), the majority owner of Precision Lens, and Cameron-Ehlen Group (conducting business as Precision Lens) (collectively, the “defendants”) are involved in the distribution of intraocular lenses and other products for ophthalmic surgeries. DOJ alleges that the defendants provided physicians with expensive trips, meals, and other in-kind remunerations at no cost or below fair market value. DOJ further alleges that, in exchange, these physicians purchased the Defendants’ products and used them during surgeries, which were subsequently billed to Medicare, in violation of the Anti-Kickback Statute and the False Claims Act. DOJ and the defendants filed motions seeking sanctions against the other in connection with inadequate preparation of 30(b)(6) designees and potential spoliation of information, documents, and electronically stored information. DOJ also filed a motion to compel the production of additional potentially relevant documents.
In a July 30 speech from the floor of the Senate honoring National Whistleblowers Day, Senator Charles Grassley announced that he is working on legislation that would “clarify” purported “ambiguities created by the courts” regarding the proper interpretation of the False Claims Act.
We recently reported on the Eleventh Circuit’s decision in Ruckh v. Salus Rehabilitation LLC, which was the first case to assess the role of litigation funding agreements in qui tam litigation. In that case, the Eleventh Circuit rejected a challenge to the relator’s standing based on the existence of a litigation funding agreement.
On June 25, 2020, the Eleventh Circuit affirmed in part and reversed in part a district court’s decision to set aside a jury’s $350 million verdict in favor of the relator. In Ruckh v. Salus Rehabilitation, LLC, Angela Ruckh, a registered nurse, alleged that two skilled nursing facilities (“SNFs”) and two related management services companies violated various Medicare and Florida Medicaid SNF regulations. The Eleventh Circuit’s decision adds further gloss to the FCA’s materiality and causation standards.
The 2015 Balanced Budget Act (BBA) requires that federal agencies make inflationary adjustments to civil monetary penalties on a yearly basis to account for inflation using calculations based on the Bureau of Labor Statistics’ Consumer Price Index. On June 19, 2020, DOJ issued a final rule that will increase the civil penalties in FCA actions for penalties assessed after this date. The prior minimum False Claims Act penalty of $11,181 will be increased to $11,665 per claim. The maximum penalty will also increase from $22,363 to $23,331 per claim. The revised civil penalties, once adopted, will apply to all assessments of FCA civil penalties after the effective date, including penalties associated with violation predating the adjustment, but assessed on or after the date that the increases go into effect.
In a May 4, 2020 letter to Attorney General William Barr, Senator Chuck Grassley “vehemently” disagreed with the Department of Justice’s (“DOJ”) view, expressed in a brief recently filed with the Supreme Court by the Solicitor General, that the DOJ’s authority to dismiss an FCA claim “is an unreviewable exercise of prosecutorial authority.” As a principal author of the 1986 FCA amendments that substantially expanded the whistleblower provisions, Senator Grassley argued that he could “confidently say” that the text of the FCA plainly states that the court—not DOJ—should decide whether the government’s motion to dismiss a qui tam claim succeeds.