In Carrel v. AIDS Healthcare Foundation, No. 17-13185 (August 7, 2018) the Eleventh Circuit affirmed summary judgment for the defendant on Anti-Kickback Statute-based FCA claims, holding that incentives to employees for referring patients for its services were covered by the employee safe harbor to the Anti-Kickback Statute, and that these payments in particular served the congressional intent of the Ryan White Act to provide AIDS patients with ease of access to services. The Court also upheld the prior dismissal of all other allegations for a lack of particularity, noting that the only instances that relators alleged with particularity were actually covered “services” under the Ryan White Act and that they would not “infer fraud from instances of lawful conduct.” (more…)
On June 7, 2018, a federal judge in Chicago denied motions to dismiss filed by defendants Roche Diagnostics Corporation (“Roche”) and Humana, Inc. (“Humana”) in a qui tam lawsuit alleging that the defendants’ settlement for allegedly overpaid contractual rebates constituted unlawful remuneration under Anti-Kickback Statute. (more…)
Sidley lawyers Kristin Graham Koehler and Josh Fougere have authored an article as a part of the Washington Legal Foundation’s Legal Opinion Letter series, entitled “Third Circuit Confirms that False Claims Act Liability Requires Actual Evidence of a False Claim.” The article examines the Third Circuit’s recent ruling in United States ex rel. Greenfield v. Medco Health Sols., Inc., 880 F.3d 89 (3d Cir. 2018), an FCA suit premised on alleged violations of the Anti-Kickback Statute that was previously covered on this blog here. Reaffirming the importance of showing an actual false claim for government payment, the Third Circuit held that, to prevail at summary judgment, relators must “point to at least one claim” rendered false or fraudulent by the alleged kickback scheme. In doing so, moreover, the Third Circuit roundly rejected the relator’s arguments that a defendant “necessarily” violates the FCA by certifying that it did not pay illegal kickbacks, or that “the taint of a kickback renders every reimbursement claim false.” Instead, the relator needed evidence of at least one “particular patient [who was] exposed to an illegal recommendation or referral and a provider [who] submits a claim for reimbursement pertaining to that patient.” This decision should prove particularly significant for pharmaceutical manufacturers as more relators gravitate towards Anti-Kickback Statute allegations rather than off-label contentions.
The article is available for download on the Washington Legal Foundation’s website: http://www.wlf.org/publishing/publication_detail.asp?id=2706.
The Third Circuit’s recent decision in Greenfield ex rel v. Medco Health Systems, Inc. recently clarified the “link” that plaintiffs must show to connect the alleged kickback scheme to the submitted claim. Greenfield, No. 17-1152 (3d Cir. Jan. 19, 2018). In affirming summary judgment for the defendant, the Third Circuit held that to create an issue for trial, a plaintiff alleging a violation of the Anti-Kickback Statute (AKS) must present evidence of a claim submitted to the federal healthcare government that was actually exposed to the alleged kickback scheme. (more…)
Last week, the Fifth Circuit affirmed summary judgment for Solvay Pharmaceuticals Inc. on allegations that the company violated the False Claims Act as a result of off-label marketing efforts and kickbacks to physicians, emphasizing the relator’s failure to demonstrate a causal link between the alleged improper conduct and any false claims. (more…)
Last week, the Fifth Circuit affirmed a defense verdict and the earlier dismissal of several False Claims Act claims related to the alleged off-label use and Medicare reimbursement of medical stents. The decision includes several significant rulings for FCA defendants, particularly in the Fifth Circuit. First, the court affirmed the dismissal of an anti-kickback claim because the relator had “[n]o particulars [to] show that the unidentified doctors who received the ill-defined benefits caused the hospital to use Abbott stents” and thus “never link[ed] the alleged carrots to the purchase and use of the stents at either of the hospitals.” Slip op. 6. The need to plead details showing such a “link” – or causation – is important. (more…)
The Fifth Circuit recently affirmed summary judgment in favor of Omnicare—the nation’s largest provider of pharmacy services to skilling nursing facilities (“SNFs”) and other long-term care institutions—alleging that Omnicare made, or caused SNFs to make, false certifications of compliance with the Anti-Kickback Statute based on Omnicare’s debt collection activities and practice of offering prompt payment discounts (“PPDs”) to SNFs. United States ex rel. Ruscher v. Omnicare, Inc., No. 15-20629 (5th Cir. Oct. 28, 2016).
In a speech on Tuesday, September 27, 2016, Principal Deputy Associate Attorney General Bill Baer said that in the post-Yates world companies must provide early and material assistance to DOJ’s efforts to hold companies and individuals accountable for corporate wrongdoing – including by voluntarily disclosing information before they receive a subpoena – if they hope to receive cooperation credit. In doing so, Baer called out those banks caught up in DOJ’s enforcement focus on mortgage-backed securities. Baer claims those companies did not cooperate early enough and that DOJ thus rejected their requests for substantial cooperation credit, ultimately extracting billions of dollars in settlements. Baer thus made clear the importance of early cooperation: “little or no cooperation credit will be afforded in situations where the supposed cooperation occurs after the department has completed the bulk of its investigation.” In addition to cooperating early, companies also must provide specific information about any and all employees involved in wrongdoing and information that is unknown to DOJ and materially assists its investigation in order to obtain meaningful cooperation credit. At the same time, Baer described conduct that will not qualify a company for cooperation credit; specifically, simply producing information in response to a subpoena or CID and making a presentation to DOJ that seeks to limit or eliminate liability will not be viewed as cooperation. Indeed, Baer’s speech raises questions as to whether legitimate efforts to defend conduct under investigation may even disqualify a company that otherwise has been cooperative from receiving cooperation credit.
Baer’s speech can be accessed here.
We previously reported on the Supreme Court’s opinion earlier this year in Tyson Foods v. Bouaphakeo, a non-FCA case that upheld the use of statistical sampling to establish liability in a Fair Labor Standards Act suit, but which offered important narrowing limitations that we argued were applicable to FCA cases (see here). Relying in part on Tyson Foods, a district court recently refused to allow a relator to use extrapolation to establish FCA liability, finding that extrapolation was inappropriate in a case based on claims of medical necessity. See United States ex rel. Wall v. Vista Hospice Care, Inc., No. 07-cv-00604 (N.D. Tex. June 20, 2016).
In the wake of Warner Chilcott’s civil settlement and guilty plea last fall, DOJ made headlines with the indictment of former Warner Chilcott executive Carl Reichel for his alleged role in the company’s violations of the Anti-Kickback Statute (“AKS”) (as discussed here). The indictment closely followed the announcement by Deputy Attorney General Sally Yates that the government was implementing a new commitment to prosecute individuals where appropriate (as discussed here). Today the government’s highest-profile test case fell short, with a jury acquitting Reichel after less than one day of deliberations.