Ninth Circuit Construes Post-2010 Public Disclosure Bar to Include Facts Disclosed During a Patent Office Patent Prosecution
In United States ex rel. Silbersher v. Allergan, Inc., 2022 WL 3652967 (9th Cir. Aug. 26, 2022), the Ninth Circuit ruled that the FCA public disclosure bar, as amended in 2010, encompasses information provided to the U.S. Patent & Trademark Office (“PTO”) during a patent prosecution. Accordingly, a qui tam action premised entirely on materials obtained from PTO records is barred.
Government Narrowly Avoids Invalidation of All LCDs in the Ninth Circuit
A divided panel of the Ninth Circuit recently reversed a district court decision that held that local coverage determinations (“LCDs”) are valid only when issued through a 60-day notice-and-comment rulemaking process. Agendia, Inc. v. Becerra, No. 19-56516 (9th Cir. July 16, 2021). The impact of the district court’s ruling—and a spirited dissent from the Ninth Circuit majority opinion—would have been significant for healthcare enforcement actions, including under the False Claims Act. LCDs have never gone through notice-and-comment rulemaking. A decision that all LCDs are accordingly invalid would have undermined a number of False Claims Act cases premised on the use of LCDs to apply the “reasonable and necessary” standard for Medicare reimbursement. The Ninth Circuit is the first court of appeals to weigh in on this issue, however, and others may yet reach a different conclusion.
Ninth Circuit Revives FCA Claim Based on “Fraud on the FDA”
The Ninth Circuit recently revived a claim in a qui tam lawsuit against a medical device manufacturer based on a “fraud on the FDA” theory of liability under the False Claims Act. See United States ex rel. The Dan Abrams Co. LLC v. Medtronic PLC et al., No. 19-56377 (9th Cir. April 2, 2021).
Ninth Circuit Invited To Weigh In On Public Disclosure Bar, Falsity
On October 8, 2019, a judge in the United States District Court for the Central District of California granted a stay and certified two questions for interlocutory appeal in relator Integra Med Analytics’ FCA suit against Providence Health & Services (“Providence”), its affiliates, and J.A. Thomas and Associates, Inc. (“JATA”), a clinical documentation consultant. The case, on which we have previously reported here, involves allegations that Providence perpetrated an upcoding scheme whereby it trained its doctors to describe medical conditions with language that would support increasing the severity levels of the DRGs that Providence reported to Medicare, leading to inflated Medicare reimbursements.
Ninth Circuit Addresses Impact of Escobar’s Falsity and Materiality Requirements On Existing Circuit Precedent
In Escobar, the Supreme Court held that the implied false certification theory of liability is viable under the False Claims Act when “at least two conditions” are satisfied: “[F]irst, the claim does not merely request payment, but also makes specific representations about the goods or services provided; and second, the defendant’s failure to disclose noncompliance with material statutory, regulatory, or contractual requirements makes those representations misleading half-truths.” As we have previously discussed here, courts are split as to whether Escobar’s two-part test is a mandatory baseline to demonstrate an implied false certification or merely one way to plead such a claim, leaving open the door for other variants of implied certification claims not explicitly identified by the Supreme Court. Recently, in United States ex rel. Scott Rose, et al. v. Stephens Institute, No. 17-15111 (9th Cir. Aug. 24, 2018), the Ninth Circuit held that Escobar’s two-part test was mandatory—effectively overruling its pre-Escobar test for establishing implied certification claims outlined in Ebeid ex rel. United States v. Lungwitz, 616 F.3d 993 (9th Cir. 2010). (more…)
Ninth Circuit Validates Value of Government-Action Bar Against Parasitic Qui Tam Suits
In a matter of first impression, the Ninth Circuit recently interpreted the “government-action bar,” one of the defenses to a parasitic False Claims Act (“FCA”) action, to offer meaningful protection to defendants who resolve one action from having to defend a whistleblower’s effort to capitalize on claims not previously litigated. See United States ex rel. Bennett v. Biotronik, Inc., 876 F.3d 1011 (9th Cir. 2017). The government-action bar prohibits a relator from bringing a qui tam suit “based upon allegations or transactions which are the subject of a civil suit . . . in which the Government is already a party.” 31 U.S.C. § 3730(e)(3). Until recently, the temporal and substantive reach of the government-action bar was unclear because of two unanswered questions: First, no court had made clear whether the government-action bar applied to suits that had been dismissed or otherwise resolved. Second, it was unclear whether there was a bar to a whistleblower action where the government intervened to settle some, but not all, of the “allegations and transactions” asserted in a complaint, and the subsequent suit asserted claims based on the uncovered conduct that was dismissed without prejudice as part of the earlier settlement. In a two-to-one decision, the Ninth Circuit provided settling defendants with some better assurances that when they settle an intervened qui tam suit with the government, they will not later be subject to a parasitic money grab by a different relator based upon the same allegations and transactions. (more…)
Recent Oral Argument Highlights the Ninth Circuit’s Continuing Struggle with Escobar
Last week’s oral argument in U.S. ex rel. Rose et al. v. Stephens Institute highlighted the Ninth Circuit’s continuing struggle with the Supreme Court’s decision in Escobar.
Stephens Institute involves allegations that the Academy of Art University (AAU) paid bonuses to recruiters in violation of an incentive compensation ban in Title IV of the Higher Education Act. According to the relator, AAU violated the False Claims Act because it implicitly and falsely certified compliance with the ban when it requested federal funds for its students under Title IV.
The Ninth Circuit took up the case on interlocutory appeal after the district court denied summary judgment to the defendants. Oral argument focused on two fundamental questions of law:
- Did Escobar establish a mandatory two-part test for claims brought under an implied false certification theory of FCA liability?
- Does a government’s practice of paying claims despite its knowledge of noncompliance render a defendant’s noncompliance immaterial as a matter of law?
Ninth Circuit Dismisses Qui Tam Appeal as Untimely
On July 25, 2017, the Ninth Circuit dealt a harsh blow to two relators in their appeal of a False Claims Act judgment, dismissing it for lack of jurisdiction as untimely.
In the underlying case, U.S. ex rel. Hoggett v. University of Phoenix, the relators alleged that the University of Phoenix had continued to falsely certify compliance with the Higher Education Act’s “incentive compensation ban” following a prior False Claims Act settlement on the same issue. The district court dismissed their case with prejudice pursuant to the public disclosure bar. Following dismissal of the case, the relators moved under Rule 59(e) to alter or amend the judgment, requesting a stay pending the decision in a similar case before the Ninth Circuit. (more…)
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…)
Ninth Circuit Affirms Broad Reach of Public Disclosure Bar
A recent decision by the U.S. Court of Appeals for the Ninth Circuit affirms the real challenges the public disclosure bar can pose to whistleblowers. In Amphastar Pharms. Inc. v. Aventis Pharma SA, No. 5:09-cv-00023-MJG-OP, 2017 WL 1947890 (C.D. Cal. May 11, 2017), the U.S. Court of Appeals for the Ninth Circuit affirmed a California federal judge’s dismissal of a False Claims Act suit by Amphastar Pharmaceuticals, Inc. (“Amphastar”) alleging the government overpaid for a blood thinner that was improperly patented, finding that the allegations were already public. (more…)