On May 21, 2021, the Department of Justice filed a brief in opposition to a petition for writ of certiorari filed by the relator in U.S. ex rel. Cimznhca, LLC v. UCB, Inc. The petition challenges the Seventh Circuit’s decision reversing the district court’s denial of the government’s motion to dismiss over the relator’s objection. In reversing, the Seventh Circuit determined that, so long as relators have an opportunity to be heard under 31 U.S.C. § 3730(c)(2)(A), the government may dismiss qui tams when it satisfies the standard contained in Federal Rule of Civil Procedure 41(a)(1)(A)(i). That rule provides that a plaintiff may dismiss an action by serving notice of dismissal any time before the opposing party serves either an answer or a motion for summary judgment.
Yesterday DOJ announced another round of coordinated law enforcement actions to combat healthcare fraud related to COVID-19. One of these indictments features “first in the nation charges for allegedly exploiting the expanded” opportunities to receive Medicare reimbursement for telehealth services during the COVID-19 public health emergency.
DOJ recently announced its second FCA settlement within the past half year that resolves alleged Anti-Kickback Statute (“AKS”) violations and corollary failures to satisfy Sunshine Act reporting obligations. Before this pair of settlements, neither DOJ nor CMS has publicly announced any targeted efforts to enforce the Sunshine Act, and these settlements seem to be on the cutting edge of an emerging government enforcement priority.
Late last week, Judge Patti Saris (D. Mass.) issued an opinion on cross-motions for summary judgment filed by a qui tam relator and Massachusetts and a group of defendants that includes South Bay Mental Health Center (“South Bay”) and its private equity fund owner, permitting the vast majority of plaintiffs’ claims to proceed to the jury. The opinion addresses important questions of law as to each of the elements of the FCA related to claims to Medicaid for services allegedly provided in violation of various state regulatory requirements. However, the opinion is most notable for being the first to hold at the dispositive motion stage that a private equity fund and its principals can act with the requisite scienter and cause the submission of false claims, and thus be exposed directly to the treble damages and statutory penalties of the FCA as a result of conduct by a healthcare provider portfolio company. As such, we may expect it to add momentum to DOJ’s stated intent to pursue FCA claims against PE investors in the industry, as we previously reported here.
This week DOJ announced the formation of a COVID-19 Fraud Enforcement Task Force “to marshal the resources of the Department of Justice in partnership with agencies across government to enhance enforcement efforts against COVID-19 related fraud.” In addition to components of DOJ, key agencies overseeing pandemic relief programs will participate, as well as the Special Inspector General for Pandemic Relief and the Pandemic Response Accountability Committee.
Sidley lawyers Jaime L.M. Jones, Brenna E. Jenny, and Jack Pirozzolo recently published an article in Bloomberg Law entitled How Life Sciences Firms Can Reduce DOJ Enforcement Risks. Scrutiny of life sciences companies, from their relationships with physicians to their promotional practices, has become one of the few constants in the evolving government enforcement landscape. But life sciences companies can mitigate this risk by making targeted updates to their compliance programs to address areas of particular interest to the Department of Justice.
A copy of the article is available here.
DOJ has repeatedly emphasized its commitment to pursuing fraud relating to the COVID-19 public health emergency (as discussed further here). But so far, little has been made public regarding enforcement scrutiny of payments from the Department of Health and Human Services Provider Relief Fund, which includes a designated fund for reimbursing providers for COVID-19 testing, treatment, and vaccination for the uninsured (“COVID-19 Uninsured Program”).
However, HHS officials recently announced that they had referred to the HHS Office of Inspector General a provider that is an outlier on reimbursement for treatment claims from the COVID-19 Uninsured Program. Providers that have received payments from the COVID-19 Uninsured Program should take steps to ensure that they are in full compliance with the terms and conditions for payment, including the balance billing restriction.
Sidley lawyer Brenna Jenny recently authored an article, available here, discussing this enforcement development.
Sidley lawyers Jaime L.M. Jones, Brenna E. Jenny, and Catherine D. Stewart recently published an article in Bloomberg Law entitled Tips for Responding to a DOJ Inquiry Into Pandemic Billing. The Department of Health and Human Services extended significant billing flexibility to providers during the COVID-19 public health emergency, and law enforcement can be expected to closely examine how providers have exercised those more relaxed rules. The article offers tips for the in-house legal and compliance functions of healthcare providers as to how they can best position their organizations for successfully engaging with DOJ and state attorneys general on False Claims Act investigations relating to the use of pandemic billing flexibilities.
A copy of the article is available here.
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.
Sidley lawyer Brenna Jenny, along with Mihran Yenikomshian and Paul Greenberg of Analysis Group, authored an article entitled “Health Companies Can Reduce FCA Risk by Leveraging Data,” available here. One of the most notable recent trends in FCA enforcement is an evolution in how DOJ identifies cases for investigation. No longer reliant solely on whistleblowers, DOJ has begun implementing increasingly sophisticated data analytics to initiate many of its own FCA cases, as discussed further here and here. The article discusses how healthcare industry participants can defensively deploy their own data to identify potential problems through internal investigations before they become part of government investigations.