On May 7, 2019, the Department of Justice (DOJ) announced the release of formal guidance to its False Claims Act (FCA) prosecutors that provides a path for leniency for defendants in FCA investigations. More specifically, the guidance which is formalized in Section 4-4.112 of the DOJ’s Justice Manual, explains the manner in which the DOJ will award credit to defendants who voluntarily self-disclose misconduct that could serve as the basis for FCA liability, take other steps to cooperate with FCA investigations, or implement adequate and effective remedial measures in the FCA context. And significantly, the guidance provides that a defendant can receive a reduction in the damages multiplier and civil penalties under the FCA, which is the typical form of “credit” described in the guidance.
As we previously reported here and here, DOJ is pursuing a compounding pharmacy and its private equity fund owner alleging the pharmacy filed claims with Tricare that were rendered false by alleged kickbacks.
In November, the Magistrate Judge filed an opinion recommending the FCA claims be dismissed for DOJ’s failure adequately to plead its claims on either an implied or express certification theory of liability. However, the Magistrate went on to hold that the allegations that the private equity fund and its principals knew of some of the alleged misconduct and caused the submission of false claims by the portfolio company were otherwise sufficient to state a claim against those defendants under the False Claims Act. (more…)
DOJ recently took the unusual step of obtaining a temporary restraining order (“TRO”) to shut down two healthcare providers in conjunction with the filing of a False Claims Act lawsuit based on the dispensing of medically unnecessary prescriptions.
On October 26, 2017, the Secretary of the Department of Health and Human Services (“HHS”) declared the opioid epidemic a national public health emergency. As further detailed in the Complaint, according to the Center for Disease Control and Prevention (“CDC”), retail opioid prescriptions were dispensed in 2017 at a national rate of 58.7 prescriptions per 100 persons, and Tennessee’s dispense rate is nearly double the national rate, according to the United States. See Complaint, at ¶15. In Clay County, in particular, the United States contends that opioids were dispensed “at a rate sufficient for every man, woman, and child in the county to get their own prescription – twice.” See Complaint, at ¶16. (more…)
On January 28, 2019, in remarks to the Advanced Forum on False Claims and Qui Tam Enforcement, Deputy Associate Attorney General Stephen Cox discussed current Department of Justice policy on key False Claims Act enforcement topics, including the Granston Memo, cooperation credit, FCA liability for individuals, and the Brand Memo (which, as noted here, has now been formalized in the Department of Justice’s Manual). A copy of his remarks can be found here.
The United States Department of Justice (DOJ) recently updated its Justice Manual and formalized the policies it had previously announced regarding reliance on subregulatory guidance in enforcement actions. (more…)
Scott Stein (Chicago), Doreen Rachal (Boston), and Naomi Igra (San Francisco) authored an article for Bloomberg Law about Attorney General nominee William Barr’s testimony on the qui tam provisions of the False Claims Act. As discussed in the article, Barr questioned the constitutionality of the qui tam provisions earlier in his career but took a softer stance at his confirmation hearing. The article, a copy of which can be accessed here, explains how Barr acknowledged a Supreme Court decision upholding the qui tam provisions but left open the possibility that a Barr-led DOJ would continue moving to dismiss whistleblower actions that do not advance the federal government’s interests.
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…)
Scott Stein (Chicago), Doreen Rachal (Boston), and Naomi Igra (San Francisco) have authored an article for Bloomberg Law regarding Attorney General nominee William Barr’s views on the qui tam provisions of the False Claims Act. As discussed in the article, Barr has previously called the qui tam provisions “patently unconstitutional.” The article, a copy of which can be accessed here, discusses the basis for Barr’s views and how his confirmation may amplify DOJ’s recent efforts to move for dismissal of qui tam cases that do not serve the federal government’s interests.
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…)
James Burnham, the Deputy Assistant Attorney General for the Consumer Protection Branch (“CPB”), addressed the annual Food and Drug Law Institute Conference (“FDLI”) on December 13, 2018 about DOJ’s enforcement priorities and tools in the FDA-regulated space. As head of the branch within DOJ that has responsibility for bringing civil and criminal actions for violations of the Federal Food, Drug, and Cosmetic Act (“FDCA”), and that works with DOJ Civil Frauds to bring actions based on those violations under the False Claims Act (“FCA”), Burnham outlined the principles that motivate enforcement action, the CPB’s current enforcement priorities, and some of the “new” enforcement tools CPB has at its disposal with respect to opioids. (more…)