At a recent U.S. Chamber of Commerce, Institute for Legal Reform meeting, Principal Deputy Associate Attorney General Ethan Davis set forth the current enforcement priorities of the U.S. Department of Justice (DOJ), clarifying for corporations accessing stimulus funds or otherwise dealing with government programs or acting in regulated industries how it is focusing its efforts to target fraud in the midst of the COVID-19 pandemic. While Davis underscored DOJ’s commitment to using the False Claims Act (FCA) and other “weapons in [its] arsenal” to fight fraud against the various pandemic stimulus programs, he also emphasized DOJ’s commitment to exercise enforcement discretion in cases lacking the hallmarks of bad corporate intent.
On March 23, 2020, the Ninth Circuit revived a whistleblower suit in which Jane Winter, a registered nurse, alleged that Defendants Gardens Regional Hospital (“Gardens Regional”), S&W Health Management Services (“S&W Health”), RollinsNelson, and various physicians orchestrated medically unnecessary inpatient admissions resulting in the submission of more than $1.2 million in false claims to Medicare. The District Court held that Winter’s allegations failed to state a claim under the FCA because “subjective medical opinions . . . cannot be proved objectively false.” Winter appealed and the Ninth Circuit reversed, finding that the FCA did not does not require plaintiffs to plead objective falsehoods and that false certification of medical necessity may give rise to FCA liability.
In a landmark decision that could have significance for any False Claims Act case in the Medicare context, the Eastern District of Pennsylvania recently held that Medicare reimbursement criteria must be established through notice-and-comment rulemaking if they are to be the basis of a viable FCA suit. Polansky v. Executive Health Resources, Inc., No. 12-4239, 2019 WL 5790061 (E.D. Pa. Nov. 5, 2019). Because the relator was relying on a reimbursement policy that was found solely in a CMS manual, the Eastern District held that the relator’s claims failed “as a matter of law.”
At the recent Compliance Week Annual Conference, Principal Deputy Associate Attorney General Claire McCusker Murray delivered extensive remarks on DOJ’s corporate enforcement priorities. Of particular note, Murray discussed a number of policy reforms focused on promoting and incentivizing corporate compliance and cooperation.
On February 13, 2017, the District Court for the District of Columbia rejected motions for summary judgment filed by cyclist Lance Armstrong and his agents Capital Sports and Entertainment Holdings Inc. (CSE) in an FCA suit alleging the defendants violated the FCA by issuing payment invoices to the United States Postal Service (USPS) under sponsorship agreements while actively concealing Armstrong’s use of performance enhancing drugs (PEDs). The Court rejected Armstrong’s motion because it found that the government raised genuine issues of fact regarding the applicability of two of its three theories of FCA liability, its common-law claims, and the issue of actual damages. As a result, the Court will set the case for trial, where Armstrong may face nearly $100M in damages. A copy of the court’s order can be found here.