Second Circuit Leaves Open Novel Legal Theory that Flawed AI is a “Worthless Service”

In a decision issued last week, the Second Circuit was faced with the novel legal theory that use of flawed artificial intelligence systems can constitute a “worthless service” for purposes of FCA liability.  See Doe v. eviCore Healthcare MSI, LLC, No. 22-530-CV, 2023 WL 2249577 (2d Cir. Feb. 28, 2023).  The Second Circuit affirmed the district court’s dismissal for failure to satisfy the heightened Rule 9(b) pleading standard but did not reach the merits, leaving open the question of whether such a theory is viable under the FCA.

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Split Seventh Circuit Panel Spars Over Escobar Interpretation

The United States Court of Appeals for the Seventh Circuit recently allowed a previously dismissed qui tam case to proceed against Molina Healthcare of Illinois (“Molina”). The suit, brought by a relator who founded Molina subcontractor GenMed, alleges that Molina fraudulently billed Illinois’ Medicaid program for skilled nursing facility (“SNF”) services that were not actually provided.  The district court previously dismissed the case at the pleading stage in June 2020, finding that the relator’s complaint insufficiently alleged that Molina knew its alleged false claims were material. The Seventh Circuit, in a split decision, reversed and remanded the case for further proceedings. (more…)