On April 5, 2022, in a 2-1 decision, the Seventh Circuit applied the precedent it set in United States ex. rel. Schutte v. SuperValu Inc., 9 F.4th 455 (7th Cir. 2021) and found once again that a defendant retail pharmacy did not act with “reckless disregard” under the False Claims Act (“FCA”) by interpreting Medicare Part D and Medicaid “usual and customary” price requirements as allowing it to charge those programs its retail cash prices rather than prices offered through discount programs. United States ex rel. Proctor v. Safeway, Inc., No. 20-3425, 2022 WL 1012256 (7th Cir. Apr. 5, 2022). (more…)
https://fcablog.sidley.com/wp-content/uploads/sites/5/2022/08/sidleyLogo-e1643922598198.png00Scott D. Steinhttps://fcablog.sidley.com/wp-content/uploads/sites/5/2022/08/sidleyLogo-e1643922598198.pngScott D. Stein2022-04-13 09:38:212024-12-23 15:38:34New Pharmacy, Same Result: Seventh Circuit Holds That Objective Reasonableness Dooms “Usual and Customary” Pricing Case
A court in the District of Maryland again dismissed a declined qui tam action in which the relator, a bariatric surgeon, alleged that two medical device companies violated the AKS by providing surgeons with free advertising in exchange for physicians using the companies’ LAP-BAND medical devices in bariatric surgeries. SeeUnited States ex rel. Fitzer v. Allergan, Inc., 17-cv-00668 (D. Md. Mar. 22, 2022). Relator fared no better on his third attempt; as the court found, he failed to adequately plead presentment and causation. (more…)
https://fcablog.sidley.com/wp-content/uploads/sites/5/2022/08/sidleyLogo-e1643922598198.png00Jaime L.M. Joneshttps://fcablog.sidley.com/wp-content/uploads/sites/5/2022/08/sidleyLogo-e1643922598198.pngJaime L.M. Jones2022-03-25 10:36:382024-12-23 15:42:41District Court Again Dismisses Anti-Kickback Statute Claim Related to Medical Devices Used in Bariatric Surgeries
On January 7, 2022, a district court in the Western District of Kentucky dismissed DOJ’s implied false certification theory relating to allegedly medically unnecessary genetic tests, holding that the prosecutors failed to adequately plead materiality. In so holding, the court set forth a novel test for materiality that forecloses the government’s ability to argue that certain regulations are per se material based on the government’s characterization of them as conditions of payment. Instead, plaintiffs must still plead “specific facts regarding the effect of a violation of that regulation” to survive dismissal. (more…)
https://fcablog.sidley.com/wp-content/uploads/sites/5/2022/08/sidleyLogo-e1643922598198.png00Jaime L.M. Joneshttps://fcablog.sidley.com/wp-content/uploads/sites/5/2022/08/sidleyLogo-e1643922598198.pngJaime L.M. Jones2022-01-13 17:01:532023-09-11 12:26:36Court Concludes Government Agencies Cannot Categorize Regulatory Violations as Material as a Matter of Law
The 2015 Balanced Budget Act (BBA) requires that federal agencies make inflationary adjustments to civil monetary penalties on a yearly basis to account for inflation using calculations based on the Bureau of Labor Statistics’ Consumer Price Index. In recent years, these increases have occurred less frequently. But on December 13, 2021 the Department of Justice published a final rule that increases the civil penalties in False Claims Act actions for violations that that occurred after November 2, 2015, the date the BBA was enacted. (more…)
Since the Supreme Court in Escobar stated that continued payment by the government is “very strong evidence” that the alleged violations are not “material” under the False Claims Act (“FCA”), courts have grappled with how much weight the government’s continued payment should be accorded when assessing “materiality.” Courts have adopted varying approaches, with no obvious majority position. (more…)
https://fcablog.sidley.com/wp-content/uploads/sites/5/2022/08/sidleyLogo-e1643922598198.png00Brenna E. Jennyhttps://fcablog.sidley.com/wp-content/uploads/sites/5/2022/08/sidleyLogo-e1643922598198.pngBrenna E. Jenny2021-12-14 11:24:532023-09-11 12:27:25Analyzing FCA Materiality Defense Outcomes Under Escobar
On December 2, 2021, the Department of Justice (“DOJ”) issued a press release announcing that Flower Mound Hospital Partners (“Flower Mound”), a partially physician-owned hospital, agreed to pay just over $18 million to resolve allegations that it had violated the False Claims Act by submitting claims that violated the Stark Law and the Anti-Kickback Statute. (more…)
Over the past two months, DOJ has filed complaints-in-intervention in two FCA cases premised on allegedly fraudulent diagnosis codes submitted to CMS as a result of retrospective chart reviews. These cases demonstrate how DOJ has begun to explore new legal theories that articulate a narrower view on the legality of retrospective chart reviews designed to add diagnosis codes. (more…)
On July 6, 2021, the D.C. Circuit Court of Appeals affirmed in part and reversed in part a district court’s dismissal of the qui tam suit against IBM in United States ex rel. Cimino v. Int’l Bus. Machines Corp., No. 19-7139. The relator alleged that IBM and the Internal Revenue Service (“IRS”) had entered into a software license agreement, but that upon learning that the IRS was uninterested in renewing the agreement, IBM fraudulently induced the IRS to extend the contract. In particular, IBM allegedly collaborated with the auditor of the agreement, resulting in an audit finding that the IRS owed IBM $292 million for noncompliance with the contract’s terms. IBM then offered allegedly to waive that fee in exchange for the IRS renewing the agreement. The relator further alleged that once the new agreement was in place, IBM nonetheless collected $87 million of the noncompliance penalty by disguising that amount as fees for products and services that were never provided. According to the relator, this scheme yielded FCA liability in two ways: first, IBM fraudulently induced the IRS to renew the agreement; second, IBM submitted false claims by billing $87 million for unprovided products and services.
https://fcablog.sidley.com/wp-content/uploads/sites/5/2022/08/sidleyLogo-e1643922598198.png00Brenna E. Jennyhttps://fcablog.sidley.com/wp-content/uploads/sites/5/2022/08/sidleyLogo-e1643922598198.pngBrenna E. Jenny2021-07-13 15:00:462023-09-11 12:38:38D.C. Circuit Applies But-For Causation Standard, Weak Materiality Test to FCA Claims, While Concurrence Questions Viability of Fraudulent Inducement Theory
Categories
Courts
Archives
We use cookies to ensure that we give you the best experience on our website. If you continue to use this site we will assume that you are happy with it.Ok
New Pharmacy, Same Result: Seventh Circuit Holds That Objective Reasonableness Dooms “Usual and Customary” Pricing Case
On April 5, 2022, in a 2-1 decision, the Seventh Circuit applied the precedent it set in United States ex. rel. Schutte v. SuperValu Inc., 9 F.4th 455 (7th Cir. 2021) and found once again that a defendant retail pharmacy did not act with “reckless disregard” under the False Claims Act (“FCA”) by interpreting Medicare Part D and Medicaid “usual and customary” price requirements as allowing it to charge those programs its retail cash prices rather than prices offered through discount programs. United States ex rel. Proctor v. Safeway, Inc., No. 20-3425, 2022 WL 1012256 (7th Cir. Apr. 5, 2022). (more…)
Scott D. Stein
Chicago
sstein@sidley.com
Brenna E. Jenny
Washington, D.C.
bjenny@sidley.com
Matt Bergs
Chicago
mbergs@sidley.com
District Court Again Dismisses Anti-Kickback Statute Claim Related to Medical Devices Used in Bariatric Surgeries
A court in the District of Maryland again dismissed a declined qui tam action in which the relator, a bariatric surgeon, alleged that two medical device companies violated the AKS by providing surgeons with free advertising in exchange for physicians using the companies’ LAP-BAND medical devices in bariatric surgeries. See United States ex rel. Fitzer v. Allergan, Inc., 17-cv-00668 (D. Md. Mar. 22, 2022). Relator fared no better on his third attempt; as the court found, he failed to adequately plead presentment and causation. (more…)
Jaime L.M. Jones
Chicago
jaimejones@sidley.com
Brenna E. Jenny
Washington, D.C.
bjenny@sidley.com
Megan Coggeshall
Court Concludes Government Agencies Cannot Categorize Regulatory Violations as Material as a Matter of Law
On January 7, 2022, a district court in the Western District of Kentucky dismissed DOJ’s implied false certification theory relating to allegedly medically unnecessary genetic tests, holding that the prosecutors failed to adequately plead materiality. In so holding, the court set forth a novel test for materiality that forecloses the government’s ability to argue that certain regulations are per se material based on the government’s characterization of them as conditions of payment. Instead, plaintiffs must still plead “specific facts regarding the effect of a violation of that regulation” to survive dismissal. (more…)
Jaime L.M. Jones
Chicago
jaimejones@sidley.com
Brenna E. Jenny
Washington, D.C.
bjenny@sidley.com
Matt Bergs
Chicago
mbergs@sidley.com
DOJ Announces Increased Inflation-Adjusted False Claims Act Penalties
The 2015 Balanced Budget Act (BBA) requires that federal agencies make inflationary adjustments to civil monetary penalties on a yearly basis to account for inflation using calculations based on the Bureau of Labor Statistics’ Consumer Price Index. In recent years, these increases have occurred less frequently. But on December 13, 2021 the Department of Justice published a final rule that increases the civil penalties in False Claims Act actions for violations that that occurred after November 2, 2015, the date the BBA was enacted. (more…)
Scott D. Stein
Chicago
sstein@sidley.com
Catherine Stewart
Chicago
catherine.stewart@sidley.com
Analyzing FCA Materiality Defense Outcomes Under Escobar
Since the Supreme Court in Escobar stated that continued payment by the government is “very strong evidence” that the alleged violations are not “material” under the False Claims Act (“FCA”), courts have grappled with how much weight the government’s continued payment should be accorded when assessing “materiality.” Courts have adopted varying approaches, with no obvious majority position. (more…)
Brenna E. Jenny
Washington, D.C.
bjenny@sidley.com
Paul E. Kalb, M.D.
Matt Bergs
Chicago
mbergs@sidley.com
Recent Settlement Illustrates Enforcement Risks Associated With Physician Roll-Ups
On December 2, 2021, the Department of Justice (“DOJ”) issued a press release announcing that Flower Mound Hospital Partners (“Flower Mound”), a partially physician-owned hospital, agreed to pay just over $18 million to resolve allegations that it had violated the False Claims Act by submitting claims that violated the Stark Law and the Anti-Kickback Statute. (more…)
Jaime L.M. Jones
Chicago
jaimejones@sidley.com
Brenna E. Jenny
Washington, D.C.
bjenny@sidley.com
Matt Bergs
Chicago
mbergs@sidley.com
Medicare Advantage Enforcement: DOJ Advances New Theories Based on Retrospective Chart Reviews
Over the past two months, DOJ has filed complaints-in-intervention in two FCA cases premised on allegedly fraudulent diagnosis codes submitted to CMS as a result of retrospective chart reviews. These cases demonstrate how DOJ has begun to explore new legal theories that articulate a narrower view on the legality of retrospective chart reviews designed to add diagnosis codes. (more…)
Jaime L.M. Jones
Chicago
jaimejones@sidley.com
Brenna E. Jenny
Washington, D.C.
bjenny@sidley.com
Krystalyn K. Weaver
D.C. Circuit Applies But-For Causation Standard, Weak Materiality Test to FCA Claims, While Concurrence Questions Viability of Fraudulent Inducement Theory
On July 6, 2021, the D.C. Circuit Court of Appeals affirmed in part and reversed in part a district court’s dismissal of the qui tam suit against IBM in United States ex rel. Cimino v. Int’l Bus. Machines Corp., No. 19-7139. The relator alleged that IBM and the Internal Revenue Service (“IRS”) had entered into a software license agreement, but that upon learning that the IRS was uninterested in renewing the agreement, IBM fraudulently induced the IRS to extend the contract. In particular, IBM allegedly collaborated with the auditor of the agreement, resulting in an audit finding that the IRS owed IBM $292 million for noncompliance with the contract’s terms. IBM then offered allegedly to waive that fee in exchange for the IRS renewing the agreement. The relator further alleged that once the new agreement was in place, IBM nonetheless collected $87 million of the noncompliance penalty by disguising that amount as fees for products and services that were never provided. According to the relator, this scheme yielded FCA liability in two ways: first, IBM fraudulently induced the IRS to renew the agreement; second, IBM submitted false claims by billing $87 million for unprovided products and services.
(more…)
Brenna E. Jenny
Washington, D.C.
bjenny@sidley.com
Joseph R. LoCascio
Chicago
joseph.locascio@sidley.com
Jaime L.M. Jones
Chicago
jaimejones@sidley.com
Categories
Courts
Archives