DOJ Announces 2024 Inflationary Adjustments to FCA Penalties

The Department of Justice has published the inflationary adjustments to the civil monetary penalties associated with False Claims Act violations that will go into effect on February 12, 2024. The new penalties will align with the penalties announced by the Department of Commerce last month (discussed here). For any violations that occurred after November 2, 2015, but that are assessed after February 12, 2024, the adjusted penalties will be applied. The minimum False Claims Act penalty will increase from $13,508 to $13,946 per claim, and the maximum penalty will increase from $27,018 to $27,894 per claim.

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Court Cuts False Claims Act Jury Verdict in Half in Rare Constitutional Decision

On Thursday, a Minnesota district court judge more than halved a $490 million False Claims Act jury verdict against an ophthalmology distributor and its founder for Anti-Kickback Statute (“AKS”) violations, to $217 million, holding the damages were “notably severe” and “grossly disproportional” to the offense, and thus improper under the Excessive Fines Clause.

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Ninth Circuit Panel Subtly Back-Pedals Prior Ruling on the Application of the Public Disclosure Bar in the False Claims Act Context

We previously wrote here regarding the Ninth Circuit’s decision in United States ex rel. Silbersher v. Valeant Pharmaceuticals Int’l Inc., 76 F.4th 843 (9th Cir. Aug. 3, 2023) (Valeant).  Earlier this month, the same panel denied Valeant Pharmaceuticals’ petition for a rehearing en banc, but also issued a revised decision, significantly curtailing its original opinion.

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Potential Liability of Investors in the Healthcare Industry Heightens as Hospital Investors Enter into Novel Settlement

A recent False Claims Act settlement between the Department of Justice, a New Jersey hospital, and the hospital’s investors also included a novel Federal Debt Collection Practices Act (“FDCPA”) settlement with the investors, highlighting the government’s continued efforts to pursue investors in the healthcare industry.

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2024 Inflationary Adjustments to FCA Penalties Announced

The Department of Commerce (“Commerce”) has published the inflationary adjustments to civil monetary penalties associated with False Claims Act violations that went effect January 15, 2024.  As we previously reported, the 2015 Balanced Budget Act provides for federal agencies to make inflationary adjustments to civil monetary each year to account for inflation using calculations based on the Bureau of Labor Statistics’ Consumer Price Index (“CPI”), which measures the change between the prices urban consumers pay for a market basket of consumer goods and services.  The 2024 civil monetary penalties adjustment was calculated using the percentage of change between the October 2022 CPI and the October 2023 CPI.  The adjusted penalties will be assessed for violations that occurred prior to the adjustment, but are assessed after January 15, 2024.  The minimum False Claims Act penalty has increased from $13,508 to $13,946 per claim and the maximum penalty has increased from $27,018 to $27,894 per claim.

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HHS-OIG Releases Medicare Advantage Toolkit to Guide Internal Auditing

As discussed here, the Department of Justice (“DOJ”) has prioritized investigating whether Medicare Advantage (“MA”) plans and providers have submitted unsupported risk-adjusting diagnosis codes, in violation of the False Claims Act.  The U.S. Department of Health and Human Services Office of Inspector General (“HHS-OIG”) has also been active in this space and issued a number of audits of MA plans within the past few years, often focusing on diagnosis codes it characterizes as “high risk.”  HHS-OIG acknowledged that stakeholders “have asked us to share with them how we decided which diagnosis codes were at high risk for being miscoded,” and in response, HHS-OIG issued this toolkit detailing how it has used data analytics to guide its work.  The toolkit offers compliance functions at MA plans and providers a path to assessing whether their coding puts them at risk of government scrutiny.

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DOJ Announces Largest Stark Law FCA Settlement Since 2006

Earlier this month, the Department of Justice (“DOJ”) issued a press release announcing that healthcare system Community Health Network Inc. (“Community”) agreed to pay $345 million to resolve allegations that it had violated the False Claims Act by knowingly submitting claims to Medicare for services that were referred to it in violation of the Stark Law. In connection with the settlement, Community also entered into a five-year Corporate Integrity Agreement with the Department of Health and Human Services Office of Inspector General.

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Court Requires But-For Causation for AKS-FCA Violations But Highlights Potential Defense Challenges from the Supervalu Decision

A recent decision from the District of Minnesota applying the Eighth Circuit’s new but-for causation requirement for connecting violations of the Anti-Kickback Statute (AKS) to FCA violations emphasizes the importance of the circuit split over the correct causation standard, while also highlighting challenges defendants can face post-Supervalu, particularly at the motion to dismiss stage, when arguing that their intent was inconsistent with the FCA’s scienter element.  See United States ex rel. Louderback v. Sunovian Pharmaceuticals, Inc., No. 17-cv-1719 (D. Minn. Nov. 27, 2023). (more…)

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