On January 24, 2023, the United States District Court for the Middle District of Florida denied a motion to dismiss a qui tam suit premised on Anti-Kickback Statute (“AKS”) allegations, explaining that it could not dismiss the case because DOJ and several interested states had filed oppositions to application of the public disclosure bar. See United States ex rel. Marcus v. BioTek Labs, LLC, No. 8:18-cv-2915 (M.D. Fla. Jan. 24, 2023).
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. Jones2023-02-02 12:19:482023-09-11 09:56:36Court Rejects Application of the Public Disclosure Bar Due to DOJ’s Opposition
On January 30, 2023, the Department of Justice published new inflationary adjustments to the False Claims Act’s civil monetary penalties. Under the Balanced Budget Act of 2015, inflationary adjustments are based on the Bureau of Labor Statistics’ Consumer Price Index and are required to occur annually by January 15. However, this most recent increase takes effect only eight months after the last adjustment. Since December 2021, CMP inflationary increases have occurred more frequently than in years prior, as DOJ likely tries to capitalize on the rising inflation rates to secure higher penalties. The revised penalties will be assessed for violations that occurred prior to the adjustment, but that are assessed after January 30, 2023. As of January 30, 2023, the minimum False Claims Act penalty increased from $12,537 to $13,508 per claim. The maximum penalty has increased from $25,076 to $27,018 per claim (see here).
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. Stein2023-02-01 16:38:262023-09-11 09:57:13DOJ Announces Increases to FCA Penalties Due to Inflationary Adjustments
On December 6, 2022, the Supreme Court heard oral argument in United States ex rel. Polansky v. Executive Health Resources, which presents the question of whether the government has the authority to dismiss a qui tam suit after initially declining to intervene, and if so, what standard of review applies to the government’s motion to dismiss. Overall, the lines of questioning suggest that the Court will conclude that the government may dismiss qui tam suits after initially declining to intervene. However, there was no clear consensus around how to define a judicially enforceable standard for evaluating the government’s dismissal authority.
As discussed here and here, DOJ during the last administration reinvigorated the use of its statutory authority to move to dismiss qui tam cases over a relator’s objections. But over the past two years, DOJ’s use of this authority has once again fallen off. However, last week, DOJ moved to dismiss a qui tam suit in the District of Maryland alleging that the defendants knowingly presented flawed studies to the Department of Health and Human Services (HHS) to induce HHS to purchase defendants’ influenza treatment for the Strategic National Stockpile (SNS). DOJ’s motion to dismiss serves as an important reminder of the potential benefits of strategically engaging with DOJ and HHS early in the life of a qui tam case about whether dismissal is warranted.
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. Jenny2022-11-11 11:12:242023-09-11 10:04:12In Fraudulent Inducement Qui Tam, DOJ Once Again Invokes Dismissal Authority
Yesterday the Supreme Court denied cert in a trio of cases seeking clarification as to the pleading standard required in FCA cases under Rule 9(b). The petitioners urged the Court to remedy what they characterized as a circuit split over how much detail whistleblowers and the government must supply about alleged false claims in order to survive a motion to dismiss. As discussed further here, the Solicitor General opposed these cert petitions and argued that the circuits have “largely converged” in their application of Rule 9(b) to FCA complaints.
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. Jones2022-10-18 11:31:522023-09-11 10:04:47Supreme Court Declines to Address Application of 9(b) to the FCA
The Fourth Circuit, evenly divided while sitting en banc, recently unwound a panel decision finding that Safeco’s “reckless disregard” standard applies to the False Claims Act (“FCA”).
In January 2022, a panel of the Fourth Circuit held, joining every other circuit to have considered the issue, that when allegations of false claims are premised on violations of ambiguous laws or regulations, the defendant’s scienter is properly assessed using the standard for “reckless disregard” established by the Supreme Court in Safeco Insurance Company of America v. Burr, 551 U.S. 47 (2007). Under Safeco, courts ask whether a defendant’s interpretation of the ambiguous law or regulation at issue was objectively reasonable and whether authoritative guidance might have warned the defendant away from that interpretation. As discussed here, applying Safeco, the panel affirmed the district court’s dismissal of the case.
HHS-OIG recently issued a report assessing Medicare program integrity risks arising from telehealth services furnished during the first year of the pandemic. Although HHS-OIG identified only 1,714 providers whose billing for telehealth services “poses a high risk to Medicare”— a relatively small percentage of the 742,000 providers who billed for telehealth services during the relevant time period—a closer review of the report (OEI-02-20-00720) reveals that HHS-OIG focused on only the most extreme outliers. Providers who took advantage of CMS telehealth billing flexibilities during the pandemic should consider assessing their own organizations for potential outliers based on HHS-OIG’s metrics.
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. Jones2022-09-15 17:36:512023-09-11 10:05:26HHS-OIG Flags Certain Extreme Outlier Telehealth Providers as Potentially Engaging in Fraudulent Billing During the Pandemic
The D.C. Circuit recently issued an important opinion on an issue of first impression: under what circumstances is an FCA defendant entitled to offset damages by amounts the government or relator has received in settlement from other defendants involving the same claims. The opinion is available here.
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. Stein2022-09-12 14:42:192023-09-11 10:07:26D.C. Circuit Holds Defendants Are Entitled To Offset Damages By Amounts Paid By Other Settling Defendants
Court Rejects Application of the Public Disclosure Bar Due to DOJ’s Opposition
On January 24, 2023, the United States District Court for the Middle District of Florida denied a motion to dismiss a qui tam suit premised on Anti-Kickback Statute (“AKS”) allegations, explaining that it could not dismiss the case because DOJ and several interested states had filed oppositions to application of the public disclosure bar. See United States ex rel. Marcus v. BioTek Labs, LLC, No. 8:18-cv-2915 (M.D. Fla. Jan. 24, 2023).
(more…)
Jaime L.M. Jones
Chicago
jaimejones@sidley.com
Brenna E. Jenny
Washington, D.C.
bjenny@sidley.com
Joseph R. LoCascio
Chicago
joseph.locascio@sidley.com
DOJ Announces Increases to FCA Penalties Due to Inflationary Adjustments
On January 30, 2023, the Department of Justice published new inflationary adjustments to the False Claims Act’s civil monetary penalties. Under the Balanced Budget Act of 2015, inflationary adjustments are based on the Bureau of Labor Statistics’ Consumer Price Index and are required to occur annually by January 15. However, this most recent increase takes effect only eight months after the last adjustment. Since December 2021, CMP inflationary increases have occurred more frequently than in years prior, as DOJ likely tries to capitalize on the rising inflation rates to secure higher penalties. The revised penalties will be assessed for violations that occurred prior to the adjustment, but that are assessed after January 30, 2023. As of January 30, 2023, the minimum False Claims Act penalty increased from $12,537 to $13,508 per claim. The maximum penalty has increased from $25,076 to $27,018 per claim (see here).
Scott D. Stein
Chicago
sstein@sidley.com
Catherine Stewart
Chicago
cstewart@sidley.com
Supreme Court Mulls Scope of DOJ Dismissal Authority
On December 6, 2022, the Supreme Court heard oral argument in United States ex rel. Polansky v. Executive Health Resources, which presents the question of whether the government has the authority to dismiss a qui tam suit after initially declining to intervene, and if so, what standard of review applies to the government’s motion to dismiss. Overall, the lines of questioning suggest that the Court will conclude that the government may dismiss qui tam suits after initially declining to intervene. However, there was no clear consensus around how to define a judicially enforceable standard for evaluating the government’s dismissal authority.
(more…)
Jaime L.M. Jones
Chicago
jaimejones@sidley.com
Brenna E. Jenny
Washington, D.C.
bjenny@sidley.com
Matthew Guillod
Chicago
mguillod@sidley.com
In Fraudulent Inducement Qui Tam, DOJ Once Again Invokes Dismissal Authority
As discussed here and here, DOJ during the last administration reinvigorated the use of its statutory authority to move to dismiss qui tam cases over a relator’s objections. But over the past two years, DOJ’s use of this authority has once again fallen off. However, last week, DOJ moved to dismiss a qui tam suit in the District of Maryland alleging that the defendants knowingly presented flawed studies to the Department of Health and Human Services (HHS) to induce HHS to purchase defendants’ influenza treatment for the Strategic National Stockpile (SNS). DOJ’s motion to dismiss serves as an important reminder of the potential benefits of strategically engaging with DOJ and HHS early in the life of a qui tam case about whether dismissal is warranted.
(more…)
Brenna E. Jenny
Washington, D.C.
bjenny@sidley.com
Joseph R. LoCascio
Chicago
joseph.locascio@sidley.com
Supreme Court Declines to Address Application of 9(b) to the FCA
Yesterday the Supreme Court denied cert in a trio of cases seeking clarification as to the pleading standard required in FCA cases under Rule 9(b). The petitioners urged the Court to remedy what they characterized as a circuit split over how much detail whistleblowers and the government must supply about alleged false claims in order to survive a motion to dismiss. As discussed further here, the Solicitor General opposed these cert petitions and argued that the circuits have “largely converged” in their application of Rule 9(b) to FCA complaints.
(more…)
Jaime L.M. Jones
Chicago
jaimejones@sidley.com
Brenna E. Jenny
Washington, D.C.
bjenny@sidley.com
Jane E. Fisher
Chicago
jane.fisher@sidley.com
Fourth Circuit En Banc Vacates Application of Safeco to FCA Cases
The Fourth Circuit, evenly divided while sitting en banc, recently unwound a panel decision finding that Safeco’s “reckless disregard” standard applies to the False Claims Act (“FCA”).
In January 2022, a panel of the Fourth Circuit held, joining every other circuit to have considered the issue, that when allegations of false claims are premised on violations of ambiguous laws or regulations, the defendant’s scienter is properly assessed using the standard for “reckless disregard” established by the Supreme Court in Safeco Insurance Company of America v. Burr, 551 U.S. 47 (2007). Under Safeco, courts ask whether a defendant’s interpretation of the ambiguous law or regulation at issue was objectively reasonable and whether authoritative guidance might have warned the defendant away from that interpretation. As discussed here, applying Safeco, the panel affirmed the district court’s dismissal of the case.
(more…)
Jaime L.M. Jones
Chicago
jaimejones@sidley.com
Brenna E. Jenny
Washington, D.C.
bjenny@sidley.com
Matt Bergs
Chicago
mbergs@sidley.com
HHS-OIG Flags Certain Extreme Outlier Telehealth Providers as Potentially Engaging in Fraudulent Billing During the Pandemic
HHS-OIG recently issued a report assessing Medicare program integrity risks arising from telehealth services furnished during the first year of the pandemic. Although HHS-OIG identified only 1,714 providers whose billing for telehealth services “poses a high risk to Medicare”— a relatively small percentage of the 742,000 providers who billed for telehealth services during the relevant time period—a closer review of the report (OEI-02-20-00720) reveals that HHS-OIG focused on only the most extreme outliers. Providers who took advantage of CMS telehealth billing flexibilities during the pandemic should consider assessing their own organizations for potential outliers based on HHS-OIG’s metrics.
(more…)
Jaime L.M. Jones
Chicago
jaimejones@sidley.com
Brenna E. Jenny
Washington, D.C.
bjenny@sidley.com
Francesca R. Ozinal
Washington, D.C.
fozinal@sidley.com
D.C. Circuit Holds Defendants Are Entitled To Offset Damages By Amounts Paid By Other Settling Defendants
The D.C. Circuit recently issued an important opinion on an issue of first impression: under what circumstances is an FCA defendant entitled to offset damages by amounts the government or relator has received in settlement from other defendants involving the same claims. The opinion is available here.
(more…)
Scott D. Stein
Chicago
sstein@sidley.com
Meredith N. Greene
Chicago
mgreene@sidley.com
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