On August 30, the U.S. Court of Appeals for the D.C. Circuit held, as a matter of first impression, that damages in False Claims Act cases are subject to pro tanto (dollar-for-dollar) settlement offsets in cases involving multiple jointly and severally liable defendants.
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Ninth Circuit Affirms Broad Scope of False Claims Act’s Public Disclosure Bar
On August 25, the U.S. Court of Appeals for the Ninth Circuit issued an opinion in which it held that ex parte patent prosecutions by the Patent and Trademark Office (PTO) qualify as “other Federal . . . hearing[s]” under prong (ii) of the False Claims Act’s Public Disclosure Bar. In so ruling, the Ninth Circuit affirmed that the Public Disclosure Bar should not be read in a restrictive manner but should be given a broad construction.
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Fifth Circuit Affirms Criminal Healthcare Fraud Convictions of Hospice and Home Health Executives
On March 24, the U.S. Court of Appeals for the Fifth Circuit affirmed the criminal healthcare fraud convictions of two individuals who ran a network of home health and hospice centers in Texas. According to the Fifth Circuit, the defendants operated a “reimburse-first-verify-later system” for nearly ten years, under which an estimated 70 to 85 percent of patients were ineligible for the care they received. The Fifth Circuit provided colorful examples to show that “many certifications were not borderline cases”:
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False Claims Act Fundamentals: How to Respond to a Civil Investigative Demand
What Is a Civil Investigative Demand
A civil investigative demand (CID) is a tool, like a subpoena, that the government uses to obtain documents and information to investigate potential violations of the False Claims Act.
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A New Year of Changes at Inside the FCA
We wanted to update readers on improvements to our blog that you will see over the next few months.
Along with giving the web page a new look, we will be publishing a series of posts to enhance our readers’ understanding of key False Claims Act issues. Each series will serve a different purpose, and the series will focus on the following:
Fourth Circuit Adopts Safeco’s Objective Reasonableness Standard for False Claims Act
On January 25, in a 2-1 decision in U.S. ex rel. Sheldon v. Allergan Sales, LLC, 2022 WL 211172, the Fourth Circuit became the most recent federal appellate court to hold that the objective scienter standard in the Supreme Court’s Safeco decision applies to the False Claims Act (FCA). Under the Fourth Circuit’s decision, the FCA’s scienter element cannot be met if the defendant’s interpretation of applicable statutory or regulatory requirements was objectively reasonable and no authoritative guidance from a circuit court or government agency warned the defendant away from its interpretation.
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Eleventh Circuit Becomes First Appeals Court to Hold that Excessive Fines Clause Applies in Declined FCA Cases
The Eleventh Circuit has become the first federal court of appeals to directly address whether the Eighth Amendment’s Excessive Fines Clause applies to the monetary award in a declined False Claims Act (FCA) case. And in an opinion issued December 29, 2021, the court held that it does. See U.S. ex rel. Yates v. Pinellas Hematology & Oncology, P.A., __ F. 4th __, 2021 WL 6133175 (11th Cir. 2021).
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The California Insurance Frauds Prevention Act: What to Know About California’s Powerful Commercial Health Insurance Fraud Statute
Although this blog focuses mainly on the federal False Claims Act (FCA), other antifraud statutes feature in the qui tam relator and government enforcement toolkit. Key among them: the California Insurance Frauds Prevention Act (IFPA).
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Eleventh Circuit Broadens Materiality Analysis for Some Cases
How should a court evaluate the FCA’s materiality requirement when the government’s ability to deny claims is constrained? According to a recent decision from the Eleventh Circuit, the court should “broadly” consider the government’s “pattern of behavior as a whole,” and may find evidence of materiality in administrative actions that might not support materiality in other cases.
Background
The case, U.S. ex rel. Donnell v. Mortgage Investors Corporation, was brought by two mortgage brokers who specialized in originating mortgage loans guaranteed by the United States Department of Veterans Affairs (VA). Under the program at issue, VA regulations limited the fees and costs lenders could collect from veterans and required lenders seeking VA guarantees to certify compliance with the fee-and-cost restrictions. The relators alleged that the defendant, Mortgage Investors Corporation (MIC), defrauded the VA by charging veterans prohibited fees and falsely certifying they had not done so.
After originating loans and obtaining VA guarantees, MIC typically sold its loans on the secondary market to holders in due course. This introduced an “important wrinkle,” the appeals court noted, because the VA is statutorily required to honor its guarantee when borrowers default on loans possessed by holders in due course.
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How Health Care Companies Can Protect Against Government Scrutiny of COVID-19 Relief Funding
In our previous article, we outlined steps companies can take now to protect themselves during later government investigations and enforcement actions related to COVID-19 relief funding. These steps include: leverage compliance resources, document the application/funding process, document how money is used, schedule an interim internal review, and respond to employee complaints. In this article we focus specifically on the health care industry and how companies can protect against inevitable government scrutiny after receiving COVID-19 relief funding.
The health care industry must be particularly vigilant about protecting against future enforcement risks because it is a highly regulated industry facing an enforcement perfect storm—fast cash, poor guidance and retrospective review. Congress allocated $175 billion to the U.S. Department of Health and Human Services (HHS) through the Coronavirus Aid, Relief and Economic Security Act Provider Relief Fund (Relief Fund). To support an industry hurt by COVID-19-related patient surges, stay-at-home driven closures and elective procedure treatment delays, HHS adopted a strategy to release relief funds quickly and perform reconciliation on the back end. As a result, HHS released what it touted as “no strings attached” relief funds through a series of general and targeted allocations each with a list of somewhat vague terms and conditions. The only other guidance available were application instructions, where applicable, and a continuously evolving set of frequently asked questions.
Of course, no government funding comes with “no strings attached.” The government inevitably will review whether recipients of HHS relief funds met the eligibility requirements and complied with the terms and conditions for using relief funds. Given that any deliberate omission, misrepresentation or falsification of information related to the HHS relief funds comes with potentially severe consequences—including but not limited to revocation of Medicare billing privileges; exclusion from federal health care programs; and/or the imposition of fines, civil damages and/or imprisonment—health care companies should consider the following steps to support their acceptance and use of the funds: