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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).
Continue Reading Eleventh Circuit Becomes First Appeals Court to Hold that Excessive Fines Clause Applies in Declined FCA Cases

As we have previously covered in a blog post dated August 25, 2021, the Senate is currently considering Senate Bill 2428, the False Claims Amendments Act of 2021 (FCAA), which would cause several significant changes that would make it more difficult for defendants in False Claims Act (FCA) cases.  On October 28, 2021, Senate Judiciary Committee (Committee) considered the bill originally introduced by Senator Chuck Grassley (R-IA) in July of this year.
Continue Reading False Claims Act Amendments Take More Direct Attack at Escobar and Pass Senate Judiciary Committee

On December 2, the U.S. District Court for the Western District of Virginia granted a motion to dismiss a False Claims Act (FCA) lawsuit brought by the United States and the Commonwealth of Virginia, which alleged that a Walgreens clinical pharmacy manager falsified hepatitis C drug prior authorization submissions to Virginia Medicaid. See United States v. Walgreen Co., 2021 WL 5760307 (W.D. Va. Dec. 3, 2021).
Continue Reading FCA Lawsuit Against Walgreens Dismissed Because Government Fails to Plead Materiality

On December 13, the Department of Justice (DOJ) published its Final Rule on the Civil Monetary Penalties Inflation Adjustment for 2021.  Under the Bipartisan Budget Act of 2015, the DOJ annually adjusts for inflation civil monetary penalties provided by law that are within the jurisdiction of the DOJ, with respect to violations occurring after…

The False Claims Act (FCA) prohibits employers from retaliating against whistleblowers who report FCA violations. 31 U.S.C. § 3730(h). To plead a claim under this anti-retaliation provision of the FCA, an employee must show the following three elements:

  • The employee engaged in protected activity.
  • The employer knew the employee engaged in protected activity.
  • The employer took an adverse action against the employee as a result of the employee’s protected activity.

Courts state and apply these basic elements slightly differently, and this post examines three rulings from district courts across different circuits at the end of last month.

Vaughn v. Harris County Hospital District

On September 29, the District Court for the Southern District of Texas adopted the memorandum and recommendation of the magistrate judge denying the motion to dismiss a former employee’s retaliation claim, holding he satisfied his pleading requirements.Continue Reading Trio of False Claims Act Retaliation Rulings from September

One of the Department of Health and Human Services (HHS) Office of Inspector General’s (OIG’s) key compliance priorities is modernizing the agency’s program integrity and compliance information.

OIG has explained that its goals for this priority are to continue producing timely and useful resources and to make the resources it provides easier to access and use, to spur innovation and improve compliance programs.  On September 22, in furtherance of these goals, OIG posted a request for information (RFI) on its website.

OIG Seeks to Understand Value of Its Resources

Although all of the guidance available on OIG’s website remains “good guidance,” many of the resources have not been updated in decades.  In addition, advancements in technology now allow stakeholders to manage and operationalize data and information in previously unavailable ways.  Through the RFI, OIG seeks input from the healthcare industry and the public on a wide range of issues, including how stakeholders use OIG’s resources, as well as how to improve the value and timeliness of those resources.Continue Reading OIG Publishes Wide-Ranging Request for Information

The U.S. Court of Appeals for the Seventh Circuit recently joined the ranks of every other circuit court of appeal to have considered the issue in holding that the False Claims Act (FCA) requires an objective scienter standard.  Under this standard, defendants who act under an incorrect interpretation of the relevant statute or regulation do not act “knowingly” under the FCA if both of the following are true:

  1. The interpretation was objectively reasonable.
  2. “Authoritative guidance” did not warn the defendant away from their interpretation.

Background on Objective Scienter Standard

The FCA imposes liability on those who “knowingly” submit false claims to the government. The term “knowingly” is statutorily defined to cover defendants who act with “actual knowledge,” “deliberate ignorance,” or “reckless disregard.”

In construing the scienter requirement of the Fair Credit Reporting Act (FCRA) in Safeco Insurance Co. of Am. v. Burr, which punishes “willful” violations, the Supreme Court analyzed the common-law definition of that term and noted that willfulness as a statutory condition of civil liability has generally been understood to cover both knowing and reckless violations of a standard.  The Court then held that a defendant interpreting an ambiguous statute or regulation did not act with “reckless disregard” where their interpretation was objectively reasonable and no authoritative guidance warned them away from their interpretation.Continue Reading Seventh Circuit Holds FCA Requires Objective Scienter Standard

On July 26, Senator Chuck Grassley (R-IA) introduced a long-promised bill to amend the False Claims Act (FCA).  Not-so-creatively entitled the False Claims Act Amendments Act of 2021 (S.B. 2428), the proposed legislation is notably co-sponsored by a prominent—and bipartisan—group of senators.  The text of the bill, available here, would most importantly bring changes to the analysis of the FCA’s materiality element while also affecting the process through which defendants may obtain discovery from the government.

According to a press release issued by Senator Grassley, the legislation is mainly intended to “clarif[y] the current law following confusion and misinterpretation of the Supreme Court decision in United Health Services v. United States ex rel. Escobar.”  As we have previously covered at length (in blog posts dated June 23, 2016; March 20, 2020; April 8, 2020; and June 25, 2021) the U.S. Supreme Court’s 2016 decision in Escobar confirmed that the FCA’s materiality element is “rigorous” and “demanding,” and that it cannot be satisfied simply by showing that the government would have had the “option” to decline payment had it known the facts underlying an allegedly fraudulent claim.

Instead, Escobar focuses the materiality inquiry on the government’s actual or likely response to alleged fraud: if the government regularly pays similar claims with knowledge of the facts, that is “strong evidence” that the alleged misrepresentations are not material; on the other hand, if the government often denies payment under similar circumstances, that supports a finding of materiality.

In Senator Grassley’s view, however, Escobar has given way to “confusion” and “misinterpretation” that “has made it all too easy for fraudsters to argue that their obvious fraud was not material simply because the government continued payment.”   Consistent with that view, the proposed legislation appears calculated to make materiality-based dismissals—as well as other kinds of dismissals—more difficult for FCA defendants to obtain.  Whether it would succeed in that aim, however, is open to debate.Continue Reading Changes Coming to the FCA?  Proposed Amendments Would Impact Materiality Analysis, Government Discovery, Among Other Issues

During the COVID-19 pandemic, many healthcare providers have relied on telehealth options to provide patients access to care. But, as I discussed in a recent article for Physicians Practice, “As long as utilization of telehealth services remains high, corresponding scrutiny and government enforcement efforts will remain focused on this area.”

In the article, I recommend ways that physicians and other providers can prepare for this additional scrutiny:Continue Reading Telehealth Scrutiny Following COVID-19 Pandemic

In the last year, the Department of Justice (DOJ) has brought more than 100 criminal cases relating to Paycheck Protection Program (PPP) Fraud.  These criminal prosecutions started at a blistering pace, with the first indictments coming within the very first months of the program’s inception. This wave of criminal prosecutions and convictions related to some of the more flagrant abuses – individuals who fraudulently obtained funds from the program and then went on spending sprees for things like Lamborghinis, mansions, and private jet travel.

These prosecutions focused on individuals and organized groups who obtained or used PPP funds fraudulently, often including charges for false statements (18 U.S.C. § 1001), aggravated identify theft (18 U.S.C. § 1028A(a)(1)), false statements in a loan application (18 U.S.C. § 1014), wire fraud (18 U.S.C. § 1343), bank fraud (18 U.S.C. § 1344), and Title 26 tax charges. Along with these prosecutions came significant resources, including new fraud coordinators and data analytics teams across the country.

Now, we are starting to see the first civil enforcement actions relating to the program. This signals a new phase of enforcement for the DOJ and all organizations who benefited from the program must pay close attention.Continue Reading PPP Investigations, Settlements and Litigation on the Horizon

From the Bass, Berry & Sims Blog Network
From the Bass, Berry & Sims Blog Network

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