On June 21, 2022 the Supreme Court granted certiorari in Polansky v. Exec. Health Res., 17 F.4th 376 (3d Cir. 2021), allowing the Court to review the Department of Justice’s (“DOJ”) authority to dismiss qui tam suits brought under the False Claims Act (“FCA”), over objections by the relators. The case invites the high Court to decide two key issues: (1) whether the DOJ has the authority to dismiss qui tam suits where it declined to intervene, and (2) what standard of review applies to such requests for dismissal. 

Continue Reading Supreme Court To Review DOJ’s Authority to Dismiss Qui Tam FCA Suits Over Objections From Relators

In one of the final cases of a tumultuous term at the Supreme Court, the Justices ruled against DOJ in a decision that could have wide ranging effects not just for physicians and other prescribers, but for drug control laws more generally. In Xiulu Ruan v. U.S., No. 20-1410 (Jun. 27, 2022), the Court considered the convictions of two physicians for violating the Controlled Substances Act, 21 U.S.C. § 841 because, DOJ contended, and the respective juries found, that their prescriptions were “not authorized.” (The relevant statute makes it a federal crime to “[e]xcept as authorized[,]….knowingly or intentionally…dispense…a controlled substance.” Id.). One physician was sentenced to 20 years imprisonment; a second to 25 years. Each, at trial, had contended that their prescriptions were authorized, that they had the requisite credentials to write prescriptions, including DEA and state board registrations, and that they were properly licensed. DOJ, meanwhile, had argued that the physicians were operating “pill mills” and, accordingly, their prescriptions were not “authorized.”

Continue Reading Supreme Court Rules for Physicians in Blow to DOJ

A major California-based health care system, Sutter Health, and several of its medical practice foundation affiliates have agreed to pay a total of $90 million to settle allegations that they violated the False Claims Act (“FCA”) by knowingly submitting inaccurate information about the health status of beneficiaries enrolled in Sutter Health’s contracted Medicare Advantage (“MA”) Plans.[1]  The Sutter Health settlement is the largest FCA settlement ever paid by a health care provider for alleged MA fraud.

Continue Reading Sutter Health Settles Medicare Fraud Case For $90 Million: The Largest Settlement For Medicare Advantage Fraud

The “Granston Memo” has proven to be a boon again in 2019 for False Claims Act (“FCA”) defendants.  In a January 15, 2019 Sheppard Mullin FCA Defense Blog article, we highlighted a growing movement by the Department of Justice (“DOJ”) to utilize its dismissal power on meritless and burdensome qui tam FCA cases following an internal policy memorandum issued in early 2018, now dubbed the “Granston Memo.”  The Granston Memo encouraged DOJ attorneys to seek dismissal of such cases where it served one or more important policy objectives.  The DOJ has met with almost uniform success in its continued focus on this effort: since the Memo issued, the DOJ has sought dismissal in 36 cases and been unsuccessful only twice. 
Continue Reading The Granston Memo in 2019: Recent Cases Highlight the Granston Memo’s Effectiveness as a Tool to Dismiss False Claims Act Cases

U.S. Attorney’s Offices (“USAOs”) across the country are issuing warning letters to physicians and other prescribers (collectively, “Prescribers”) cautioning them about their opioid prescribing practices (the “Warning Letters”). In just the last week, the USAO for the Eastern District of Wisconsin sent warning letters to over 180 prescribers identified by Drug Enforcement Administration (“DEA”) data as prescribing opioids at relatively high levels. The Food and Drug Administration and the Federal Trade Commission have also been issuing their own warning letters to opioid marketers and distributors over the past several months, evidencing a concerted effort to combat the opioid epidemic on a number of fronts through various federal enforcement and regulatory efforts.
Continue Reading Compliance Risk Alert: Opioid Warning Letters issued by the U.S. Department of Justice Target Prescribers

On Monday, September 17, 2018, the Antitrust Division of the United States Department of Justice (the “DOJ”) cleared Cigna’s proposed $67 billion acquisition of Express Scripts, the country’s largest pharmacy benefit manager. While the transaction still needs the approval of certain state regulatory agencies, obtaining the DOJ’s approval was widely seen as the transaction’s most significant obstacle to overcome.
Continue Reading Federal Antitrust Regulators Approve Cigna’s Proposed Acquisition of Express Scripts

On January 19, 2018, the United States Court of Appeals for the Third Circuit affirmed a district court’s ruling granting summary judgment to a specialty pharmacy that was accused of violating the Anti-Kickback Statute and the federal False Claims Act (United States ex rel. Greenfield v. Medco Health Solutions, Inc. et al., No. 17-1152.). The court held that the relator, a former vice president of the specialty pharmacy, failed to link the pharmacy’s alleged kickback scheme to the actual submission of claims to Medicare. The decision is important because it stands for the proposition that to be liable under the False Claims Act a relator must allege more than the defendant was submitting claims for federal health care program beneficiaries while engaging in kickbacks. Rather, it must allege that at least one claim was submitted for services that were provided in violation of the Anti-Kickback Statute.
Continue Reading Temporal Proximity Is Not Enough: Third Circuit Nixes FCA/Anti-Kickback Suit For Failure To Link Alleged Scheme to Claims

A Florida federal court threw out a $350 million jury verdict against a nursing facility, citing the Supreme Court’s landmark decision in Universal Health Services, Inc. v. United States ex rel. Escobar. The court explained that the relators had failed to establish that the alleged violations were material to the federal Medicare and state Medicaid programs’ decision pay claims.

The ruling is another piece of welcome news to the healthcare community, which is historically the primary target of the government’s False Claims Act enforcement efforts. The ruling demonstrates that under Escobar, it is one thing to proclaim that a violation was material to the government’s decision to pay, but it is another thing to prove it.
Continue Reading Escobar’s Demanding Materiality Standard Nixes $350 Million Verdict Against Florida Nursing Facility

An early report from the Health Care Compliance Association’s Health Care Enforcement Compliance Institute states that DOJ will be moving to dismiss False Claims Act cases that it concludes lack merit. DOJ has not yet posted the speech on its website but RACmonitor, an online news and information source for healthcare providers, reports that:

In announcing a significant policy change, the U.S. Department of Justice (DOJ) said that when it concludes that a qui tam case lacks merit, it will file a motion to dismiss the case rather than allowing the relator to continue.

The surprise announcement was made by Michael Granston, director of the commercial litigation branch of the fraud section in the DOJ’s civil division, during the Health Care Compliance Association’s Health Care Enforcement Compliance Institute in Washington, D.C. on Monday.
Continue Reading Change in Policy or Same Old Story? DOJ Suggests it Will Dismiss Unmeritorious Qui Tam Suits

As reported in earlier blogs, the federal Department of Justice (DOJ) has been actively looking into potential abuses by Medicare Advantage (MA) Organizations as to allegedly improper risk adjustment claims submissions and practices. Earlier this month, and as had been anticipated, the DOJ filed complaints-in-intervention against UnitedHealth Group, Inc., and related Medicare Advantage entities, in two False Claims Act qui tam lawsuits in United States ex rel. James Swoben v. Secure Horizons, et. al., and United States ex rel. Benjamin Poehling v. UnitedHealth Group, Inc., et. al. Previously, the DOJ had announced its intent to intervene in both cases, as well as its intent to conduct “on-going investigations” of other potential defendants, including Health Net, Inc., Aetna, Inc., Bravo Health, Inc. (which is part of Cigna), and Humana, Inc.
Continue Reading Medicare Advantage Plans Under Fire: The Department of Justice Files Complaints-in-Intervention

On February 8th, the U.S. Department of Justice (DOJ) quietly issued new guidance on how the agency evaluates corporate compliance programs during fraud investigations. The guidance, published on the agency’s website as the “Evaluation of Corporate Compliance Programs,” lists 119 “sample questions” that the DOJ’s Fraud Section has frequently found relevant in determining whether to bring charges or negotiate plea and other agreements. The February 8th issuance is the agency’s first formal guidance under the new presidential administration, and the latest effort by the DOJ’s “compliance initiative,” which launched at the hiring of compliance counsel expert Hui Chen in November 2015. The new guidance is particularly valuable for healthcare organizations in light of the agency’s heightened efforts to prosecute Medicare Advantage plans for fraudulent reporting under the False Claims Act.
Continue Reading DOJ Issues New Guidance on the Evaluation of Corporate Compliance Programs in Federal Fraud Investigations