The United States’ recent False Claims Act (“FCA”) prosecution in United States v. Prometheus Group, et al., is a reminder that the government will use the FCA to target medical device manufacturers for off-label use of medical devices, even where healthcare providers have decided the use is safe and effective. In Prometheus Group, the government alleges that the defendant medical device manufacturer trained providers to re-use disposable rectal probes against U.S. Food and Drug Administration (“FDA”) recommendations, causing the providers to submit false claims for payment to Medicare for the services mis-using the probes. The complaint alleges that Prometheus put vulnerable Medicare patients at risk to gain a marketing advantage by reducing overhead costs associated with its systems. The message to medical device manufacturers is clear: even without submitting claims to the government themselves, manufacturers can face FCA liability for suggesting providers use their devices in any way the FDA has not approved (and in this case, warned against).

Continue Reading The Government Seeks FCA Liability for Off-Label Use of Medical Devices

The Eighth Circuit Court of Appeals recently tossed a $5.5 million jury verdict finding that a physician violated the False Claims Act (“FCA”) by submitting claims for items and services ordered subsequent to a violation of the Federal health care program anti-kickback statute (“AKS”). According to the appellate court, the trial court’s jury instruction “brushed aside causation” and “misinterpreted” a 2010 amendment to the AKS.

Continue Reading Eighth Circuit: In False Claims Act Cases Based On Kickback Violations, the Kickback Violation Must Be the “But For” Cause of the Items and Services Subject to the Claim

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

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 Coronavirus Aid, Relief, and Economic Security (CARES) Act provided trillions in economic relief in response to the COVID-19 pandemic, including hundreds of billions of dollars in aid for the healthcare industry.  Regulators in the healthcare industry have also adjusted regulations and procedures in response to the changing landscape caused by the pandemic.  While the CARES Act and regulatory changes provide much-needed help, accepting funds and navigating the regulatory changes can add many legal pitfalls to an already cluttered regulatory scheme.  As the government prepares to prosecute fraud and abuse by recipients of CARES Act funds, healthcare entities—the top payors of government enforcement and qui tam dollars—should take care to avoid claims of misconduct under the CARES Act.
Continue Reading Tips for the Unwary: Precautions Against Liability for Healthcare Businesses Receiving CARES Act Funds

Introduction

Federal and state governments are ready to roll out over one trillion dollars in funding in response to the novel coronavirus (COVID-19) pandemic.  As past is often prologue, we expect this new round of massive government spending to someday be subjected to strict government oversight, targeted audits and investigations, and whistleblowers all searching for potential fraud, waste and abuse.  Economic downturns and the unfortunate necessity of layoffs may also lead to an increased risk of whistleblower claims by former employees.  Flooding the healthcare industry and other negatively impacted industry streams with hundreds of billions in aid will no doubt prove too tempting for the ever-present fraudsters in society who are always looking to take advantage.  As we have learned from past crises, however, when government enforcement eventually gets around to casting its False Claims Act (FCA) nets far and wide in search of potential fraud and abuse, many unwary businesses may be ensnared along with the usual fraudsters because of their sloppy or reckless practices. Deficient practices today could trigger an FCA investigation or enforcement action tomorrow along with all of its draconian treble damages and penalties.  This article details the risks businesses face under the FCA when responding to COVID-19, and provides guidance on how to guard against them now.

Continue Reading Guard Against False Claims as Massive Government Spending Rolls Out to Combat COVID-19

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

In a highly anticipated opinion in the AseraCare case, issued on September 9, 2019, the Eleventh Circuit Court of Appeals affirmed the district court’s holding that “a clinical judgment of terminal illness warranting hospice benefits under Medicare cannot be deemed false, for the purposes of the False Claims Act, when there is only a reasonable disagreement between medical experts as to the accuracy of their conclusion, with no other evidence to prove the falsity of the assessment.” U.S. v. AseraCare, Inc., No. 16-13004, at *3 (Sept. 9, 2019 11th Cir.) (“Op.”). Although the Court remanded the case to the district court to consider any such “other evidence” the Government might identify in the record, it also made clear that such evidence would need to “link” to specific claims submitted for payment, creating a substantial practical impediment to the Government’s ability to prove falsity in this and similar cases. See Op. at 56.
Continue Reading The Eleventh Circuit Remands AseraCare, But Affirms High Hurdle for Proving Falsity

On July 31, 2019, the U.S. Court of Appeals for the Eleventh Circuit affirmed a lower court’s decision to grant summary judgment to hospital operator HCA and dismiss relator Thomas Bingham’s allegations. Bingham v. HCA (S.D. Fla. July 31, 2019) (“Op.”). In a well-reasoned opinion, the Court affirmed several key holdings:

  • There is no “remuneration”, for Federal health care program anti-kickback statute (“AKS”) purposes, unless a benefit is conferred for less than fair market value. In other words, as long as compensation to or from a referral source is consistent with fair market value, the AKS is not implicated.
  • With respect to the Stark Law, showing that a space lease arrangement effectuates an “indirect compensation arrangement” between a hospital and a referring physician requires a showing that the space, rental rates, or benefits under the lease correlate with the volume of the physician’s referrals to the hospital.
  • It may be appropriate for a court to strike allegations from an amended False Claims Act complaint if they are based on information uncovered by a relator during discovery.

These holdings should be welcomed by defendants of alleged AKS, Stark Law, and False Claims Act violations.
Continue Reading Eleventh Circuit Affirms Key Kickback Statute, Stark Law, and False Claims Act Principles in Dismissing Allegations Against HCA

On May 14, 2019, the Supreme Court issued a decision in the case of Cochise Consultancy, Inc. v. United States ex rel. Hunt, No. 18-315, 2019 WL 2078086 (U.S. May 13, 2019). In its decision, the Supreme Court essentially added four years on the time available for private suits to be brought by whistleblowers/relators under the False Claims Act (“FCA”), regardless of whether the Government decides to intervene. As a result of this decision, entities that submit claims to the Government for payment – including Medicare, Medicaid and other Federal healthcare program-participating providers and suppliers – may find themselves facing a private whistleblower complaint more than six years after the alleged conduct took place. As described in the following article, “Supreme Court Addresses False Claims Act Statute of Limitations,” that was previously posted on the Sheppard Mullin False Claims Act Defense Blog on May 14, 2019, the Court decision now allows for the possibility that a whistleblower could inform an appropriate U.S. official of material facts relating to an alleged FCA violation after the whistleblower’s own six-year statute of limitations has already tolled, so long as the action is brought within 10 years of the alleged violation.
Continue Reading Supreme Court Addresses False Claims Act Statute of Limitations

Federal prosecutors announced yesterday the Government’s settlement with electronic health records (“EHR”) vendor Greenway Health, LLC (“Greenway”) of False Claims Act (“FCA”) allegations for a payment of $57.25 million and Greenway’s acceptance of a Corporate Integrity Agreement (“CIA”). The Government’s FCA complaint was filed by the U.S. Attorney’s Office for the District of Vermont, the same office that handled the May 2017 civil settlement with EHR company eClinicalWorks for $155 million. The Greenway settlement is the second largest civil settlement in the District of Vermont’s history, topped only by the eClinicalWorks settlement.
Continue Reading Government Puts Electronic Health Records Companies “on Notice” of Vigorous False Claims Act Enforcement