Yesterday, the Supreme Court issued a unanimous decision holding that the scienter element of the False Claims Act (“FCA”) is met if a defendant subjectively knew his or her claims were false and submitted them anyway. See United States ex rel. Schutte v. SuperValu Inc. and United States ex rel. Proctor v. Safeway. The Court’s ruling was narrow and avoided the more challenging—and common—issues raised during oral argument (which we previously discussed here).
Companies regularly are required to interpret ambiguous and vague regulatory provisions. Today, the United States Supreme Court heard oral arguments in a pair of consolidated cases to determine whether a defendant’s subjective interpretation of an ambiguous regulation is relevant to determining the knowledge (or scienter) element of the False Claims Act or, as the Seventh Circuit held in the case below, that once a defendant can articulate an objectively reasonable interpretation its contemporaneously held subjective belief is irrelevant to the knowledge inquiry. The issue is a significant one for both the government and relators on one side, and potential defendants on the other, as False Claims Act (FCA) liability imposes treble damages and penalties exceeding $20,000 per claim as well as relators’ attorneys’ fees and costs.
Continue Reading Supreme Court Hears Arguments on False Claims Act Scienter Standard
The ABA Washington Health Law Summit is the premier legal conference focusing on health law policy and, as a result, offers insight into current and future major policy issues. But, as always at this conference, there are the issues selected by the conference chairs and formally on the agenda – and then there are issues experienced practitioners can identify by reading between the lines. Both are addressed below.
Continue Reading Health Law Policy Heading Into 2022 At The ABA Health Law Summit
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
The DOJ is empowered under the FCA to seek dismissal of unmeritorious qui tam suits brought in its name. The DOJ has historically used this power sparingly. We are happy to report, however, that more dismissals may be on the horizon.
On January 10, 2018, Michael Granston, Director of the Commercial Litigation Branch of the Fraud Section of the U.S. Department of Justice circulated an internal memorandum that was published last week in the legal press. The memorandum collects cases in which the Department sought dismissal of unmeritorious qui tams. It categorizes these cases into seven factors that DOJ attorneys should consider when evaluating whether the government should seek to dismiss a qui tam.
Nearly all FCA recoveries against healthcare entities in the last three years came from cases filed by qui tam relators. In other words, of $7.3 billion recovered from healthcare entities in 2015-17, $6.9 billion of that originated from qui tam suits. The Department of Justice’s guidance is welcome news for healthcare entities as it will likely further stymie unmeritorious qui tam litigation.
The following article, “DOJ Formalizes Guidance for Government Dismissal of Unmeritorious Qui Tam Suits,” by Michael Paddock, David T. Fischer and Matthew Turetzky was previously posted on January 25, 2018, on the Sheppard Mullin False Claims Act Defense Blog.
Continue Reading The Department of Justice Delivers Some Good News to the Healthcare Industry: New False Claims Act Guidance Predicts More Challenges to Qui Tam Plaintiffs
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