Gibson Dunn | 2021 Mid-Year False Claims Act Update

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July 26, 2021

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As the US emerges from the darkest days of the COVID-19 pandemic and the Biden Administration settles in, the U.S. authorities and qui tam relators proceed to churn out litigation and investigations beneath the False Claims Act (“FCA”), the federal government’s main instrument for combatting fraud towards the federal fisc.

Six months in the past, in our 2020 Year-End FCA Update, we explored what the brand new Biden Administration’s priorities may be and whether or not they would alter FCA enforcement. Up to now, there have been no main shifts in overarching coverage, however the contours of the Biden Administration’s priorities are rising. And, with almost $400 million in FCA settlements within the first half of the yr, extra aggressive and forward-leaning FCA enforcement might be on the horizon. Certainly, the Biden Administration forecasts that its efforts to root out COVID-19-related fraud will lead to “important instances and recoveries” beneath the FCA.

In the meantime, federal courts issued a number of important selections within the first half of 2021, together with necessary selections exploring the usage of statistical proof in FCA instances, causation in fraudulent inducement instances, alleged “fraud on the FDA,” legal responsibility based mostly on Anti-Kickback Statute (“AKS”) violations, the FCA’s materiality requirement, and DOJ’s discretion to dismiss qui tam instances the place the federal government has not intervened.

Under, we start by summarizing current enforcement exercise, then present an outline of notable legislative and coverage developments on the federal and state ranges, and at last analyze important court docket selections from the previous six months. Gibson Dunn’s recent publications concerning the FCA could also be discovered on our web site, together with in-depth discussions of the FCA’s framework and operation, industry-specific shows, and sensible steerage to assist firms keep away from or restrict legal responsibility beneath the FCA. And, in fact, we’d be completely satisfied to debate these developments—and their implications for your enterprise—with you.

I.  NOTEWORTHY DOJ ENFORCEMENT ACTIVITY DURING THE FIRST HALF OF 2021

Momentum continued to construct on the FCA enforcement entrance throughout 2021’s first half, as DOJ introduced a variety of FCA resolutions totaling greater than $393 million. Though the variety of resolutions demonstrated a continued excessive stage of enforcement exercise, these resolutions didn’t embrace any blockbuster settlements by historic requirements; DOJ didn’t announce any nine-figure settlements within the first half of the yr.

Under, we summarize essentially the most notable settlements up to now in 2021, with a concentrate on the industries and theories of legal responsibility concerned. According to historic tendencies, a majority of FCA recoveries from enforcement actions for the primary half of this yr have concerned well being care and life sciences entities, together with alleged violations of the AKS, however DOJ additionally introduced a number of resolutions within the authorities contracting and procurement area.

A.  HEALTH CARE AND LIFE SCIENCE INDUSTRIES

FCA resolutions within the well being care and life sciences industries totaled greater than $228 million. According to historic tendencies, this made up the most important share of general recoveries of any {industry}. Of the 27 resolutions summarized beneath, not less than 5 included a Company Integrity Settlement.

  • On January 11, a California laboratory agreed to pay $2.5 million to resolve allegations that it violated the FCA and the AKS by billing Medicare for genetic assessments that had been induced by kickbacks paid for referrals of the assessments. A advertising firm purportedly referred its shoppers to the laboratory for testing, and the laboratory allegedly paid a specified share or fastened quantity of Medicare’s reimbursement for coated assessments.[1]
  • On February 4, a Florida firm and the corporate’s president agreed to pay $20.3 million to settle allegations that they violated the FCA by fraudulently establishing companies to invoice for medically pointless sturdy medical gear (“DME”) and by participating in improper advertising practices in violation of the In response to the federal government’s allegations, the corporate established dozens of entrance firms purporting to be DME suppliers, submitted greater than $400 million in improper DME claims to Medicare and the Veterans Administration (“VA”), and bribed docs to approve the claims even after they had not interacted with the purported beneficiaries. Along with the settlement, the corporate’s president pleaded responsible to conspiracy to commit well being care fraud and submitting a false tax return for which she faces a most penalty of 13 years in federal jail. The share of the whistleblower who initially filed the motion was not disclosed on the time of the settlement announcement.[2]
  • On February 25, a Pennsylvania pharmacy agreed to pay $2.9 million to resolve allegations that it violated the FCA by filling prescriptions with cheap generic drugs however billing Medicare for pricier brand-name medicine, and that it violated the Managed Substances Act by illegally dishing out opioids and different managed substances to people who didn’t have prescriptions.[3]
  • On February 25, a world medical expertise firm agreed to pay $3.6 million to settle allegations that it violated the FCA by submitting improperly accomplished certificates of medical necessity (“CMN”) for units that had been medically pointless. The allegations stemmed from the corporate’s self-disclosure to HHS-OIG that its gross sales representatives at occasions crammed out a CMN part that, beneath Medicare guidelines, should be accomplished by the treating doctor’s workplace.[4]
  • On March 2, a North Carolina medical gear supplier agreed to pay $20.1 million, and its particular person proprietor agreed to pay a further $4 million, to resolve allegations that the corporate violated the federal and North Carolina FCA The federal government alleged that the corporate fraudulently billed Medicaid for DME purportedly supplied to particular person Medicaid recipients, however the people by no means ordered or acquired the gear; in some instances, the supposed recipients allegedly had been deceased for years earlier than the submission of the claims. The U.S. authorities and the state of North Carolina additionally obtained a default judgment of $34.7 million towards a gross sales consultant of the corporate. In a associated felony investigation, the corporate was sentenced to 5 years of probation and ordered to pay a $2 million tremendous and over $10 million in restitution to the North Carolina Medicaid Program associated to prices of well being care fraud. The corporate self-reported the exercise to the North Carolina Medicaid Investigations Division.[5]
  • On March 2, a Virginia medical observe agreed to pay $2.1 million to resolve allegations that it violated the FCA by double-billing Medicare for remedies administered to sufferers. The at-issue therapy is bought in single-use vials, however some sufferers don’t want a whole vial. In such instances, Medicare guidelines permit the physician to invoice as if all the vial had been administered whereas discarding the leftover quantity. Allegedly, the medical observe engaged in a scheme whereby it might administer a partial vial to 1 affected person, give the rest of the vial to a special affected person, after which invoice Medicare for one full vial per affected person. In June 2020, the medical observe pleaded responsible to 1 depend of felony well being care fraud associated to the conduct.[6]
  • On March 5, the Florida-based guardian of two Ohio psychiatric hospitals and one Ohio substance abuse therapy facility agreed to pay $10.3 million to resolve allegations that they violated the FCA by billing federal well being care packages for medical providers that had been induced by kickbacks improperly supplied to sufferers. In response to the federal government, the corporate unlawfully supplied free long-distance transportation to sufferers to induce them to hunt therapy on the firm’s services after which submitted claims for the providers it supplied to these sufferers. The federal government additionally alleged that among the inpatient admissions, for which the corporate submitted claims, had been medically pointless. Along with the monetary settlement, the corporate entered right into a Company Integrity Settlement with HHS-OIG that requires it to retain an impartial reviewer for a five-year interval to look at its claims to Medicare and Medicaid. The share of the whistleblower who initially filed the motion was not disclosed on the time of the settlement announcement.[7]
  • On March 16, two former homeowners of a telemarketing firm agreed to collectively pay not less than $4 million to settle allegations that they violated the FCA by scheming to generate referrals to pharmacies in change for kickbacks. The federal government alleged that the previous homeowners solicited potential sufferers to just accept compounded medicine however the medical necessity of such medicine, procured prescriptions for the sufferers, after which organized to have these prescriptions crammed at compounding pharmacies. In change, the previous homeowners acquired a kickback from the pharmacies equal to half of the quantity that TRICARE in the end reimbursed for every prescription. Underneath the settlement settlement, the precise decision quantity might be decided based mostly the sale value of sure actual property that one of many former homeowners agreed to promote. A former worker of 1 pharmacy to which the telemarketing firm referred prescriptions initially filed the qui tam The share of the whistleblower who initially filed the motion was not publicized on the time the settlement was introduced.[8]
  • On March 18, a Michigan doctor and his observe agreed to pay $2 million to resolve allegations that the observe violated the FCA by billing federal packages for diagnostic assessments that had been pointless or by no means carried out. Along with the monetary settlement, the doctor and his observe agreed to a Integrity Settlement with HHS-OIG that requires billing practices oversight for a three-year interval. The shares of the 2 whistleblowers who initially filed the actions weren’t disclosed on the time of the settlement announcement.[9]
  • On March 26, a former proprietor of a North Carolina diagnostic testing laboratory agreed to pay $2 million to settle allegations that he participated in kickback schemes to induce physicians to refer sufferers to the laboratory for medically pointless drug assessments, resulting in the submission of claims to Medicare in violation of the AKS and the FCA. In response to the federal government, the laboratory supplied advantages, together with urine drug testing gear and loans to physicians, in addition to volume-based commissions and a wage to a person for affect over two doctor practices, in change for referrals to the laboratory for testing. On March 30, one other of the laboratory’s former homeowners consented to an entry of ultimate judgement requiring that he pay $4.5 million to resolve allegations that he paid kickbacks to the proprietor or a medical observe.[10]
  • On April 1, a New York-based pharmaceutical firm agreed to pay $75 million to resolve allegations that it knowingly underpaid rebates owed pursuant to the Medicaid Drug Rebate Program. The federal government alleged that the corporate had underreported the Common Producer Costs (“AMPs”) for a number of medicine as a result of it improperly subtracted service charges paid to wholesalers from the reported AMPs and excluded further worth the corporate acquired beneath contractual price-appreciation provisions with the wholesalers. In response to the federal government, the underreported AMPs resulted in underpaid quarterly rebates to states and, relatedly, induced overcharges to the US for the federal government’s Medicaid program funds to the states.[11] The corporate pays roughly $41 million, plus curiosity, to the US and the rest to states collaborating within the settlement. The settlement stemmed from a qui tam lawsuit, which the whistleblower pursued after the federal government declined to intervene. The whistleblower’s share was not introduced with the settlement.
  • On April 8, an urgent-care supplier community in South Carolina and its administration firm agreed to pay $22.5 million to resolve allegations that the administration firm falsely licensed that community well being care suppliers credentialed to invoice Medicaid, Medicare, and TRICARE had carried out numerous procedures, when non-credentialed suppliers really carried out these providers. The businesses additionally entered right into a five-year Company Integrity Settlement with HHS-OIG and DCIS that requires the administration firm to retain an impartial evaluate group to evaluate its claims.[12] The share of the whistleblowers who initially filed the motion was not introduced with the settlement.
  • On April 20, a community of three specialty well being care suppliers in Massachusetts agreed to pay $2.6 million to resolve allegations that they improperly billed Medicare and Massachusetts’ Medicaid program for sure workplace visits whereas additionally billing for procedures carried out on the workplace visits, permitting the suppliers to acquire reimbursements to which they weren’t entitled beneath the circumstances. The whistleblower who initially filed the motion will obtain 15% of the restoration.[13]
  • On April 21, a Tennessee-based community of pain-management clinics, its 4 majority homeowners, and a former govt agreed to pay $4.1 million to settle allegations involving the submission of false claims for medically pointless or non-reimbursable remedies, testing, and medicines to federal well being care packages, in addition to for providers and testing that weren’t really carried out. The settlement additionally resolved common-law claims of fraud, fee by mistake, and unjust enrichment. With the settlement, the federal government agreed to dismiss its underlying civil motion towards all of the events besides the community’s former CEO, who was convicted of well being care fraud in 2019. The allegations initially stemmed from qui tam lawsuits, pursuant to which the whistleblowers will obtain $610,685.[14]
  • On April 30, a well being care software program developer in Florida agreed to pay $3.8 million to resolve allegations that it used its advertising referral program for digital well being information merchandise to pay illegal kickbacks to generate gross sales. The federal government alleged that the referral program financially incentivized present shoppers to advocate the developer’s merchandise and barred program individuals from offering unfavourable product info to potential shoppers, with out the possible shoppers’ information of the association. The federal government additionally asserted that the kickback funds rendered false the claims the corporate submitted beneath Medicare and Medicaid Significant Use Applications and the Benefit-Primarily based Incentive Fee System. The whistleblower who initially filed the motion will obtain roughly $800,000 in reference to the settlement.[15]
  • On Could 3, a neurosurgeon in South Dakota, in addition to two affiliated medical machine distributors owned by the physician, agreed to pay $4.4 million to resolve allegations that the physician accepted unlawful funds to make use of sure medical units and knowingly submitted claims for medically pointless surgical procedures. The physician allegedly requested and acquired kickbacks, within the type of meals and alcohol, from a medical machine producer via a restaurant that the physician owned together with his spouse. The physician additionally allegedly knowingly submitted false claims for medically pointless procedures utilizing medical units by which he had a monetary curiosity. The 2 medical machine distributors agreed to pay a further $100,000 to resolve claims that they violated the Facilities for Medicare & Medicaid Providers’ (“CMS”) Open Funds Program when the distributors didn’t report back to the CMS the physician’s possession pursuits and funds made to him. The settlement precludes every of the defendants from collaborating in federal well being care packages for a interval of six years. The whistleblowers who initially filed the motion will obtain $880,000 in reference to the settlement.[16]
  • On Could 4, a Delaware-based pharmaceutical producer agreed to pay $12.6 million to resolve allegations that it used a third-party basis to cowl the copays of Medicare and TRICARE sufferers taking its myelofibrosis drug. The federal government alleged that the producer improperly induced sufferers to buy its medicine after pressuring the inspiration to make use of funds donated by the producer for affected person copays and assist ineligible sufferers full monetary help purposes to the fund. The whistleblower who initially filed the motion will obtain roughly $3.59 million of the restoration.[17]
  • On Could 5, an Arizona hospital, operated by one of many largest well being care techniques in the US, and a neurosurgery supplier on the hospital’s campus agreed to pay $10 million to resolve allegations that they billed Medicare for concurrent, overlapping surgical procedures in violation of rules and reimbursement insurance policies. The neurosurgery supplier contemporaneously entered right into a five-year Company Integrity Settlement with HHS-OIG that requires the supplier to keep up compliance and risk-assessment packages and rent an impartial evaluate group to yearly evaluate its claims. The share of the restoration the whistleblower who initially filed the motion was not introduced with the settlement.[18]
  • On Could 10, a personal college in Florida agreed to pay $22 million to resolve claims associated to its laboratory and off-campus, hospital-based services. The federal government alleged that the college billed federal well being care packages for medically pointless laboratory assessments for kidney transplant sufferers, submitted inflated reimbursement claims for pre-transplant laboratory testing in violation of rules limiting above-cost reimbursements for assessments carried out by a supplier’s associated entity, and knowingly failed to offer required discover to beneficiaries concerning the price of receiving providers at hospital services slightly than doctor places of work. Contemporaneous with the settlement, the college entered right into a five-year Company Integrity Settlement with HHS-OIG, which requires the college to ascertain compliance, risk-assessment, and internal-review packages. The share of the whistleblower who initially filed the three underlying qui tam lawsuits was not disclosed on the time of settlement.[19]
  • On Could 11, a nationwide pharmacy-services supplier based mostly in Texas agreed to pay $2.8 million to resolve a variety of alleged violations beneath the Managed Substances Act and FCA. The settlement additionally resolved allegations that the supplier disbursed opioids and different managed substances with out legitimate prescriptions, submitted false claims for invalid emergency prescriptions to Medicare, and billed Medicare for claims that had already been reimbursed. The share of the whistleblower who initially filed the motion was not introduced with the settlement.[20]
  • On Could 14, two Texas-based dentists, in addition to their affiliated practices and dental administration firms, agreed to pay $3.1 million to resolve allegations that they knowingly billed Medicaid for providers not rendered or falsely recognized who supplied these providers. The share of the whistleblowers who initially filed the motion was not introduced with the settlement.[21]
  • On Could 19, a French medical machine producer and its American affiliate agreed to pay $2 million to resolve allegations that they violated the AKS, FCA, and the Open Funds Program’s necessities. The federal government alleged the producer supplied objects of worth—similar to meals, leisure, and journey bills—to U.S.-based docs attending a convention in France to induce purchases of their spinal units and failed to completely report the physician-entertainment bills as a part of the Open Funds Program. The share of the whistleblower who initially filed the motion was not introduced with the settlement.[22]
  • On Could 21, an Atlanta-based chain of nursing services agreed to pay $11.2 million to resolve allegations that it billed Medicare for medically unreasonable, pointless, and unskilled rehabilitation remedy providers, and that it billed each Medicare and Medicaid for substandard or “nugatory” skilled-nursing providers after allegedly failing to have a enough variety of expert nursing employees to look after the residents The settlement additionally resolved allegations that the chain submitted false claims to Medicaid for coinsurance quantities for beneficiaries eligible for each Medicare and Medicaid. Contemporaneously, the chain entered right into a five-year Company Integrity Settlement with HHS-OIG that requires an impartial group to yearly evaluate affected person stays and related claims in addition to an impartial monitor to evaluate resident-care high quality. The settlement resolves a number of qui tam fits; the whistleblowers’ share of the restoration was not introduced with the settlement.[23]
  • On Could 25, a dental-clinic system in New York agreed to pay $2.7 million to resolve allegations that it submitted false claims to Medicaid for dental providers carried out with improperly sterilized gear. The share of the whistleblower who initially filed the motion was not introduced with the settlement.[24]
  • On June 8, a Texas-based chiropractor and her medical group agreed to pay $2.6 million to resolve allegations that the chiropractor improperly billed Medicare and TRICARE packages for the implantation of neurostimulator electrodes regardless of not performing such surgical procedures. Along with the settlement, the chiropractor and affiliated medical entities agreed to a 10-year interval of exclusion from participation in any federal well being care program.[25]
  • On June 28, a surgical procedure middle and its affiliated outpatient surgical procedure supplier agreed to pay $3.4 million to resolve allegations that the businesses submitted claims for kidney stone procedures that weren’t medically justified and in addition engaged in a kickback scheme. One of many surgical procedure facilities allegedly submitted claims for sure kidney stone procedures for Medicare and TRICARE sufferers that weren’t medically crucial. Additional, a doctor and the 2 firms allegedly engaged in a kickback association by which the doctor carried out the kidney stone procedures in change for per-procedure funds on the surgical procedure middle, which the surgical procedure middle then billed to Medicare and TRICARE. The settlement resulted from a qui tam lawsuit, and the whistleblower will obtain $748,000 of the settlement proceeds. In November 2020, the property of the doctor additionally paid the U.S. authorities $1.75 million to resolve claims associated to his participation within the conduct.[26]

B.  GOVERNMENT CONTRACTING AND PROCUREMENT

Settlement quantities to resolve legal responsibility beneath the FCA within the authorities contracting and procurement area totaled greater than $165 million within the first half of 2021.

  • On January 8, a Connecticut electrical contractor agreed to pay $3.2 million to settle allegations that it violated the FCA in reference to public development contracts principally funded by the U.S. Division of Transportation. Underneath the phrases of the contracts, the contractor was required to subcontract a portion of the work to Deprived Enterprise Enterprises (“DBE”). The federal government alleged that the contractor fraudulently misrepresented {that a} DBE had carried out work as a subcontractor, when in actual fact the work in query was carried out by {the electrical} contractor’s personal staff. As a part of the settlement, the contractor agreed to enter a monitoring settlement with the Federal Transit Administration.[27]
  • On January 12, a Washington aerospace contractor agreed to pay $25 million to resolve allegations that it submitted materially false value and pricing knowledge in relation to navy contracts, in violation of the FCA. The contractor entered into contracts to produce Unmanned Aerial Automobiles (“UAVs”) to the navy. The proposals submitted by the contractor included value and pricing knowledge that assumed new elements could be utilized in constructing the UAVs, however the authorities alleged that the contractor as an alternative used recycled, refurbished, reconditioned, or reconfigured elements. The whistleblower who initially filed the qui tam lawsuit will obtain $4.625 million of the settlement quantity.[28]
  • On February 17, a subsidiary of a French civil engineering firm agreed to pay $3.9 million to resolve allegations that it violated the FCA by knowingly utilizing contractually noncompliant concrete within the development of an abroad U.S. navy airfield. Along with the civil settlement, the corporate agreed to enter right into a separate DPA beneath which the corporate admitted to the underlying information and accepted duty for a one-count info for conspiracy to commit wire fraud, and agreed to pay a financial penalty of greater than $12.5 million. The civil settlement credited roughly $1.95 million of the DPA fee.[29]
  • On February 19, a Virginia firm agreed to pay greater than $6 million to settle allegations that its predecessor firm, an info expertise contractor, violated the FCA by overbilling the Division of Homeland Safety (“DHS”) for work carried out by its staff. The contractor allegedly used underqualified personnel to carry out providers and knowingly billed DHS at larger charges meant for extra certified personnel.[30]
  • On February 26, a U.S.-based airline agreed to pay $49 million to resolve felony prices and civil claims that it supplied fraudulent knowledge to the U.S. Postal Service (“USPS”) in reference to a contract to ship mail internationally on behalf of U.S.P.S. Underneath the airline’s contracts with USPS, it was required to offer bar code scans of mail containers when it took possession of them and once more when it delivered them to meant recipients; the airline was entitled to fee provided that correct scans had been supplied and the mail was well timed delivered. In response to the federal government, the airline submitted automated scans that didn’t correspond to the precise motion of the mail, and thus it was not entitled to fee. The airline admitted that it hid issues associated to mail motion and scanning that will have subjected it to penalties beneath the contracts. The airline agreed to pay almost $32.2 million to resolve civil allegations that it violated the FCA, and the airline additionally entered right into a felony non-prosecution settlement and agreed to pay a further $17.3 million in felony penalties and disgorgement. The airline additionally agreed to continued cooperation with the DOJ Legal Division’s Fraud Part. The airline additional agreed to strengthen its compliance program and agreed to reporting necessities, together with annual stories to DOJ.[31]
  • On March 1, the subsidiary of a multinational software program engineering and assist firm agreed to pay $2.2 million to settle allegations that it violated the FCA by failing to pay required administrative charges pursuant to contracts it signed with the U.S. Common Providers Administration, and that it violated the FCA by failing to offer contracted reductions and never assembly contractual necessities concerning the tutorial and experiential {qualifications} of its employees.[32]
  • On March 19, a New York-based nongovernmental group (“NGO”) agreed to pay $6.9 million to settle allegations that it violated the FCA in relation to programming funded by the U.S. Company for Worldwide Growth (“USAID”). The NGO acquired USAID funding to offer humanitarian help to refugees in Syria. In response to the federal government, the NGO’s employees participated in a collusion and kickback scheme with a international provider to rig bids for items and providers contracts utilized in its humanitarian aid efforts. The federal government alleged that this conduct led to the procurement of products at unreasonably excessive costs, which had been then invoiced to USAID.[33]
  • On April 29, a California-based producer agreed to pay $5.6 million to resolve allegations that it falsely licensed the origin of supplies and the manufacturing location of things produced beneath a contract with the Authorities of Israel, which was funded by the U.S. Protection Safety Cooperation Settlement Company. To be eligible for international procurement grant funds, the supplies should be sourced and manufactured in the US by home firms. As associated to objects manufactured beneath the DSCA-funded contract with the Authorities of Israel, the federal government alleged that the producer knowingly submitted false certifications that Chinese language-sourced supplies had been produced in the US and that manufacturing had occurred in the US, when the corporate had in actual fact contracted with a Mexican maquiladora. The whistleblowers who filed the motion will obtain 17% of the settlement.[34]
  • On Could 27, an Illinois-based navy producer agreed to pay $50 million to resolve allegations that it fraudulently induced the U.S. Marine Corps to enter right into a contract modification at inflated costs for parts of armored autos. The federal government alleged that the producer knowingly created and submitted fraudulent gross sales invoices for gross sales that by no means occurred to justify the contract’s inflated costs. The whistleblower who filed the motion will obtain roughly $11.1 million of the settlement.[35]
  • On June 3, a Washington subsidiary of a Colorado-based environmental cleanup and remediation firm paid roughly $3 million to resolve allegations that it submitted fraudulent small-business subcontractor stories. The corporate had entered right into a authorities contract that required it to make efforts to award small companies a share of its subcontracts and frequently report its progress; the contract supplied fee-based incentives for its subcontracting successes and imposed financial penalties if these targets had been missed in dangerous religion. The federal government alleged that the corporate falsely represented the standing of two companies awarded subcontracts to say credit score for small-business subcontractors beneath the contract. The whistleblowers who initially filed the motion will obtain roughly $865,900 of the settlement.[36]
  • On June 10, a nationwide car-rental group headquartered in New Jersey agreed to pay $10.1 million to resolve allegations that it submitted false claims beneath an settlement managed by the Division of Protection Journey Administration Workplace for unallowable supplemental prices to automobile leases, similar to collision-damage waiver insurance coverage, supplemental legal responsibility protection, personal-effects protection, and late turn-in charges. Moreover, the federal government alleged that among the charges charged had been already included within the authorities rental fee.[37]
  • On June 25, a multinational telecommunications and Web service supplier firm agreed to pay greater than $12.7 million to resolve allegations that the corporate violated the FCA in quite a few methods. Former officers of the corporate allegedly accepted kickbacks in return for favorable therapy for subcontractors associated to authorities contracts. The corporate additionally allegedly improperly obtained protected competitor bid info associated to a authorities contract to realize a bidding benefit. Additional, the corporate allegedly misstated its compliance with woman-owned small enterprise subcontracting necessities beneath a contract with the Division of Homeland Safety. The settlement resolves claims beneath the FCA, the Anti-Kickback Act, and the Procurement Integrity Act. The share of the whistleblower who initially filed the motion was not disclosed on the time of the settlement announcement.[38]
  • On June 30, a authorities contractor agreed to pay $4.3 million to settle allegations that three of its former executives accepted kickbacks from a subcontractor in change for awarding subcontracts for presidency contracts. A former govt allegedly instructed a subcontractor to mark up the price of the subcontractor’s providers supplied to the contractor, and instructed the subcontractor to divide the proceeds between the subcontractor, the previous govt, and two different former executives in change for awarding the subcontracts to the subcontractor.[39]

II.  POLICY AND LEGISLATIVE DEVELOPMENTS

A.  COVID-19-RELATED DEVELOPMENTS

Throughout the first half of 2021, DOJ has maintained its concentrate on COVID-19-related fraud. In a February 17, 2021 speech on the Federal Bar Affiliation Qui Tam Convention, Appearing Assistant Lawyer Common Brian M. Boynton outlined the Civil Division’s key enforcement priorities and positioned pandemic-related fraud on the high of the listing.[40] Appearing AAG Boynton described ongoing efforts by DOJ and its company companions to “establish, monitor, and examine the misuse of important pandemic aid monies,” and in addition expressed confidence that DOJ’s devotion of assets to this effort might be worthwhile: “The overwhelming majority of the funds distributed beneath [pandemic relief] packages have gone to eligible recipients. Sadly, nonetheless, some people an1 companies utilized for—and acquired—funds to which they weren’t entitled.”[42]

In his remarks, Appearing AAG Boynton highlighted DOJ’s first civil settlement beneath the PPP.[42] The settlement was small (solely $100,000), however marked the primary such settlement associated to COVID PPP funds and resolved claims an organization had violated the FCA and the Monetary Establishments Reform, Restoration and Enforcement Act (FIRREA) based mostly on allegations the corporate “made false statements to federally insured banks that [it] was not in chapter in an effort to affect these banks to approve, and the Small Enterprise Administration (SBA) to ensure” a PPP mortgage.[43] And whereas the PPP-related settlement didn’t contain a qui tam relator, in March, DOJ confirmed what many within the protection bar have lengthy identified or suspected—specifically that “whistleblower complaints have been on the rise” throughout the COVID-19 pandemic.[44]

The opposite priorities Appearing AAG Boynton outlined in his February speech additionally reveal that DOJ views pandemic-related fraud as extending past aid packages applied throughout the pandemic. For instance, in discussing DOJ’s continued concentrate on the opioid disaster, Appearing AAG Boynton characterised the disaster as “not new, however . . . exacerbated by the pandemic.”[45] Equally, he attributed DOJ’s “continued concentrate on telehealth schemes” partially to “the growth of telehealth throughout the pandemic.”[46] These remarks clarify that DOJ has not overpassed pre-pandemic enforcement priorities, along with specializing in fraud tied to authorities packages which are themselves creatures of the pandemic.

B.  CONTENDING WITH THE LEGACY OF THE GRANSTON MEMO

Underneath the Trump administration, DOJ took outstanding steps to say DOJ’s management of FCA lawsuits. Particularly, on January 10, 2018, Michael Granston, the then-Director of the Fraud Part of DOJ’s Civil Division, issued a memorandum directing authorities attorneys evaluating a suggestion to say no intervention in a qui tam FCA motion to “contemplate whether or not the federal government’s pursuits are served . . . by in search of dismissal pursuant to 31 U.S.C. § 3730(c)(2)(A).”[47] That coverage was then formally included into the Justice Guide. After that, DOJ turned noticeably extra keen to hunt dismissal of sure FCA instances.

To date in 2021, the Biden Administration has not signaled whether or not it plans to reduce DOJ’s efforts to dismiss sure qui tam fits. Nor has the Administration disavowed the ideas outlined within the Granston Memo or Justice Guide. Nonetheless, statements by DOJ officers within the final six months counsel that DOJ could also be adapting its strategy to qui tam enforcement by enhancing the federal government’s personal capability to establish and pursue FCA violations with out prompting from relators. In his February speech, Appearing AAG Boynton acknowledged explicitly that observers can “anticipate the Civil Division to proceed to develop its personal efforts to establish potential fraudsters, together with its reliance on numerous kinds of knowledge evaluation.”[48] He went on to debate “subtle analyses of Medicare knowledge” by DOJ “to uncover potential fraud schemes that haven’t been recognized by whistleblower fits, in addition to to assist analyze and assist the allegations that we do obtain from such fits.”[49]

Whereas the Biden Administration DOJ explores its choices, there was continued criticism by Senator Chuck Grassley (R-IA) of DOJ’s use of its dismissal authority beneath the FCA. Per week after Appearing AAG Boynton’s remarks, Senator Grassley wrote to then-Lawyer Common Nominee Merrick Garland that “it’s as much as the courts, via a listening to, to find out whether or not or not a [qui tam] case lacks advantage.”[50] In response to Senator Grassley, “[t]he Justice Division isn’t, and can’t be, the decide, jury, and executioner of a relator’s declare.”[51] Senator Grassley asserted that he’s “working with a cadre of bipartisan Senate colleagues to draft laws that may additional strengthen and enhance the False Claims Act.”[52]

Whereas the diploma of DOJ involvement on this legislative effort—and the extent to which it addresses DOJ’s dismissal authority—stays to be seen, the stability between DOJ-pursued FCA instances and relator-driven issues might shift. On one stage, elevated leveraging of information analytics might lead to much less reliance on relators general, and due to this fact fewer conditions by which DOJ makes an attempt to train its dismissal authority and dangers making dangerous regulation. On one other, a rise within the quantity and class of DOJ’s knowledge analyses of instances that do contain relators might higher place DOJ to make merits-based arguments in favor of dismissal within the occasion that judicial scrutiny of these selections ratchets up.

C.  A PIVOT AWAY FROM THE BRAND MEMO?

In January 2018, then-Affiliate Lawyer Common (the third-ranking place at DOJ) Rachel Model issued a memorandum titled “Limiting Use of Company Steerage Paperwork In Affirmative Civil Enforcement Instances.”[53] The so-called “Model Memo” expressly asserted that “[g]uidance paperwork” issued with out notice-and-comment rulemaking “can not create binding necessities that don’t exist already by statute or regulation.”[54] Due to this fact, the Model Memo acknowledged that DOJ “might not use compliance with steerage paperwork as a foundation for proving violations of relevant regulation in [affirmative civil enforcement] instances.”[55] The Model Memo additionally defined that DOJ “mustn’t deal with a celebration’s noncompliance with an company steerage doc as presumptively or conclusively establishing that the celebration violated the relevant statute or regulation.”[56] Regardless of its brevity—beneath two pages—the Model Memo represented a considerable coverage change for civil enforcement, particularly for the FCA. In December 2018, DOJ issued new part 1-20.000 of the Justice Guide, “Limitation on Use of Steerage Paperwork in Litigation,” which included the Model Memo and defined that, with some necessary caveats—similar to the usage of “consciousness of [a] steerage doc” as proof of scienter—DOJ “mustn’t deal with a celebration’s noncompliance with a steerage doc as itself a violation of relevant statutes or rules.”[57]

Underneath the Biden Administration, DOJ might marginalize the Model Memo. On the day he was inaugurated, President Biden issued an govt order that signaled an anticipated shift from the Trump Administration’s skepticism of businesses towards better deference to company experience and steerage. Govt Order 13992 revoked six Trump govt orders referring to company regulation.[58] This included revoking Trump’s Govt Order 13891 (“Selling the Rule of Legislation By Improved Company Steerage Paperwork”), which required that “businesses deal with steerage paperwork as non-binding each in regulation and in observe, besides as included right into a contract” and acknowledged as a matter of govt coverage that “[a]gencies might impose legally binding necessities on the general public solely via rules and on events on a case-by-case foundation via adjudications.”[59]

President Biden’s order famous that “govt departments and businesses . . . should be outfitted with the flexibleness to make use of strong regulatory motion to handle nationwide priorities,” which embrace addressing the “coronavirus illness 2019 (COVID-19) pandemic, financial restoration, racial justice, and local weather change” (emphasis added).[60] Though Govt Order 13992 doesn’t expressly confer with DOJ’s civil enforcement or the FCA, the Order might foster a local weather by which DOJ is extra keen to make use of sub-regulatory steerage as the premise for FCA allegations. Such a change would each permit for broader FCA enforcement and sign assist for the experience of businesses in promulgating external-facing steerage. Likewise, as firms proceed to adapt to DOJ’s efforts to root out fraud in authorities packages, a renewed concentrate on company steerage might change the danger calculus constructed into company compliance packages and inner investigation efforts.

D.   STATE LEGISLATIVE DEVELOPMENTS

The federal authorities supplies incentives for states to adapt their false claims statutes to the federal FCA. Specifically, HHS-OIG grants “a 10-percentage-point improve” in a state’s share of any recoveries beneath the related legal guidelines to any state that obtains HHS-OIG approval for its false claims statute.[61] Such approval requires that the statute in query, amongst different necessities, “include provisions which are not less than as efficient in rewarding and facilitating qui tam actions for false or fraudulent claims as these described within the [federal] FCA.”[62] The statute can also be required to include a 60-day sealing provision and “a civil penalty that’s not lower than the quantity of the civil penalty licensed beneath the [federal] FCA.”[63] The full variety of states with accredited statutes is now twenty-two, with Minnesota having obtained approval on Could 27, 2021.[64] That leaves seven states—Florida, Louisiana, Michigan, New Hampshire, New Jersey, New Mexico, and Wisconsin—with false claims statutes listed by HHS-OIG as “not accredited.”[65]

There have been a number of different notable developments in state-level false claims laws within the first half of this yr.

  • In Montana, the legislature handed a regulation in April that adjustments the order of precedence in response to which damages and penalties not paid to qui tam relators are to be disbursed to affected authorities entities.[66] The statute beforehand supplied that the affected authorities entity’s common fund would obtain the stability of such monies; beneath the brand new regulation, the monies “should be distributed first to completely reimburse any losses suffered by the governmental entity on account of the defendant’s actions,” with the rest then going to the entity’s common fund.[67]
  • In Arkansas, which has a false claims statute particular to its Medicaid program, the Common Meeting not too long ago accredited a invoice granting the state’s Lawyer Common the power to intervene in instances introduced in federal court docket beneath the federal FCA that implicate Arkansas Medicaid funds.[68]
  • In California, the legislature launched a invoice that will (amongst different issues) levy a 1% annual “wealth tax” on any resident with a internet value of over $50 million (or $25 million within the case of a married taxpayer who information a separate return).[69] The invoice comprises a provision subjecting false claims and information regarding the wealth tax to legal responsibility beneath California’s false claims statute.[70]

III.  CASE LAW DEVELOPMENTS

The primary half of 2021 noticed a variety of notable federal appellate court docket selections, which we now have summarized beneath.

A.  D.C. CIRCUIT EXPLORES CAUSATION IN FCA CASES PREMISED ON “FRAUDULENT INDUCEMENT” THEORY

In United States ex rel. Cimino v. Worldwide Enterprise Machines Corp., the D.C. Circuit issued an necessary opinion exploring the contours of the “fraudulent inducement” concept of FCA legal responsibility, beneath which an preliminary fraud throughout procurement of a contract allegedly leads to legal responsibility for all claims submitted to the federal authorities beneath that contract. No. 19-7139, 2021 WL 2799946 (D.C. Cir. July 6, 2021). In its determination, the D.C. Circuit imposed necessary limits on the fraudulent inducement concept by requiring a relator to plead (and in the end show) but-for causation.

The Cimino case concerned allegations that IBM had “violated the FCA by (1) utilizing a false audit to fraudulently induce the IRS to enter right into a $265 million license settlement for software program the IRS didn’t need or want, and (2) presenting false claims for fee for software program that the IRS by no means acquired.” Id. at *1. In evaluating what it deemed a problem of first impression, the D.C. Circuit undertook an in-depth evaluate of fraudulent inducement instances beneath the FCA, and the Supreme Courtroom’s most up-to-date opinions in FCA instances, to conclude that “a profitable declare for fraudulent inducement requires demonstrating {that a} defendant’s fraud induced the federal government to enter a contract that later leads to a request for fee.” Id. at *4. The court docket defined that the important query for “legal responsibility beneath the FCA for fraudulent inducement should activate whether or not the fraud induced the federal government to contract.” Id. Turning to what commonplace of causation utilized, the court docket rejected a lesser commonplace urged by the Relator and as an alternative held that the FCA requires the relator or authorities “to allege precise trigger beneath the but-for check,” which required the relator in Cimino to “present enough information for the court docket to attract an inexpensive inference that IBM’s false audit induced the IRS to enter the license settlement.” Id. at *6 (emphasis added). Notably, the court docket additionally rejected relator’s argument that causation was encompassed throughout the FCA’s materiality requirement, and didn’t have to be pled individually. The court docket as an alternative acknowledged that “a plaintiff should plead each causation and materiality,” id. at *7, and that these are “separate parts that we can not conflate,” id. at *5.

Making use of these requirements, the D.C. Circuit concluded that the Relator had met his pleading burden on this specific case. However by setting forth this rigorous evaluation of the causation and materiality necessities beneath the FCA in fraudulent inducement instances, the court docket additionally charted a course for defendants going through legal responsibility beneath comparable circumstances. The place a relator doesn’t plead {that a} defendants conduct really induced the federal government to enter into the underlying contract, a fraudulent inducement concept shouldn’t be capable of transfer ahead.

Turning to relator’s second concept, the court docket did dismiss sure claims beneath Federal Rule of Civil Process 9(b) (which requires pleading fraud claims with particularity). Making use of a strict type of Rule 9(b), the court docket concluded that the relator didn’t plead sure claims with enough particularity as a result of he didn’t plead “when the false claims had been offered and who offered these claims.” Id. at *9.

Lastly, in a concurrence, Circuit Choose Rao went a step additional and questioned whether or not fraudulent inducement is even a legitimate concept beneath the FCA. Making use of a textualist framework, he argued that “[t]he textual content of the FCA doesn’t readily counsel legal responsibility for fraudulent inducement as a separate reason behind motion.” Id. at *9 (Rao, J., concurring). The concurrence defined that courts throughout the nation have lengthy accepted fraudulent inducement theories based mostly largely on an eighty-year-old Supreme Courtroom FCA determination in United States ex rel. Marcus v. Hess, 317 U.S. 537 (1943), outmoded by statute on different grounds, Act of Dec. 23, 1943, ch. 377, 57 Stat. 608, 609. See Cimino, 2021 WL 2799946, at *10. However Choose Rao mentioned that call is “hardly a mannequin of readability concerning the existence of a fraudulent inducement reason behind motion,” and instructed {that a} “reconsideration of a fraudulent inducement reason behind motion could also be warranted as a result of it exists in some rigidity with current Supreme Courtroom selections” that emphasize the textual content of the statute over its goal. Id. at *11. We might be watching rigorously to see if different courts take up this undertaking of reconsideration.

B.  ELEVENTH CIRCUIT DECIDES THAT QUI TAM CHALLENGE MIGHT SURVIVE SUMMARY JUDGMENT DESPITE GOVERNMENT’S CONTINUED PAYMENT

In Common Well being Providers v. United States ex rel. Escobar, 136 S. Ct. 1989 (2016), the Supreme Courtroom directed the district courts to scrutinize whether or not plaintiffs have alleged information enough to fulfill the “rigorous” and “demanding” materiality commonplace the FCA imposes. The Supreme Courtroom additionally emphasised that the federal government’s determination to proceed paying claims, regardless of information of an alleged deficiency with these claims, is “very robust proof” that these points should not materials for functions of the FCA. Since then, the federal courts have grappled with the affect of those directions.

Earlier this yr, the Eleventh Circuit addressed this problem in United States ex. rel. Bibby v. Mortgage Traders Corp., 987 F.3d 1340 (eleventh Cir. 2021), cert. denied sub nom. Mortg. Invs. Corp. v. United States ex rel. Bibby, No. 20-1463, 2021 WL 1951877, at *1 (U.S. Could 17, 2021). In Bibby, the relators alleged that lenders had been charging charges prohibited by the U.S. Division of Veterans Affairs (“VA”) rules (attorneys’ charges) whereas certifying that they charged solely permissible charges (title examination and insurance coverage charges) by bundling them collectively. Id. at 1343-45. The district court docket granted abstract judgment for the lender defendants on materiality grounds in mild of the truth that the federal government continued to pay the claims after being on discover of the alleged problem. See id. at 1346

The Eleventh Circuit reversed, holding that real points of fabric truth precluded abstract judgment. Id. There was no dispute that the VA was conscious of the lenders’ noncompliance with payment necessities, so the problem of fabric truth was how the VA reacted to the information that the lenders had been charging prohibited charges. Id. at 1349-50. The court docket acknowledged that the federal government’s fee determination is usually related to the materiality inquiry, however asserted that the relevance of that truth “var[ies] relying on the circumstances.” Id. at 1350. On this case, the Eleventh Circuit discovered it important that “[o]nce the VA points guaranties, it’s required by regulation to honor these guaranties” and pay holders sooner or later, “no matter any fraud by the unique lender.” Id.

Having determined to “divorce [its] evaluation from a strict concentrate on the federal government’s fee determination,” the court docket “s[aw] no motive to restrict [its] view solely to the VA’s issuance of guaranties.” Id. at 1351. As a substitute, the court docket reviewed “the VA’s habits holistically” and located proof of materiality in a VA round despatched to lenders reminding them of the relevant payment rules, in addition to the VA’s implementation of “extra frequent and extra rigorous audits.” Id. Though the VA neither revoked fee on guaranties of loans with purportedly fraudulent charges nor prohibited these lenders from collaborating in this system, the court docket decided that these information didn’t reply the materiality query on their very own. See id. at 1352. In in the end concluding that the query of materiality on this case was one for the actual fact finder, the panel once more emphasised that “the materiality check is holistic, with no single ingredient—together with the federal government’s information and its enforcement motion—being dispositive.” Id.

The Supreme Courtroom denied the petition for writ of certiorari on Could 17, 2021. Bibby, 2021 WL 1951877, at *1. The Eleventh Circuit court docket’s determination in Bibby stands as an indicator that the that means of Escobar continues to evolve.

C.  NINTH AND ELEVENTH CIRCUITS LIMIT USE OF STATISTICAL EVIDENCE AS SUFFICIENT TO MEET BOTH PLAUSIBILITY AND PARTICULARITY REQUIREMENTS OF FCA PLEADINGS

Courts have continued to make clear pleading necessities for FCA claims beneath Federal Guidelines of Civil Process 8(a) and 9(b).

In Integra Med Analytics LLC v. Windfall Well being & Providers, No. 19-56367, 2021 WL 1233378, at *1 (ninth Cir. Mar. 31, 2021), a Ninth Circuit panel held that Integra’s statistical evaluation of publicly accessible knowledge—allegedly demonstrating that Windfall Well being submitted Medicare claims “with higher-paying prognosis codes” than different comparable establishments—was not sufficient to plead falsity when Integra had didn’t rule out an “apparent various clarification” and due to this fact failed to satisfy the Rule 8(a) requirement for pleading a believable declare for aid. Id. at *1, *3 (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 557 (2007)).

The court docket famous that Integra, in its pleading, had not dominated out an alternate clarification for why Windfall Well being’s declare submissions included extra Medicare reimbursement codes—on this case, main complication or comorbidity (“MCC”) codes—than different establishments: specifically that Windfall, with the help of third-party billing advisor JATA aimed toward bettering its Medicare billing practices, was “on the forefront of a nationwide development towards coding these related MCCs at a better fee.” Id. at *4. Absent any insider info alleging in any other case, the court docket discovered that Integra provided solely a “doable clarification” for the outcomes of its statistical evaluation (i.e., that Windfall was directing its docs to falsify claims) and ignored that the statistical evaluation might additionally assist a “believable various (and authorized) clarification.” Id. (emphasis in unique). Thus, the court docket acknowledged “[w]e needn’t settle for the conclusion that the defendant engaged in illegal conduct when its actions are according to lawful ‘rational and aggressive enterprise technique.’” Id. (quotation omitted).

Though the Ninth Circuit’s determination ought to cut back the load courts are keen to attribute to the findings of statistical analyses on the pleading stage FCA instances, the court docket expressly famous in a footnote that its determination was not “categorically preclud[ing]” the usage of statistical knowledge to satisfy the FRCP 8(a) and 9(b) pleading necessities. Id. at *4 n.5.

Equally, in Property of Helmly v. Bethany Hospice and Palliative Care of Coastal Georgia, LLC, the Eleventh Circuit upheld the dismissal with prejudice of a qui tam swimsuit introduced by two former staff towards Bethany Hospice, reasoning that allegations based mostly on numerical chance are mere inferences that don’t suffice to plead fraud with particularity beneath Rule 9(b). No. 20-11624, 2021 WL 1609823, at *6 (eleventh Cir. Apr. 26, 2021).

In Helmly, the relators alleged that the defendant hospice violated the FCA by submitting false claims when it billed the federal government for providers supplied to sufferers obtained via a kickback scheme. Id. at *1. They argued that as a result of a big variety of Medicare recipients had been referred to the hospice, and since “all or almost all” of the sufferers on the hospice acquired protection from Medicare, it was mathematically believable that the hospice had submitted to the federal government claims for sufferers obtained beneath kickback agreements. Id. at *4-6.

The Eleventh Circuit rejected this argument as the premise for an FCA declare, holding that relators didn’t plead the submission of an precise false declare. Id. at *6. To be able to meet Rule 9(b)’s particularity requirement, a criticism “should allege precise submission of a false declare” and should achieve this with “some indicia of reliability.” Id., at *5 (citing Carrel v. AIDS Healthcare Discovered., Inc., 898 F.3d 1267, 1275 (eleventh Cir. 2018)) (inner citation marks omitted). The Helmly court docket held that “numerical chance isn’t an indicium of reliability” enough to “meet Rule 9(b)’s particularity requirement.” Id. at *6. “[R]elators can not ‘depend on mathematical chance to conclude that [a defendant] absolutely will need to have submitted a false declare in some unspecified time in the future.’” Id. (quoting Carrel, 898 F.3d at 1277) (second alteration in unique).

These selections exhibit that the pleading stage of an FCA declare requires better specificity than many relators have usually provided. No matter what the alleged core FCA declare might entail, courts are prone to require plaintiffs to obviously join the dots and supply extra concrete proof of falsity to outlive a movement to dismiss.

D.  NINTH CIRCUIT AFFIRMS THE “FRAUD-ON-THE-FDA” THEORY

This previous spring, the Ninth Circuit reaffirmed that “fraud-on-the-FDA” theories might state a legitimate FCA declare enough to outlive a movement to dismiss in sure circumstances. United States ex rel. Dan Abrams Co. LLC v. Medtronic Inc., 850 Fed. App’x 508 (ninth Cir. 2021). In Medtronic, the relator alleged, amongst different claims, that the defendant fraudulently obtained FDA 510(okay) clearance for a number of units utilized in spinal fusion surgical procedures. Id. at 510. In response to the relator, a few of these units might solely be used for a contraindicated use, and couldn’t be used as indicated in defendant’s 510(okay) submissions in any respect (the “Contraindicated-only Gadgets”). Id. As such, the relator alleged that these units weren’t correctly accredited or cleared by the FDA and thus would have been ineligible for reimbursement beneath Medicare however for the defendant’s alleged fraud. Id. The district court docket dismissed these fraud-on-the-FDA allegations for failure to state a declare as a result of the allegations had been provided “solely as a predicate for the declare that the [devices] had been meant for off-label use” and “the federal authorities permits reimbursement for off-label and even contraindicated makes use of.” Id. at 511.

The Ninth Circuit affirmed many of the district court docket’s dismissal of relators’ claims, however reversed the district court docket’s holding as to the Contraindicated-only Gadgets, holding that the FCA might function a car to convey a fraud-on-the-FDA declare right here. Citing United States ex rel. Campie v. Gilead Sciences, Inc., 862 F.3d 890, 899 (ninth Cir. 2017), the court docket concluded that for the Contraindicated-only Gadgets, the relator didn’t merely allege off-label use; slightly, the relator alleged that the units weren’t correctly cleared for any use by the FDA. As a result of the Contraindicated-only Gadgets might “solely be used for his or her contraindicated use,” and disclosures about that meant use are “exactly people who the FDA considers in granting Class II certification,” the court docket held that Medtronic’s alleged fraud went “to the very essence of the cut price” and due to this fact might proceed as a fraud-on-the-FDA declare. Medtronic, 850 Fed. App’x at 511. Though the Ninth Circuit acknowledged that different jurisdictions had beforehand “cautioned towards permitting claims beneath the [FCA] to wade into the FDA’s regulatory regime[,]” citing Campie, 862 F.3d. at 905, Ninth Circuit precedent allowed a relator’s fraud-on-the-FDA concept to maneuver ahead. Id.

Relator’s different claims—such because the allegation that the defendant promoted off-label and contraindicated makes use of of sure units—had been dismissed as a result of the units included people who might be used for his or her acknowledged meant use however had been contraindicated to be used elsewhere. Id. *3. The panel affirmed dismissal of the relator’s declare that defendant violated the AKS by getting into into improper rebate agreements with hospitals and providing kickbacks to physicians for sure enterprise growth occasions. Id. at *511–12. The Ninth Circuit acknowledged that the AKS doesn’t embrace reductions provided to suppliers if they’re correctly disclosed and mirrored in prices to the federal program. Furthermore, the relator failed to elucidate how defendant’s rebate settlement violated the statute or to state sufficiently particular allegations associated to doctor kickbacks. Id.

E.  FOURTH CIRCUIT AFFIRMS THE BROAD REACH OF THE AKS AS A BASIS FOR FCA LIABILITY

The Fourth Circuit’s ruling earlier this yr in United States v. Mallory, 988 F.3d 730 (4th Cir. 2021), serves as a reminder of the danger of compensating impartial contractors for advertising actions in mild of HHS-OIG steerage on whether or not such compensation falls inside an AKS protected harbor. In Mallory, a laboratory that supplied blood testing for heart problems and diabetes contracted with a consulting firm to market and promote the blood assessments. The consulting firm acquired a base fee and a share of income based mostly on the variety of blood assessments ordered. Primarily based on the proof offered at trial, the jury discovered that the laboratory’s revenue-based fee funds to its gross sales brokers constituted improper remuneration that was meant to induce the gross sales brokers to promote as many laboratory assessments as doable. See United States ex rel. Lutz v. BlueWave Healthcare Consultants, Inc., No. 9:11-CV-1593-RMG, 2018 WL 11282049, at *1 (D.S.C. Could 23, 2018), aff’d sub nom. United States v. Mallory, 988 F.3d 730 (4th Cir. 2021).

Defendants argued on enchantment that the federal government didn’t show that the defendants “knowingly and willfully” violated the AKS and that, accordingly, the defendants couldn’t have “knowingly” violated the FCA. Mallory, 988 F.3d at 736. The Fourth Circuit discovered these arguments unconvincing on condition that, in the midst of trying to say an advice-of-counsel protection, the defendants had been unable to “establish any particular authorized opinion” that would assist a “good-faith perception that their conduct . . . didn’t violate the Anti-Kickback Statute.” Id. at 739. On the contrary, the Authorities provided proof that a number of attorneys had expressed issues to the defendants concerning doable AKS violations within the preparations. Id. at 736–37.

The defendants additionally argued on enchantment that commissions to impartial contractor salespeople don’t represent kickbacks beneath the AKS. Though the court docket famous that the AKS does include a protected harbor for bona fide employment relationships, it defined that HHS-OIG “has expressly acknowledged that this protected harbor doesn’t cowl impartial contractors.” Id. at 738. The court docket mentioned the historical past of the statutory protected harbor for commissions paid to salespeople who’re “worker[s]” which have a “bona fide employment relationship” with their employer, 42 U.S.C. § 1320a-7b(b)(3)(B), and HHS’s reasoning that if employers “want to pay [ ] salesperson[s] on the premise of the quantity of enterprise they generate,” they “ought to make these salespersons staff” to keep away from “civil or felony prosecution.” 54 Fed. Reg. 3088, 3093 (Jan. 23, 1989). As a result of the quantity of compensation in Mallory diversified with the amount of the referrals, the court docket discovered that it match squarely outdoors the bounds of the salesperson fee protected harbor. Mallory, 988 F.3d at 738.

The Fourth Circuit affirmed the jury’s findings and evaluation of precise damages totaling greater than $16 million for violations of FCA. Id. at 742; Lutz, 2018 WL 11282049, at *2–3. The court docket additionally affirmed the district court docket’s judgment, which totaled greater than $100 million after the district court docket trebled the precise damages and added civil financial penalties as required by the FCA. Lutz, 2018 WL 11282049, at *8.

F.  SUPREME COURT DECLINES TO REVIEW SEVERAL IMPORTANT ISSUES UNDER THE FCA

1.  SUPREME COURT REJECTS OPPORTUNITY TO REVIEW A SEVENTH CIRCUIT DECISION UPHOLDING DOJ AUTHORITY TO DISMISS CASES OVER OBJECTION OF RELATORS

Within the last week of June, the Supreme Courtroom denied a petition to evaluate a Seventh Circuit determination concerning the correct commonplace to judge a authorities movement to dismiss a relator’s declare. See Cimznhca, LLC v. United States, No. 20-1138, 2021 WL 2637991 (U.S. June 28, 2021). Cimznhca’s enchantment argued that the Seventh Circuit improperly expanded its jurisdiction by treating the federal government’s movement to dismiss additionally as a movement to intervene for functions of dismissal, regardless that the federal government by no means sought to intervene.

As defined in Gibson Dunn’s 2020 12 months-Finish Replace and mentioned above, DOJ has extra frequently invoked its dismissal authority beneath 31 U.S.C. § 3730(c)(2)(A) for the reason that Granston Memo was issued. In evaluating DOJ’s requests to dismiss, courts traditionally have cut up based mostly on whether or not they adopted the Ninth Circuit’s Sequoia Orange check or the D.C. Circuit’s Swift check in deciding whether or not the federal government might dismiss a qui tam case. Underneath the Sequoia Orange strategy, the federal government might dismiss a qui tam case if: (1) it identifies a legitimate authorities goal; (2) a rational relation exists between the dismissal and the accomplishment of that goal; and (3) dismissal isn’t fraudulent, arbitrary and capricious, or unlawful. United States ex rel. Sequoia Orange Co. v. Baird-Neece Packing Corp., 151 F.3d 1139, 1145 (ninth Cir. 1998). The Swift check, against this, affords the federal government an “unfettered” proper to dismiss a case such that the choice is “unreviewable” besides in situations of “fraud on the court docket.” Swift v. United States, 318 F.3d 250, 252-53 (D.C. Cir. 2003). Each requirements typically favor the federal government’s discretion, albeit to totally different levels, and DOJ frequently argues in its motions to dismiss that it has enough discretion to dismiss a case beneath both commonplace.

In Cimznhca, the Seventh Circuit referred to as the selection between the Sequoia Orange and Swift requirements “a false one, based mostly on a misunderstanding of the federal government’s rights and obligations beneath the False Claims Act.” United States v. UCB, Inc., 970 F.3d 835, 839 (seventh Cir. 2020). Though it acknowledged the worth of a Sequoia Orange-type commonplace centered on the outer constitutional limits on the train of the federal government’s prosecutorial discretion, the court docket acknowledged that it believes the restrict lies nearer to the more-deferential Swift commonplace.

When shifting for dismissal within the district court docket, the federal government argued that the allegations “lack[ed] enough advantage to justify the price of investigation and prosecution and [were] in any other case . . . opposite to the general public curiosity.” Id. at 840. In reversing the district court docket’s denial of the federal government’s movement, the Seventh Circuit seen the federal government’s movement as a movement to intervene and dismiss and held that Federal Rule of Civil Process 41 (which governs voluntary dismissal by plaintiffs typically) provided “the start and finish of [the court’s] evaluation.” Id. at 849. Turning to the Sequoia Orange and Swift requirements, the court docket held that Sequoia Orange merely signifies that dismissal “might not violate the substantive element of the Due Course of Clause,” id. at 851, which the court docket characterised as a “naked rationality commonplace” concentrating on “solely essentially the most egregious official conduct” that “shocks the conscience” or “offend[s] even hardened sensibilities,” id. at 852 (inner citation marks omitted) (alteration in unique). The court docket rejected the concept that the comparatively formal nature of Part 3730(c)(2)(A) hearings “justif[ies] imposing on the federal government in every case the burden of satisfying Sequoia Orange’s ‘two-step check’ earlier than the burden is put again on the relator to indicate illegal govt conduct.” Id. at 853.

By declining to evaluate the Cimznhca enchantment, the Supreme Courtroom left unresolved a rising circuit cut up over DOJ dismissals of whistleblower lawsuits. Accordingly, we might even see different circuits apply both Sequoia Orange or Swift—or take the Seventh Circuit’s place in Cimznhca that the usual lies someplace between the 2 and will primarily be told by Federal Rule of Civil Process 41.

2.  SUPREME COURT DECLINES TO RESOLVE DEBATE OVER “OBJECTIVELY FALSE”

In February, the US Supreme Courtroom additionally declined to resolve a outstanding cut up between federal courts of enchantment concerning the FCA’s falsity commonplace. In denying petitions for writs of certiorari in Care Options v. United States, — S. Ct. —, 2021 WL 666386 (Feb. 22, 2021), and RollinsNelson LTC Corp. v. U.S. ex rel. Winters, — S. Ct. —, 2021 WL 666435 (Feb. 22, 2021), the Courtroom left unresolved whether or not FCA legal responsibility should be predicated on a declare that’s objectively false based mostly on verifiable information, or whether or not a publish hoc skilled opinion can suffice to ascertain falsity (not less than on the pleading stage). As we now have written about here, this goal falsity problem joins a number of different FCA-related questions as to which the federal courts have been unable to offer uniform solutions.

IV.  CONCLUSION

We’ll monitor these developments, together with different FCA legislative exercise, settlements, and jurisprudence all year long and report again in our 2021 False Claims Act 12 months-Finish Replace, which we’ll publish in January 2022.

____________________________

[1]             See Press Release, U.S. Atty’s Office for the Western Dist. of WI, AutoGenomics, Inc. Agrees to Pay Over $2.5 Million for Allegedly Paying Kickbacks (Jan. 11, 2021), https://www.justice.gov/usao-wdwi/pr/autogenomics-inc-agrees-pay-over-25-million-allegedly-paying-kickbacks.

[2]             See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Florida Businesswoman Pleads Guilty to Criminal Health Care and Tax Fraud Charges and Agrees to $20.3 Million Civil False Claims Act Settlement (Feb. 4, 2021), https://www.justice.gov/opa/pr/florida-businesswoman-pleads-guilty-criminal-health-care-and-tax-fraud-charges-and-agrees-203.

[3]             See Press Release, U.S. Atty’s Office for the Eastern Dist. of PA, Lancaster County Pharmacy and Pharmacist Agree to Resolve Civil Allegations of Dispensing Controlled Substances Without a Prescription and Falsely Billing Medicare for $2.9 Million (Feb. 25, 2021), https://www.justice.gov/usao-edpa/pr/lancaster-county-pharmacy-and-pharmacist-agree-resolve-civil-allegations-dispensing.

[4]             See Press Release, U.S. Atty’s Office for the Middle Dist. of NC, Bioventus Agrees to Pay More Than $3.6 Million to Resolve False Claims Act Violations (Feb. 25, 2021), https://www.justice.gov/usao-mdnc/pr/bioventus-agrees-pay-more-36-million-resolve-false-claims-act-violations.

[5]             See Press Release, U.S. Atty’s Office for the Eastern Dist. of N.C., North Carolina Durable Medical Equipment Corporation Sentenced for $10 Million Healthcare Fraud Scheme, and the Company and Its Owner Agree to Pay Millions to Resolve Related Civil Claims (Mar. 2, 2021), https://www.justice.gov/usao-ednc/pr/north-carolina-durable-medical-equipment-corporation-sentenced-10-million-healthcare.

[6]             See Press Release, U.S. Atty’s Office for the Western Dist. of VA, Allergy and Asthma Associates in Roanoke Pleads Guilty to Criminal Charge; Enters into Civil Resolution Over Health Care Fraud Allegations (Mar. 2, 2021), https://www.justice.gov/usao-wdva/pr/allergy-and-asthma-associates-roanoke-pleads-guilty-criminal-charge-enters-civil.

[7]             See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Ohio Treatment Facilities and Corporate Parent Agree to Pay $10.25 Million to Resolve False Claims Act Allegations of Kickbacks to Patients and Unnecessary Admissions (Mar. 5, 2021), https://www.justice.gov/opa/pr/ohio-treatment-facilities-and-corporate-parent-agree-pay-1025-million-resolve-false-claims.

[8]             See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Former Owners of Telemarketing Company Agree to Pay At Least $4 Million to Resolve False Claims Act Allegations (Mar. 16, 2021), https://www.justice.gov/opa/pr/former-owners-telemarketing-company-agree-pay-least-4-million-resolve-false-claims-act.

[9]            See Press Release, U.S. Atty’s Office for the Eastern Dist. of MI, Cardiologist Dinesh Shah Pays $2 Million to Resolve False Claims Act Allegations Relating to Excessive Testing (Mar. 18, 2021), https://www.justice.gov/usao-edmi/pr/cardiologist-dinesh-shah-pays-2-million-resolve-false-claims-act-allegations-relating.

[10]            See Press Release, U.S. Atty’s Office for the Western Dist. of NC, Owner of Defunct Urine Drug Testing Laboratory Agrees to Pay Over $2 Million to Resolve Allegations of Participation in Kickback Schemes (Mar. 26, 2021), https://www.justice.gov/usao-wdnc/pr/owner-defunct-urine-drug-testing-laboratory-agrees-pay-over-2-million-resolve; Press Release, U.S. Atty’s Office for the Western Dist. of NC, Court Enters $4.5 Million Judgment Against Owner of Defunct Urine Drug Testing Laboratory Resolving Allegations of Participation in Kickback Schemes (Mar. 30, 2021), https://www.justice.gov/usao-wdnc/pr/court-enters-45-million-judgment-against-owner-defunct-urine-drug-testing-laboratory.

[11]            See Press Release, U.S. Atty’s Office for the Eastern Dist. of PA, Bristol-Myers Squibb to Pay $75 Million to Resolve False Claims Act Allegations of Underpayment of Drug Rebates Owed Through Medicaid (Apr. 1, 2021), https://www.justice.gov/usao-edpa/pr/bristol-myers-squibb-pay-75-million-resolve-false-claims-act-allegations-underpayment.

[12]            See Press Release, U.S. Atty’s Office for the Dist. of SC, South Carolina’s Largest Urgent Care Provider and its Management Company to Pay $22.5 Million to Settle False Claims Act Allegations (Apr. 8, 2021), https://www.justice.gov/usao-sc/pr/south-carolina-s-largest-urgent-care-provider-and-its-management-company-pay-225-million.

[13]            See Press Release, U.S. Atty’s Office for the Dist. of MA, Massachusetts Eye and Ear Agrees to Pay $2.6 Million to Resolve False Claims Act Allegations (Apr. 20, 2021), https://www.justice.gov/usao-ma/pr/massachusetts-eye-and-ear-agrees-pay-26-million-resolve-false-claims-act-allegations.

[14]            See Press Release, U.S. Atty’s Office for Middle Dist. of TN, Comprehensive Pain Specialists And Former Owners Agree To Pay $4.1 Million To Settle Fraud Allegations (Apr. 21, 2021), https://www.justice.gov/usao-mdtn/pr/comprehensive-pain-specialists-and-former-owners-agree-pay-41-million-settle-fraud.

[15]            See Press Release, U.S. Atty’s Office for the Southern Dist. of FL, Miami-Based CareCloud Health, Inc. Agrees to Pay $3.8 Million to Resolve Allegations that it Paid Illegal Kickbacks (Apr. 30, 2021), https://www.justice.gov/usao-sdfl/pr/miami-based-carecloud-health-inc-agrees-pay-38-million-resolve-allegations-it-paid.

[16]            See Press Release, U.S. Atty’s Office for the Dist. of SD, Neurosurgeon and Two Affiliated Companies Agree to Pay $4.4 Million to Settle Healthcare Fraud Allegations (May 3, 2021), https://www.justice.gov/usao-sd/pr/neurosurgeon-and-two-affiliated-companies-agree-pay-44-million-settle-healthcare-fraud; Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Neurosurgeon and Two Affiliated Companies Agree to Pay $4.4 Million to Settle Healthcare Fraud Allegations (May 3, 2021), https://www.justice.gov/opa/pr/neurosurgeon-and-two-affiliated-companies-agree-pay-44-million-settle-health-care-fraud.

[17]            See Press Release, U.S. Atty’s Office for the Eastern Dist. of PA, Pharmaceutical Manufacturer Agrees to Pay $12.6 Million to Resolve Allegations it Provided Kickbacks Through Donations to a Third-Party Charity (May 4, 2021), https://www.justice.gov/usao-edpa/pr/pharmaceutical-manufacturer-agrees-pay-126-million-resolve-allegations-it-provided; Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Incyte Corporation to Pay $12.6 Million to Resolve False Claims Act Allegations for Paying Kickbacks (May 4, 2021), https://www.justice.gov/opa/pr/incyte-corporation-pay-126-million-resolve-false-claims-act-allegations-paying-kickbacks.

[18]            See Press Release, U.S. Atty’s Office for the Dist. of AZ, Neurosurgical Associates, LTD and Dignity Health, D/B/A St. Joseph’s Hospital, Paid $10 Million to Resolve False Claims Allegations (May 5, 2021), https://www.justice.gov/usao-az/pr/neurosurgical-associates-ltd-and-dignity-health-dba-st-josephs-hospital-paid-10-million.

[19]            See Press Release, U.S. Atty’s Office for the Southern Dist. of FL, University of Miami to Pay $22 Million to Settle Claims Involving Medically Unnecessary Laboratory Tests and Fraudulent Billing Practices (May 10, 2021), https://www.justice.gov/usao-sdfl/pr/university-miami-pay-22-million-settle-claims-involving-medically-unnecessary; Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, University of Miami to Pay $22 Million to Settle Claims Involving Medically Unnecessary Laboratory Tests and Fraudulent Billing Practices (May 10, 2021), https://www.justice.gov/opa/pr/university-miami-pay-22-million-settle-claims-involving-medically-unnecessary-laboratory; Office of Inspector Gen. of Dep’t of Health and Hum. Servs., Corporate Integrity Agreement Between the Office of Inspector General of the Department of Health and Human Services and University of Miami (2021), https://oig.hhs.gov/fraud/cia/agreements/University_of_Miami_05072021.pdf.

[20]            See Press Release, U.S. Atty’s Office for the Northern Dist. of GA, AlixaRx LLC Agrees to Pay $2.75 Million to Resolve Allegations that it Improperly Dispensed Controlled Substances at Long-Term Care Facilities (May 11, 2021), https://www.justice.gov/usao-ndga/pr/alixarx-llc-agrees-pay-275-million-resolve-allegations-it-improperly-dispensed.

[21]            See Press Release, U.S. Atty’s Office for the Northern Dist. of TX, Dentists to Pay $3.1 Million to Resolve Allegations They Submitted False Claims for Services Not Provided to Underprivileged Children (May 14, 2021), https://www.justice.gov/usao-ndtx/pr/dentists-pay-31-million-resolve-allegations-they-submitted-false-claims-services-not.

[22]            See Press Release, U.S. Atty’s Office for the Eastern Dist. of PA, French Medical Device Manufacturer to Pay $2 Million to Resolve Alleged Kickbacks to Physicians and Related Medicare Open Payments Program Violations (May 19, 2021), https://www.justice.gov/usao-edpa/pr/french-medical-device-manufacturer-pay-2-million-resolve-alleged-kickbacks-physicians.

[23]            See Press Release, U.S. Atty’s Office for the Eastern Dist. of PA, Atlanta-Based National Chain of Skilled Nursing Facilities to Pay $11.2 Million to Resolve Allegations of Providing Substandard Care, Medically Unnecessary Therapy Services (May 21, 2021), https://www.justice.gov/usao-edpa/pr/atlanta-based-national-chain-skilled-nursing-facilities-pay-112-million-resolve.

[24]            See Press Release, U.S. Atty’s Office for the Western Dist. of NY, Upper Allegheny Health System To Pay $2.7 Million To Settle False Claims Act Allegations (May 25, 2021), https://www.justice.gov/usao-wdny/pr/upper-allegheny-health-system-pay-27-million-settle-false-claims-act-allegations.

[25]            See Press Release, U.S. Atty’s Office for the Southern Dist. of TX, Wrongful Billing Results in $2.6M Settlement and 10-Year Exclusion from Federal Health Care Programs (June 8, 2021), https://www.justice.gov/usao-sdtx/pr/wrongful-billing-results-26m-settlement-and-10-year-exclusion-federal-health-care.

[26]            See Press Launch, U.S. Atty’s Workplace for the Center Dist. of FL, Surgical Care Associates And Orlando Surgical procedure Middle Agree To Pay $3.4 Million To Settle False Claims Act Legal responsibility (June 28, 2021), https://www.justice.gov/usao-mdfl/pr/surgical-care-affiliates-and-orlando-surgery-center-agree-pay-34-million-settle-false.

[27]            See Press Release, U.S. Atty’s Office for the Dist. of CT, Connecticut Electrical Contractor Agrees to Pay $3.2 Million to Resolve Criminal and Civil Investigation (Jan. 8, 2021), https://www.justice.gov/usao-ct/pr/connecticut-electrical-contractor-agrees-pay-32-million-resolve-criminal-and-civil.

[28]            See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Insitu Inc. to Pay $25 Million to Settle False Claims Act Case Alleging Knowing Overcharges on Unmanned Aerial Vehicle Contracts (Jan. 12, 2021), https://www.justice.gov/opa/pr/insitu-inc-pay-25-million-settle-false-claims-act-case-alleging-knowing-overcharges-unmanned.

[29]            See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Concrete Contractor Agrees to Settle False Claims Act Allegations for $3.9 Million (Feb. 17, 2021), https://www.justice.gov/opa/pr/concrete-contractor-agrees-settle-false-claims-act-allegations-39-million.

[30]            See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Federal Contractor Agrees to Pay More Than $6 Million to Settle Overbilling Allegations (Feb. 19, 2021), https://www.justice.gov/opa/pr/federal-contractor-agrees-pay-more-6-million-settle-overbilling-allegations.

[31]            See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, United Airlines to Pay $49 Million to Resolve Criminal Fraud Charges and Civil Claims (Feb. 26, 2021), https://www.justice.gov/opa/pr/united-airlines-pay-49-million-resolve-criminal-fraud-charges-and-civil-claims.

[32]            See Press Release, U.S. Atty’s Office for the Eastern Dist. of PA, SAP Public Services, Inc. to Pay $2.2 Million to Settle False Claims Act Allegations (Mar. 1, 2021), https://www.justice.gov/usao-edpa/pr/sap-public-services-inc-pay-22-million-settle-false-claims-act-allegations.

[33]            See Press Release, U.S. Atty’s Office for D.C., The International Rescue Committee (“IRC”) Agrees to Pay $6.9 Million to Settle Allegations That It Performed Procurement Fraud by Engaging in Collusive Behavior and Misconduct on Programs Funded by the U.S. Agency for International Development (Mar. 19, 2021), https://www.justice.gov/usao-dc/pr/international-rescue-committee-irc-agrees-pay-69-million-settle-allegations-it-performed.

[34]            See Press Release, U.S. Atty’s Office for Southern Dist. of CA, Tungsten Heavy Powder of San Diego Agrees to Pay $5.6 Million to Settle False Claims Act Allegations (Apr. 29, 2021), https://www.justice.gov/usao-sdca/pr/tungsten-heavy-powder-san-diego-agrees-pay-56-million-settle-false-claims-act.

[35]            See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Navistar Defense Agrees to Pay $50 Million to Resolve False Claims Act Allegations Involving Submission of Fraudulent Sales Histories (May 27, 2021), https://www.justice.gov/opa/pr/navistar-defense-agrees-pay-50-million-resolve-false-claims-act-allegations-involving.

[36]            See Press Release, U.S. Atty’s Office for Eastern WA, CH2M Hill Plateau Remediation Company Agrees to Pay More than $3 Million to Settle Hanford Subcontract Small Business Fraud Allegations (June 3, 2021), https://www.justice.gov/usao-edwa/pr/ch2m-hill-plateau-remediation-company-agrees-pay-more-3-million-settle-hanford.

[37]            See Press Release, U.S. Atty’s Office for NJ, Avis Budget Group to Pay $10.1 Million to Settle False Claims Act Allegations for Overcharging United States on Rental Vehicles (June 10, 2021), https://www.justice.gov/usao-nj/pr/avis-budget-group-pay-101-million-settle-false-claims-act-allegations-overcharging-united.

[38]            See Press Launch, U.S. Atty’s Workplace for the Jap Dist. of VA, Degree 3 Communications, LLC Agrees to Pay Over $12.7 Million to Settle Civil False Claims Act Allegations (June 25, 2021), https://www.justice.gov/usao-edva/pr/level-3-communications-llc-agrees-pay-over-127-million-settle-civil-false-claims-act.

[39]            See Press Launch, U.S. Atty’s Workplace for the Jap Dist. of VA, Armed Forces Providers Company Pays $4.3 Million to Resolve Anti-Kickback Act and False Claims Act Allegations (June 30, 2021), https://www.justice.gov/usao-edva/pr/armed-forces-services-corporation-pays-43-million-resolve-anti-kickback-act-and-false.

[40]            Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Acting Assistant Attorney General Brian M. Boynton Delivers Remarks at the Federal Bar Association Qui Tam Conference (Feb. 17, 2021), https://www.justice.gov/opa/speech/acting-assistant-attorney-general-brian-m-boynton-delivers-remarks-federal-bar [hereinafter, “Boynton Speech”].

[41]            Id. (emphasis added).

[42]            Id.

[43]            See Press Launch, U.S. Atty’s Workplace for the Jap Dist. of CA., Jap District of California Obtains Nation’s First Civil Settlement for Fraud on Cares Act Paycheck Safety Program (Jan. 12, 2021), https://www.justice.gov/usao-edca/pr/eastern-district-california-obtains-nation-s-first-civil-settlement-fraud-cares-act.

[44]            Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Justice Department Takes Action Against COVID-19 Fraud: Historic level of enforcement action during national health emergency continues (Mar. 26, 2021), https://www.justice.gov/opa/pr/justice-department-takes-action-against-covid-19-fraud.

[45]            Boynton Speech, supra note 41.

[46]            Id.

[47]            U.S. Dep’t of Justice, Memorandum from Michael D. Granston, Director, Industrial Litigation Department, Fraud Part (Jan. 10, 2018), https://drive.google.com/file/d/1PjNaQyopCs_KDWy8RL0QPAEIPTnv31ph/view.

[48]            Id.

[49]            Id.

[50]            Ltr. from Sen. Chuck Grassley to Hon. Merrick B. Garland (Feb. 24, 2021), https://g7x5y3i9.rocketcdn.me/wp-content/uploads/2021/03/2021-02-24-CEG-to-DOJAG-Nominee-Garland-regarding-FCA.pdf [hereinafter, “Grassley Letter”].

[51]            Id.

[52]            Id.

[53]         Department of Justice, Office of the Associate Attorney General Rachel Brand, Memorandum for Heads of Civil Litigating Components and United States Attorneys: Limiting Use of Agency Guidance Documents In Affirmative Civil Enforcement Cases (Jan. 25, 2018), available at https://www.justice.gov/file/1028756/download.

[54]            Id. at 2.

[55]            Id.

[56]            Id.

[57]            Department of Justice, Justice Manual § 1-20.000, available at https://www.justice.gov/jm/1-20000-limitation-use-guidance-documents-litigation.

[58]            Executive Order 13992, 86 Fed. Reg. 7049 (Jan. 20, 2021) (“Revocation of Certain Executive Orders Concerning Federal Regulation”).

[59]            Executive Order 13981, 84 Fed. Reg. 55235 (Oct. 9, 2019) (“Promoting the Rule of Law Through Improved Agency Guidance Documents”).

[60]         Id.

[61]            HHS-OIG, State False Claims Act Reviews, https://oig.hhs.gov/fraud/state-false-claims-act-reviews/.

[62]            Id.

[63]            Id.

[64]            Id.; see also Ltr. from Christi A. Grimm, Principal Deputy Inspector General, to Hon. Keith Ellison, Attorney General of Minnesota (May 27, 2021), https://oig.hhs.gov/documents/false-claims-act/369/Minnesota_False_Claims_Act_Letter_05272021.pdf.

[65]            State False Claims Act Reviews, supra note 62.

[66]            See Montana S.B. No. 345, https://legiscan.com/MT/bill/SB345/2021.

[67]            Id.

[68]            Arkansas H.B. 1623, https://legiscan.com/AR/text/HB1623/2021.

[69]            California Assembly Bill No. 310, https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=202120220AB310.

[70]            Id.


The following Gibson Dunn lawyers assisted in the preparation of this alert: Jonathan Phillips, Winston Chan, Nicola Hanna, John Partridge, James Zelenay, Sean Twomey, Reid Rector, Allison Chapin, Maya Nuland, Michael Dziuban, and Eva Michaels.

Gibson Dunn lawyers regularly counsel clients on the False Claims Act issues. Please feel free to contact the Gibson Dunn lawyer with whom you usually work, the authors, or any of the following members of the firm’s False Claims Act/Qui Tam Defense Group:

False Claims Act/Qui Tam Protection Group Leaders:
Winston Y. Chan – San Francisco (+1 415-393-8362, wchan@gibsondunn.com)
Jonathan M. Phillips – Washington, D.C. (+1 202-887-3546, jphillips@gibsondunn.com)

Please additionally be at liberty to contact any of the next observe members:

Washington, D.C.
Jonathan M. Phillips (+1 202-887-3546, jphillips@gibsondunn.com),
F. Joseph Warin (+1 202-887-3609, fwarin@gibsondunn.com)
Joseph D. West (+1 202-955-8658, jwest@gibsondunn.com)
Robert K. Hur (+1 202-887-3674, rhur@gibsondunn.com)
Geoffrey M. Sigler (+1 202-887-3752, gsigler@gibsondunn.com) 

New York
Reed Brodsky (+1 212-351-5334, rbrodsky@gibsondunn.com)
Mylan Denerstein (+1 212-351-3850, mdenerstein@gibsondunn.com)
Alexander H. Southwell (+1 212-351-3981, asouthwell@gibsondunn.com)
Casey Kyung-Se Lee (+1 212-351-2419, clee@gibsondunn.com)

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Monica K. Loseman (+1 303-298-5784, mloseman@gibsondunn.com)
John D.W. Partridge (+1 303-298-5931, jpartridge@gibsondunn.com)
Ryan T. Bergsieker (+1 303-298-5774, rbergsieker@gibsondunn.com)

Dallas
Robert C. Walters (+1 214-698-3114, rwalters@gibsondunn.com)
Andrew LeGrand (+1 214-698-3405, alegrand@gibsondunn.com)

Los Angeles
Nicola T. Hanna (+1 213-229-7269, nhanna@gibsondunn.com)
Timothy J. Hatch (+1 213-229-7368, thatch@gibsondunn.com)
Deborah L. Stein (+1 213-229-7164, dstein@gibsondunn.com)
James L. Zelenay Jr. (+1 213-229-7449, jzelenay@gibsondunn.com)

Palo Alto
Benjamin Wagner (+1 650-849-5395, bwagner@gibsondunn.com)

San Francisco
Winston Y. Chan (+1 415-393-8362, wchan@gibsondunn.com)
Charles J. Stevens (+1 415-393-8391, cstevens@gibsondunn.com)

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