First Circuit on Escobar Remand: Relators’ Allegations of Regulatory Violations Sufficiently Material to State a Claim Under the FCA

On remand from the Supreme Court’s Escobar decision, the First Circuit holds that Universal Health Services’ (UHS) alleged failure to adequately staff its facilities in compliance with Massachusetts health care regulations is sufficiently material to survive UHS’s motion to dismiss.  The decision is not a complete surprise, but is nevertheless noteworthy because it reflects the First Circuit’s treatment of the matter following one of the most important Supreme Court FCA decisions in recent history.

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Fifth Circuit: No Anti-Kickback Violation When Defendant Merely Hopes or Expects Referrals from Benefits Designed for Other Purposes

The Fifth Circuit recently affirmed the grant of summary judgment in favor of Omnicare, Inc., in a qui tam action alleging violations of the False Claims Act (“FCA”) and the Anti-Kickback Statute (“AKS”). The ruling signifies that, to violate the AKS, there must be unambiguous evidence that a business specifically designed its practices to induce referrals.

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You’ve Been Served—What to Do When You Receive an Agency Subpoena or CID (Part II)

Now that you understand what prompts an agency subpoena or CID, the next step is to have a strategy, which involves answering the question, “what should I do?” Taking the right approach from the outset is critical to protecting your company’s interests.

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The Government’s Take on Materiality After Escobar

Following the Supreme Court’s decision in Universal Health Services, Inc. v. United States ex rel. Escobar, 136 S. Ct. 1989 (2016), we expected significant False Claims Act litigation over the Act’s materiality standard.  Such litigation is a direct consequence of Escobar’s holding, which does not limit the implied certification theory to violations of conditions of payment[1] and emphasizes the Act’s “demanding” materiality standard.

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You’ve Been Served—What to Do When You Receive an Agency Subpoena or CID (Part I)

Nothing sends chills through a Compliance Officer or General Counsel faster than receiving an agency subpoena or civil investigative demand (CID). The first questions that immediately come to mind are “what does it mean” and “what should I do?”

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DOJ Rule Increases FCA Penalties to Over $20,000 Per Claim

Effective August 1, 2016, the False Claims Act’s (FCA) civil penalty will double.  As it currently stands, the FCA’s civil penalty ranges from $5,500 to $11,000 per violation.  But as of August 1, the FCA’s civil penalty range will almost double to a minimum of $10,781 and a maximum of $21,563.

The increase is the result of an interim final rule issued yesterday by the Department of Justice.  81 Fed. Reg. 42491 (June 30, 2016).  Although the increase was expected, it still reflects a dramatic increase in risk to those doing business with the federal government.  Health care providers are uniquely at risk, because those entities are often sending thousands of claims to the federal government for reimbursement.  When thousands of claims are at issue, the civil penalty can easily add up.

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FCA’s “Implied Certification” Theory Survives

We previously reported on the viability of the “implied certification” theory of FCA liability based on oral argument before the Supreme Court in Universal Health Services, Inc. v. U.S. ex rel. Escobar.  We concluded that the theory—under which a claim for payment can be false without an express certification, but because the government contractor has not complied with an applicable statute, regulation, or contractual provision—did not appear to be headed for extinction.  It turns out we were right.

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Did the FCA’s “Implied Certification” Theory Dodge a Bullet?

Yesterday’s argument before the Supreme Court in Universal Health Services, Inc. v. U.S. ex rel. Escobar had the potential to put false claims based on an “implied certification” in the crosshairs. Instead, based on the weight of questioning by a plurality of justices, it appears that some form of implied certification theory may survive. (We previously reported on this case, here.) Continue Reading

“Beware Greeks Bearing Gifts”: FCA Enforcement Turning to Federal Grants?

While we may be hard pressed to recall which ancient epic poem includes the tale of the Trojan Horse (it’s the Aeneid, in case you’re wondering, although it’s also referenced in the Iliad), we all know the lesson—if it seems too good to be true, it probably is. For recipients of Federal grants, there are lots of administrative hurdles but, once you get the money, it’s smooth sailing, right? Hold on a minute. Continue Reading

DOJ Seeks Rehearing in D.C. Circuit Case, Hoping to Resurrect Liability for a Contractor’s “Objectively Reasonable” Interpretation of an Ambiguous Contract Provision

We previously reported on a D.C. Circuit case in which a three-judge panel held that when the government is silent, there is no False Claims Act (FCA) liability for a contractor’s “objectively reasonable” interpretation of an ambiguous contract provision. The government is now seeking a rehearing en banc (a rehearing by all of the D.C. Circuit judges) in the hopes of rolling back the panel’s ruling.  Continue Reading

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