Statistical sampling is always a hot topic in False Claims Act (FCA) litigation. Courts have allowed statistical extrapolation from samples of claims to determine damages in cases where FCA liability was already established. But courts are reluctant to allow the use of sampling for determining liability in the first instance. Since the FCA’s monetary penalty per “violation” has been held to apply to each individual claim submitted for reimbursement, it seems only natural that relators and the government be required to prove the FCA’s various elements for each individual claim. But, in a series of recent rulings, some district courts have acquiesced to – or at least been open to – the idea of using statistical sampling to establish liability. Other courts have rejected statistical sampling to prove liability, especially when all the claims alleged to contain falsehoods remain available for a full review.
Yesterday, the Department of Justice (DOJ) released its annual False Claims Act (FCA) recovery statistics, which revealed that Fiscal Year 2016 has been another lucrative year for FCA enforcement. Based on these statistics, DOJ recovered more than $4.7 billion in civil FCA settlements this fiscal year — the third highest annual recovery since the Act was established. Since 2009 alone, the government has recovered $31.3 billion in FCA settlements and judgments. This is a truly staggering statistic. It shows that the government’s reliance on the FCA to combat fraud will continue for the foreseeable future.
On December 6, 2016 the U.S. Department of Health & Human Services, Office of Inspector General (HHS-OIG) issued two final rules relating to the Anti-Kickback Statute (AKS) and Civil Monetary Penalties (CMP). These rules affect a wide variety of health care companies and also impact False Claims Act investigations and litigation.
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.
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.
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.
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 and emphasizes the Act’s “demanding” materiality standard.
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?”
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.
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.