The FCA Insider

The FCA Insider

Insights and updates on False Claims Act Litigation


OIG Permits Healthcare Organization’s Smartphone Loan Program For Telehealth Services

On April 22, 2022, the U.S. Department of Health and Human Services Office of Inspector General (OIG) issued a favorable advisory opinion (no. 22-08) (the “Advisory Opinion”) approving a healthcare organization loaning smartphones to promote telehealth care that it provides to underserved populations. The Advisory Opinion provides context for healthcare organizations that may similarly want to loan out smartphones to patients to assist such patients in obtaining reimbursed telehealth services, which otherwise could be considered renumeration to induce referrals and federal Anti-Kickback Statute (AKS) and Beneficiary Inducements Civil Monetary Penalty (CMP) repercussions.

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Anti-Kickback Statute, OIG, Regulatory

OIG Approves Physician-Owned Medical Device Company With Several Safeguards

On April 20, the U.S. Department of Health and Human Services Office of Inspector General issued a favorable advisory opinion regarding physician ownership of a medical device company that manufactures products ordered by the physician owners and other affiliated physicians.

Read our alert to learn more about the opinion, which offers a path forward for these ownership arrangements but makes it clear that physician owners and their counsel must structure them carefully.

Anti-Kickback Statute

California Court: Fair Market Value Payments May Not Avert Anti-Kickback Liability

In February 2022, the U.S. District Court for the Central District of California denied a defendant’s motion to dismiss a qui tam action alleging that the defendant had violated the federal Anti-Kickback Statute (AKS). In its ruling, the court noted that “even some fair-market value payments will qualify as illegal kickbacks.”

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Anti-Kickback Statute

District Court Adopts Middle of the Road Approach in Determining Causation in Anti-Kickback Statute-Based False Claims Act Case

The U.S. District Court for the District of Maryland recently weighed in on the appropriate causation standard when evaluating whether a claim “result[s] from” a violation of the Anti-Kickback Statute sufficient to constitute a false or fraudulent claim for purposes of the False Claims Act. In U.S. ex rel. Fitzer v. Allergan, Inc., the court adopted a middle of the road approach under which a causal link between the remuneration and the claim is required, but a showing that the remuneration succeeded in producing the prescription is not.

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FCA Defenses

COVID Nursing Home Patient Safety Failures Not Actionable under FCA in New York

In Conte v. Kingston NH Operations LLC, 2022 U.S. Dist. LEXIS 21686, *1, 2022 WL 356753, a New York District court granted a defendant’s motion to dismiss an employee’s false claims allegations under the False Claims Act (the “FCA”) and the New York False Claims Act (the “NYFCA”). The case stemmed from allegedly improper patient care and workspace safety during the COVID-19 pandemic, which the plaintiff brought against a New York nursing home operator under both the FCA and NYFCA. Despite multiple alleged COVID-related deaths and demonstrated care issues that the court acknowledged were present, the court dismissed the case as such allegations were not actionable under these fraud and abuse statutes.

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Anti-Kickback Statute

District Court finds that AKS Violations are Per Se Material

Last month, the Central District of California granted the government’s affirmative motion for partial summary judgment in U.S. v. Reliance Medical Sys., 2022 WL 524062 (C.D. Cal. Feb. 2, 2022).  The Reliance Medical case involved an FCA action based on a theory that certain physician-owned distributorships (PODs) violated the Anti-Kickback Statute (AKS).  As detailed below, the Central District found – in accordance with the substantial majority of other courts – that violations of the AKS are material under the FCA.

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FCA Litigation

Largest-Ever Small-Business Contracting Fraud Settlement Related to Pass-Through Subcontracting

Federal contractors should take note of a $48.5 million False Claims Act settlement between the Department of Justice and TriMark USA LLC — the largest-ever FCA settlement based on allegations of small-business set-aside contracting fraud. DOJ alleged that TriMark had a plan to circumvent specific small-business contracting requirements by providing significant assistance to three small companies — distributors and resellers for TriMark products — in obtaining set-aside contracts they would pass along to TriMark for performance.

Read on to learn why manufacturers, suppliers, developers and distributors that closely influence and control their distribution networks and reseller partners should take note of this settlement and ensure they have adequate compliance policies and procedures in place to avoid similar conduct allegations and repercussions.


Eye Care Practice Settles with Government for Employing Excluded Individual

On March 18, the Department of Justice (“DOJ”) and the Connecticut Attorney General announced that a Connecticut eye care practice and its owners had agreed to pay $192,699 to resolve allegations that the practice improperly employed an individual who was excluded by the Department of Health and Human Services’ Office of Inspector General (“OIG”) from federal health care programs. Continue Reading


DOJ Announces First False Claims Settlement Since Launch of Civil Cyber-Fraud Initiative

On March 8, the U.S. Department of Justice announced a $930,000 settlement with Comprehensive Health Services, LLC for alleged violations of the False Claims Act. As DOJ’s first resolution of a False Claims Act enforcement action involving cyber fraud since launching its Civil Cyber-Fraud Initiative in October 2021, this settlement signals the DOJ’s eagerness to combat cybersecurity violations and misrepresentations.

Read on for analysis of this case and implications for government contractors.

FCA Litigation

Analysis of DOJ’s 2021 False Claims Act Statistics and Related Trends

Last week, the U.S. Department of Justice announced that it recovered more than $5.6 billion under the False Claims Act in fiscal year 2021 — an enormous total, second only to 2014 recoveries.

Read the latest post on “Subject to Inquiry” for analysis of the reported 2021 statistics, how they compare to previous years’ numbers and a forecast of some top DOJ enforcement priorities: the opioid epidemic, cybersecurity and pandemic-related fraud.

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