The FCA Insider

The FCA Insider

Insights and updates on False Claims Act Litigation

Anti-Kickback Statute, OIG, Regulatory

OIG to Expand Informal Guidance with New FAQs

OIG FAQ

The Office of Inspector General (OIG) has announced that it is expanding the topics it considers for new Frequently Asked Questions (FAQs) submitted by healthcare stakeholders. OIG will now answer general questions about the Federal anti-kickback statute (AKS), questions related to the civil monetary penalty (CMP) provision prohibiting remuneration to Medicare and State health care program beneficiaries, and questions relating to OIG’s enforcement authority under these statutes. OIG has stated it will respond to inquiries in the FAQ asking for general applications of AKS to a given type of arrangement. OIG also said it would answer questions regarding compliance and its healthcare fraud self-disclosure protocol.

Continue Reading

FCA Litigation

Pharmaceutical Suppliers Beware: Expect Increased Scrutiny of Average Wholesale Pricing Methodology and Marketing “The Spread”

A Texas federal court recently denied a pharmaceutical supplier’s motion to dismiss claims brought by a whistleblower under the federal False Claims Act (FCA) alleging violations of the Anti-Kickback Statute (AKS) and manipulation of Average Wholesale Pricing (AWP) rules. The complaint was filed by a pharmacist (the Relator) who previously worked for the defendant, Professional Compounding Centers of America Inc. (PCCA), a pharmaceutical supplier which sells active ingredients to compounding pharmacies. The Relator alleged that PCCA reported inflated AWPs for the ingredients it sold to its compounding pharmacy customers as part of a scheme that violated the FCA and AKS. The Government filed its complaint in partial intervention in November 2021, asserting FCA claims against PCCA for causing the submission of false claims to TRICARE and for reporting false AWPs to the pricing compendia upon which TRICARE reimbursement is based.

Continue Reading

Anti-Kickback Statute, FCA Litigation

Distributor of Ophthalmic Surgical Products Found Guilty of Paying Kickbacks and Violating the False Claims Act: May Be Liable For Up To $848 Million in Civil Damages and Penalties

On February 28, 2023, a federal jury in the District of Minnesota found the Cameron-Ehlen Group, d/b/a Precision Lens, and its founder and owner Paul Ehlen (the “Defendants”) guilty of paying kickbacks to ophthalmic surgeons in violation of the False Claims Act, 31 U.S.C. 3729 (“FCA”) and Federal Anti-Kickback Statute, 42 U.S.C. 1320a-7b(b) (“AKS”) between 2006 and 2015.[1]  This case serves as an excellent example of the risks that medical device manufacturers and distributors incur by not having an effective compliance program that identifies and corrects compliance issues. 

Continue Reading

CMS Guidance, Stark Law

CMS Streamlines Stark Law Self-Disclosures

The Centers for Medicare & Medicaid Services recently announced updates to the voluntary self-referral disclosure protocol for reporting and resolving technical violations under the physician self-referral law commonly known as the Stark Law.

Read on for details about these updates, intended to streamline the reporting process and reduce burdens on self-disclosing healthcare providers.

DOJ

Medicare Accelerated Payment Fraud Leads to Criminal Conviction

Government investigators focus on pandemic-related fraud has culminated in a recent criminal conviction  As announced by the Department of Justice (DOJ), on Friday, January 13, 2023, a federal jury convicted a Colorado physician of theft for misappropriating almost $250,000 in federal COVID-19 relief funds, including both the Medicare Accelerated and Advance Payment Program (“MAAPP”) and the Paycheck Protection Program (“PPP Loans”). This is the first conviction we are aware of with respect to MAAPP to date, but marks another example of the government’s enforcement efforts to address COVID-19-related fraud. It is also a reminder for healthcare providers to remain vigilant in complying with COVID-19 relief fund program requirements as such government focus on COVID-19-related fraud continues unabated.

Continue Reading

FCA Litigation

DOJ’s False Claims Act Statistics Show Declining Recoveries, Increasing Enforcement

The U.S. Department of Justice recently announced it recovered over $2.2 billion under the False Claims Act in fiscal year 2022 — the lowest annual recovery since 2008. Despite declining recoveries, the number of new matters suggests that investigation activity will remain vigorous and businesses should be prepared for more robust enforcement as promised by the Biden campaign and administration.

Read on to learn more about the expected increase in enforcement activity over the next few years.

FCA Litigation

SCOTUS to Decide if False Claims Act Reaches Defendants Offering Reasonable Interpretation of Vague Requirement

On Jan. 13, the U.S. Supreme Court granted a writ of certiorari to petitioners in two False Claims Act cases to determine whether the law’s knowledge requirement reaches defendants who can offer an “objectively reasonable” interpretation of an ambiguous legal or contractual requirement material to government payment.

Read on for details about this case, likely to produce one of the most significant FCA decisions in decades, with important implications for government contractors and healthcare providers whose businesses must comply with complex and sometimes opaque regulatory regimes.

Settlements

Pharmaceutical Manufacturer Agrees to $900M False Claims Act Settlement to Resolve Kickback Claims

On July 20, Biogen Inc. agreed to pay $900 million to settle claims the company violated the False Claims Act by allegedly paying improper consulting and speaker fees and providing lavish meals and entertainment to medical providers to induce them to prescribe the multiple sclerosis drugs it manufactures.

Read on for details about this unusually large settlement, which highlights the risks associated with pharmaceutical and device manufacturers hiring providers as consultants and conducting speaker programs.

DOJ

Supreme Court to Review When DOJ May Dismiss Relator Suits

Last month, the Supreme Court granted certiorari in United States ex rel. Polansky v. Executive Health Resources, Inc., a case presenting the question whether the federal government forfeits the authority to dismiss False Claims Act (FCA) suits brought in its name if it first declines to intervene in them.

Continue Reading

Defense Arguments, Retaliation

Seventh Circuit Suggests High Standard Under the FCA Whistleblower Retaliation Provision

7th Circuit CourtLast month, the U.S. Court of Appeals for the Seventh Circuit affirmed summary judgement against an employee-whistleblower who had claimed that her former employer retaliated against her in violation of the False Claims Act’s (FCA) whistleblower protection provision. Lam v. Springs Window Fashions, LLC, 37 F.4th 431 (7th Cir. 2022). The court held that her former employer’s conduct fell short of “harassment” protected under the statute and that she failed to establish a causal connection between her informing management of potential false claims issues and her eventual termination. While the Seventh Circuit declined to adopt a strict test for the meaning of “harassment,” its holding shows that the court believes that harassment requires significant conduct to be actionable under the FCA.

Jennifer Lam, the employee-whistleblower, began working at defendant Springs in January 2019. In her role with Springs, she oversaw the global fabric inventory and tariffs on these fabrics. Springs discovered a possible tariff problem as Lam believed a specific fabric had originated in China, instead of the manufacturer designation of Taiwan/Malaysia, which, based on new country-of-original regulations, would require Springs to pay a steep 25 percent tariff on the fabric. Lam alleged that Springs was informed about this issue by her predecessor, who had been reprimanded and forced to resign.

Lam contends that she communicated her tariff concerns to the CEO at three meetings between June and September 2019 that Springs should pay higher tariffs on the fabric, at which point the CEO would become “frustrated and visibly irritated.”  Lam also alleged that she was “scolded” by Senior Vice Presidents and threatened with her future job security by other members of Springs’s C-Suite.

In October 2019, the General Counsel informed Lam that Springs has made a “business decision” to classify the fabric as Taiwanese/Malaysian and Lam dropped the issue. Later in 2019, Lam was put on a performance review plan although Lam contends that her boss had never indicated there had been any issues with her performance. Lam was terminated in February 2020 based on Spring’s contention that Lam had failed to properly notify them and handle an audit of one of its facilities.

Lam sued in April 2020, claiming that Springs retaliated against her, in violation of the FCA’s whistleblower protection provision, for bringing up the tariff issues. To prevail on this claim, Lam needed to show that her actions were taken in furtherance of the statute, that Springs knew about it, and that Springs retaliated against her because of this protected conduct. While Springs concedes the first two elements, it maintains that they did not retaliate against her. The district court, and ultimately the Seventh Circuit, agreed.

Defining harassment under the FCA is an issue of first impression for the Seventh Circuit. While the court did not settle on a definition in this case—declining to adopt one of two proposed standards, either (a) whether the conduct described would have dissuaded a reasonable worker from complaining to management (adopted by two other federal circuits) or (b) whether the retaliatory acts were severe or persuasive enough to affect the terms and conditions of her employment—the court opined on what does not constitute harassment.

The court held that, under either test, no reasonable jury could find that Lam was harassed within the meaning of the FCA and therefore it need not settle on a standard. Based on similar cases, the court found that Springs’s executives comments toward her displayed a “lack of good manners” but that it would not dissuade a reasonable person from reporting a potential legal violation.

 The court also rejected Lam’s argument that she had been terminated in retaliation for her contention that higher tariffs were owed by Spring.  In so holding, the court found that Lam’s contention that she was told she did not have a long-term future at the company and being put on a performance improvement plan for reasons she believed to be pretextual could not give rise to a retaliatory discharge under the FCA. The court reasoned, in part, that Lam presented no evidence that the reasons for her firing were pretextual, principally because she failed to timely tell her boss about the audit, and it was unclear what her plan was to fix it. Given that, and the lack of evidence to the contrary, a reasonable jury would not connect her termination with her stance on tariffs.

The Seventh Circuit’s opinion serves as a helpful resource for defendants, as it evidences the exacting requirements that a plaintiff must adhere to in order to properly plead a claim for retaliation under the FCA.

We use cookies to enhance your experience of our website. By continuing to use this website, you agree to the use of these cookies. For more information and to learn how you can change your cookie settings, please see our policy.

Agree