Category: Healthcare

First Circuit Rejects Fraud-on-the-FDA Theory of FCA Liability

Katherine Arnold

Affirming an earlier order handed down by the United States District Court for the District of Massachusetts, the First Circuit recently denied Plaintiff D’Agostino leave to amend his complaint, finding the proposed claims were futile. D’Agostino, et al. v. EV3, Inc. et al., 2016 WL 7422943 (1st Cir. Dec. 23, 2016).  D’Agostino’s complaint alleges False Claims Act (“FCA”) violations related to the Onyx and Axium medical...

OIG Creates New AKS Safe Harbors, Codifies Others

Neal N. Peterson

On January 6, 2017, two new safe harbors to the federal anti-kickback statute (the “AKS”) will become effective pursuant to a final rule published by the United States Department of Health and Human Services Office of the Inspector General (the “OIG”) on December 7, 2016. The final rule also codifies safe harbors for certain AKS exceptions and makes a technical correction to the existing safe...

Former CEO of Health System Agrees to Pay $1 million to Settle False Claims Act Case with U.S. Department of Justice

Benjamin Fee

In the most recent example of its continued effort to hold individuals accountable for corporate misconduct, the U.S. Department of Justice (“DOJ”) announced on September 27, 2016, that the former CEO of Tuomey Healthcare System has agreed to pay $1 million to settle claims arising from his involvement in the hospital’s violations of the Stark Law.  In addition to the $1 million civil fine, the...

Eighth Circuit Determines that Compliance with Reasonable Interpretation of Government Regulation Sufficient to Avoid FCA Liability (Absent a Government Warning to the Contrary)

Ben Kappelman

The Centers for Medicare and Medicaid Services (“CMS”) establishes requirements for how medical procedures must be performed for a medical provider to seek payment for those procedures.  Seeking payment without properly performing the procedure might expose the provider to alleged liability under the False Claims Act (“FCA”).  But what if the requirements for the procedure are ambiguous?  Will a provider’s reasonable interpretation of a requirement...

Implied Certification, Escobar, and the Impact on Healthcare Providers

Alissa Smith

On June 16, 2016, the Supreme Court issued a unanimous decision in Universal Health Services, Inc. v. United States ex rel. Escobar upholding the “implied certification” theory of liability under the False Claims Act (“FCA”) but adopting a rigorous materiality standard for determining liability in such cases.  This case is a game changer.  For years, the government and plaintiffs have argued that the federal FCA...

Failure to Disclose Best Pricing: Pharmaceutical Companies Settle FCA Claims for $784 Million

Alex Hontos

The Department of Justice announced late last month that pharmaceutical manufacturers Wyeth and Pfizer would pay $784 million to resolve a False Claims Act investigation and qui tam lawsuit arising from Wyeth’s failure to disclose its best pricing of drugs to the government.  The case was brought under the FCA’s qui tam provisions; the relators’ share of the recovery is nearly $100 million. The case...

Nashville Pharmacy Services, LLC Settles FCA Allegations

Katherine Arnold

Last week the Department Of Justice announced a settlement agreement with Nashville Pharmacy Services, LLC (“NPS”) and NPS majority owner Kevin Hartman.  Under the agreement, NPS and Mr. Hartman will pay up to $7.8 million to settle a lawsuit alleging violations of the False Claims Act.  The settlement agreement does not include any admission of liability on the part of NPS or Mr. Hartman. On...

California Court Permits FCA Claim Involving Medicare “Referral and Regeneration” Scheme to Proceed Against Healthcare CEO

Angela Porter

In a recent opinion, the Northern District of California allowed FCA claims to proceed against the CEO of a skilled nursing facility operator.  John Orten, the whistleblower in the suit, was a former nursing home administrator for North American Health Care, Inc. (NAHC).  Orten claimed that he had witnessed the CEO of NAHC, John Sorensen, order company administrators to pay physicians who referred patients to...

Novartis Pharmaceuticals Settles $390MM FCA Allegations

Kristin Zinsmaster

Drugmaker Novartis Pharmaceuticals has agreed in principle to pay $390MM (including $20MM in civil forfeitures) to the Department of Justice.  This payment, in addition to modification and an extension of Novartis’s existing Corporate Integrity Agreement (“CIA”), settles claims that the company paid illegal kickbacks to specialty pharmacy companies in order to induce the pharmacies to recommend two drugs—Exjade and Myfortic—to their patients.  The Government sought...

Dialysis Provider Settles Whistleblower Lawsuit for $450 Million

Katherine Arnold

The Department of Justice and dialysis provider DaVita Healthcare Partners recently finalized a $450 million agreement settling claims that the company intentionally inflated Medicare billings.  The parties had filed a joint motion to stay the case, United States ex rel. et al. v. DaVita Inc., No. 07-02509 (N.D. Ga. Apr. 16, 2015), in April in order to focus on reaching a settlement. Relators Alon Vainer...