FCA NOW

Texas Diagnostic Imaging Service Settles FCA Allegations for $3.5 Million; Whistle-Blower to Receive $596,700

Nathan Ebnet

A recent settlement illustrates the substantial recovery available to whistle-blowers under the FCA’s qui tam provisions. Those provisions allow a qui tam plaintiff to receive typically between 15 percent and 25 percent of the proceeds of an FCA settlement.  31 U.S.C. § 3730(d). The settling party—Preferred Imaging—is a Dallas-based company that operates independent diagnostic facilities in Texas, Illinois, and Kansas. Preferred Imaging performs procedures involving the administration of contrast...

DOJ Files FCA Complaint Against Recipient of Grant Funding

Vanessa J. Szalapski

The FCA began as a response to procurement fraud by military contractors during the Civil War.  In the intervening years, its reach has extended and increasingly the government is using the FCA as a tool in the context of grant programs.  A recent civil complaint filed by the U.S. Attorney’s Office for the Eastern District of Kentucky is a good example. DOJ sued the medical device maker...

Pharmaceutical Manufacturer’s Possible Settlement Shows Long-Arm of FCA

Zachary Davison

On Tuesday, August 2, 2016, pharmaceutical and biotech company Shire PLC filed a Form 8-K announcing a possible resolution to an ongoing FCA investigation into the sales and marketing tactics of Shire’s “Dermagraft” skin product.   The episode illustrates how the FCA can have significant consequences for mergers and acquisitions, imposing residual obligations years after an acquisition, and again underscores the utility of dedicated FCA due...

Senate Finance Committee Explores Revisions to Stark Law

Andrew Brantingham

At a July 12, 2016 hearing entitled “Examining the Stark Law: Current Issues and Opportunities,” members of the U.S. Senate Finance Committee expressed openness to potentially significant amendments to the Stark Law aimed at alleviating the threat of potentially devastating liability the Stark Law can impose on health care providers that pursue value-based payment models. The Stark Law, 42 U.S.C. § 1395nn, generally prohibits a...

District Court Grants Motion to Dismiss Relators’ Claims in One of the First Post-Escobar Decisions

Katherine Arnold

The District Court for the Eastern District of Washington recently granted the defendants’ Motion to Dismiss relators’ claims in a consolidated False Claims Act lawsuit against Monaco Enterprises, Inc. (“MEI”). MEI provides security and fire detection products, installation, and services to a variety of customers, including the U.S. military. The lawsuit, brought by former employees of MEI, alleges that MEI fraudulently overbilled the government, charged...

First Circuit Affirms Dismissal For CVS Caremark Under Public Disclosure Bar

Mike Rowe

The FCA’s public disclosure bar precludes liability when a relator’s allegations have been publicly disclosed in a list of statutorily enumerated sources.  Last week, the First Circuit added to the growing jurisprudence both interpreting the bar and an exception to the bar:  the original source exception. In United States ex rel. Winkelman v. CVS Caremark Corp., No. 15-1991 (June 30, 2016), the relators filed suit...

Federal Civil Penalties Going Up, Way Up.

John Marti

The United States Department of Justice (“DOJ”) published an Interim Final Rule on June 30th nearly doubling the per-claim civil penalties for violations of a number of laws, including the False Claims Act (FCA), the Program Fraud Civil Remedies Act, and the Anti-Kickback Act.  For example, the FCA provides for mandatory per-claim penalties on top of treble damages.  Currently, the FCA penalties are set at...

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...

D.C. Circuit Upholds Public-Disclosure-Bar Dismissal Based On Information Posted to Websites

Benjamin Greenberg

Last week, the U.S. Court of Appeals for the D.C. Circuit upheld a district court’s dismissal of a qui tam action under the oft-litigated, “public disclosure bar,” where the transactions that gave rise to an inference of fraud were “available” on the internet. See United States ex rel Oliver v. Phillip Morris USA Inc., No. 15-7049 (D.C. Cir. June 21, 2016).  The public disclosure bar...

Supreme Court Upholds Implied Certification Theory of Liability; Imposes Limitations on its Reach

RJ Zayed

In a unanimous decision, the Supreme Court today charted a middle course between competing interpretations of the scope of False Claims Act.  Universal Health Servs., Inc. v. United States ex rel. Escobar, Case No. 15-7 (June 16, 2016).  The Court upheld the viability of the so-called “implied-certification” theory under the FCA, but simultaneously clarified the contours of the theory and imposed significant limitations on its...