The SDNY U.S. Attorney’s Office has targeted several labs and their principals for False Claims Act violations arising out of reimbursements for COVID-19 testing services. In a complaint filed on June 13, the government sued LabQ Clinical Diagnostics, Dart Medical Laboratory, Community Mobile Testing, and their CEO, Moshe Landau.
In response to the COVID pandemic, Congress mandated that private health
Continue Reading SDNY Sues Labs For Fraudulent COVID-19 Testing Under False Claims Act
Recently, in United States ex rel. Hart v. McKesson Corp., the Second Circuit clarified the standard for acting “willfully” under the federal anti-kickback statute (AKS).
False Claims Act relator Adam Hart alleged that the defendant violated the AKS by providing business management tools to its customers, without charge, to induce those customers to purchase drugs from them. The tools helped providers to maximize profits and mitigate the risk that reimbursement rates would fall below the cost of the drugs to them. One tool, the Margin Analyzer, compared profit margins for drugs considered to be interchangeable, and the second, the Regimen Profiler, provided margin information for an entire course of treatment as opposed to specific drugs. The unlawful kickback, according to relator, was that the defendant did not offer these tools on a stand-alone basis, but only offered them to providers who agreed to use the defendant as their primary wholesaler of branded and generic drugs. The defendant allegedly provided the tools as a kickback to induce drug sales.
The Second Circuit first addressed the proper understanding of “willfulness” under the AKS. The Court held that, in order to violate the federal AKS, a defendant must act knowing that the conduct is in some way unlawful but does not have to know specifically that the conduct violates the AKS. The Court stated that this interpretation accords with the general goal of criminal law to punish only those who act with a “vicious will.” Notably, in 2010, Congress amended the AKS to provide that a violation does not require actual knowledge of the AKS or a specific intent to violate the AKS. Also, particularly with respect to the analysis of applications of AKS safe harbors to conduct, this interpretation also avoids unfairly sweeping innocent conduct under the reach of the criminal statute.Continue Reading Second Circuit Defines “Willfulness” Standard Under Anti-Kickback Statute
The Supreme Court will hear argument next week in two consolidated cases that will decide what standard applies when a doctor asserts a good faith defense to a criminal prosecution for unlawful drug distribution. The argument on Tuesday, March 1, will address the convictions of two doctors accused of running “pill mills” and seeking to profit in the midst of
SDNY Judge Jed Rakoff rejected Northwell Health’s bid for insurance coverage for its increased costs and business losses related to the COVID-19 pandemic in a recent decision. As the COVID-19 pandemic unfolded, Northwell was inundated with new patients, had increased cleaning costs, and stopped offering outpatient care services and elective procedures. In the ruling, Judge Rakoff held that Northwell
Continue Reading Northwell Loses Bid For COVID-19 Insurance Coverage
Last week, in Washington v. Barr, the Second Circuit addressed a case seeking to strike down the federal government’s classification of marijuana as a Schedule I drug under the Controlled Substances Act (CSA). The Court held that plaintiffs had failed to exhaust their administrative remedies before the Drug Enforcement Administration (DEA). Rather than dismissing the case, however, the Court
Continue Reading Second Circuit Holds Case Challenging Marijuana Classification As Schedule I Drug In Abeyance Pending Agency Exhaustion
Home health care aides working twenty-four hour shifts can be paid for as little as thirteen hours under certain conditions, according to a March ruling from the New York Court of Appeals in Andryeyeva v. New York Health Care, Inc. The Court of Appeals remanded, however, for lower courts to consider whether employers were adhering to the sleep and
Continue Reading Home Health Care Aides Working Twenty-Four Hour Shifts Can Be Paid For Thirteen Hours If Employer Meets Sleep and Meal Time Requirements
EDNY Judge Nina Gershon analyzed several False Claims Act issues in United States ex rel. Omni Healthcare Inc. v. McKesson Corp., ruling on first-to-file, Rule 9(b), and statute of limitations issues.
Relator Omni Healthcare alleged that defendants improperly used “overfill” in vials of injectable drugs. “Overfill” is the amount of a drug in excess of the amount indicated on
Continue Reading EDNY False Claims Act Overfill Decision Highlights Importance of Timely Naming All Defendants
In federal criminal investigations, corporate health care providers have faced a Department of Justice increasingly focused on individuals, one that has limited or foreclosed cooperation credit for corporations not providing complete information on all individual involvement. At a conference in late November, Deputy Attorney General Rod Rosenstein outlined a modification of these stringent guidelines, to some extent for criminal prosecutions
Continue Reading Need For Discretion In Civil DOJ Cases Drives Rosenstein To Modify Yates Memorandum Individual Accountability Policy
Last week, in LeadingAge New York, Inc. v. Shah, the New York Court of Appeals addressed Department of Health regulations limiting executive compensation and administrative expenditures by healthcare providers receiving state funds. The Court upheld limits related to state funding, but struck down a limit that applied regardless of the source of funding.
In 2012, Governor Cuomo directed agencies
Continue Reading NY Court of Appeals Strikes Down DOH Limits On Use Of Private Funds For Executive Compensation And Upholds Limits On Use Of Public Funds
In United States ex rel. Wood v. Allergan, Inc., the Second Circuit addressed the issue of whether a violation of the False Claims Act’s “first-to-file” rule compels dismissal of an action or whether it can be cured by the filing of an amended or supplemental pleading. The Court’s acceptance of the interlocutory appeal was addressed here in a post
Continue Reading Second Circuit Answers First-To-File Question: Amended Complaint Cannot Save Later-Filed FCA Action