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
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
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
EDNY Judge Brian Cogan recently addressed the False Claims Act public disclosure bar and original source rule in a decision based on a qui tam Relator’s claims that defendants marketed a test to measure the levels of a certain hormone knowing that the test was flawed. In United States ex rel. Patriarca v. Siemens Healthcare Diagnostics, Inc., Relator alleged
Continue Reading EDNY Decision Highlights False Claims Act Public Disclosure Bar, Original Source Rule
The Department of Justice issued two memoranda at the start of 2018 that may have important effects on health care fraud investigations and prosecutions under the False Claims Act.
The first, Factors for Evaluating Dismissal Pursuant to 31 U.S.C. 3730(c)(2)(A), was issued by Michael Granston, Director of the DOJ Commercial Litigation Branch, Fraud Section, and encourages DOJ attorneys to
Continue Reading DOJ Memoranda Encourage Dismissal of Declined False Claims Act Cases and Prohibit Government Reliance on Noncompliance with Agency Guidance Theory of Liability
False Claims Act whistleblowers expose themselves to significant risks by coming forward and asserting claims of fraud against the government. Often, the whistleblowers, called relators under the False Claims Act, would prefer to maintain their anonymity for personal or professional reasons, but their options to do so are limited.
A False Claims Act case is initially filed under seal, and
Continue Reading Medicaid Fraud Whistleblower Loses Bid To Keep His Name Out Of The Public Eye
The Second Circuit recently agreed to accept an interlocutory appeal to decide the question whether a violation of the False Claims Act’s “first-to-file” rule compels dismissal of the complaint or whether it can be cured by the filing of an amended pleading.
In United States ex rel. Wood v. Allergan, Inc., Relator John Wood brought FCA claims against Allergan,
Continue Reading Second Circuit Accepts Appeal of False Claims Act First-To-File Issues