On January 25, in a 2-1 decision in U.S. ex rel. Sheldon v. Allergan Sales, LLC, 2022 WL 211172, the Fourth Circuit became the most recent federal appellate court to hold that the objective scienter standard in the Supreme Court’s Safeco decision applies to the False Claims Act (FCA). Under the Fourth Circuit’s decision, the FCA’s scienter element cannot be met if the defendant’s interpretation of applicable statutory or regulatory requirements was objectively reasonable and no authoritative guidance from a circuit court or government agency warned the defendant away from its interpretation.

The Seventh Circuit’s similar holding last year in U.S. ex rel. Schutte v. SuperValu Inc. was one of the most important False Claims Act cases of 2021. Expect Sheldon to be a consequential decision as well.

Continue Reading Fourth Circuit Adopts <em>Safeco</em>’s Objective Reasonableness Standard for False Claims Act

We will release our 10th Annual Healthcare Fraud & Abuse Review in early February 2022. As a companion to the Review, we will host a complimentary webinar on Thursday, February 17, 2022, from 11:00 a.m.-1:00 p.m. ET / 10:00 a.m.-12:00 p.m. CT / 8:00-10:00 a.m. PT, which will provide an overview and discussion of key focus areas covered in the Review. Topics will include:

  • Healthcare fraud enforcement updates and issues to watch
  • Key False Claims Act developments
  • Stark Law/Anti-Kickback Statute enforcement trends
  • Managed care and pharma/medical device developments

We hope you can join us for this timely discussion of healthcare fraud issues from the past year and how they will impact proceedings in 2022. Click here to register.

Continue Reading [WEBINAR] Healthcare Fraud & Abuse Annual Review

Each year, the Department of Justice (DOJ) recovers millions of dollars through False Claims Act (FCA) settlements, and 2021 was no exception. Some of the most sizeable or otherwise noteworthy settlements from 2021 were with hospitals and health systems. We’ve summarized a few below.

Numerous Hospital Systems Resolved Kickback Allegations

FCA allegations premised on Anti-Kickback Statute (AKS) and Stark Law violations continued to result in sizeable settlements in 2021, particularly claims related to compensation in excess of fair market value.

In July, Akron General Health System agreed to pay $21.25 million to resolve FCA allegations that from 2010-2016 it compensated local physician groups in excess of fair market value in exchange for the referrals of patients, in violation of the AKS and Stark Law. Cleveland Clinic Foundation acquired the hospital system in 2015. According to the DOJ press release, it disclosed its concerns about the physician compensation arrangements to the government and received cooperation credit in the settlement, underscoring the importance of proactively addressing compliance issues.

Continue Reading 2021 Recap: Hospitals’ Significant False Claims Act Settlements

The Eleventh Circuit has become the first federal court of appeals to directly address whether the Eighth Amendment’s Excessive Fines Clause applies to the monetary award in a declined False Claims Act (FCA) case. And in an opinion issued December 29, 2021, the court held that it does. See U.S. ex rel. Yates v. Pinellas Hematology & Oncology, P.A., __ F. 4th __, 2021 WL 6133175 (11th Cir. 2021).

Case Background

The defendant was a clinical laboratory with multiple locations. Some had Clinical Laboratory Improvement Amendments (CLIA) certificates required to conduct lab tests; others did not. The jury found that the defendant had submitted 214 claims to Medicare in which it falsely represented that tests were performed at locations with CLIA certificates, when in fact they had been performed at locations without CLIA certificates.

The jury found that the United States had sustained $755.54 in actual damages. The district court trebled the government’s actual damages and imposed the lowest per claim civil penalty, $5,500, resulting in a total judgment of $1.179 million. The defendant challenged this award on appeal under the Excessive Fines Clause.

Continue Reading Eleventh Circuit Becomes First Appeals Court to Hold that Excessive Fines Clause Applies in Declined FCA Cases

As we have previously covered in a blog post dated August 25, 2021, the Senate is currently considering Senate Bill 2428, the False Claims Amendments Act of 2021 (FCAA), which would cause several significant changes that would make it more difficult for defendants in False Claims Act (FCA) cases.  On October 28, 2021, Senate Judiciary Committee (Committee) considered the bill originally introduced by Senator Chuck Grassley (R-IA) in July of this year.

After a series of negotiations with other Republican senators, the Committee passed a new, amended version of the FCAA by a vote of 15-7.  The Committee-approved bill was reported to the Senate on November 16, 2021.  Even under the amended language passed by the Committee, the FCAA, if passed into law, will likely make FCA litigation cases more complex and costly than they already are.

The Materiality Burden-Shift Is Gone, But the Threat to Escobar Is Not

As previously discussed on this blog, the FCAA’s most significant change is to alter the “rigorous” materiality standard set out by the U.S. Supreme Court in United Health Services v. United States ex rel. Escobar.  Senator Grassley even stated before the Committee that the purpose of the FCAA was to “make very clear we don’t have to rely on different courts interpreting it a different way.  These amendments will clarify misinterpretations created by the Escobar court, by clarifying what should already be common sense.”

Continue Reading False Claims Act Amendments Take More Direct Attack at <em>Escobar</em> and Pass Senate Judiciary Committee

Although this blog focuses mainly on the federal False Claims Act (FCA), other antifraud statutes feature in the qui tam relator and government enforcement toolkit. Key among them: the California Insurance Frauds Prevention Act (IFPA).

The IFPA is a state antifraud statute that, while modeled on the FCA, stands on its own because it targets fraud on commercial insurance. The IFPA has become a primary vehicle in California for addressing alleged healthcare fraud. Over the last decade, qui tam IFPA actions have resulted in tens of millions of dollars in settlements in healthcare fraud matters. Going forward, qui tam relators and the State of California will continue to use the IFPA to pursue significant recoveries for alleged healthcare fraud. This is a statute every provider doing business in California needs to know about. The main features of the IFPA are discussed below.

Conduct Covered by IFPA

When it was enacted in 1993, the IFPA focused only on workers’ compensation fraud. Recognizing the need to combat other types of insurance fraud, California expanded the statute’s reach over time. Codified at Cal. Ins. Code § 1871, et seq., the IFPA has evolved to cover many types of insurance fraud, including health insurance fraud.

Continue Reading The California Insurance Frauds Prevention Act: What to Know About California’s Powerful Commercial Health Insurance Fraud Statute

On December 2, the U.S. District Court for the Western District of Virginia granted a motion to dismiss a False Claims Act (FCA) lawsuit brought by the United States and the Commonwealth of Virginia, which alleged that a Walgreens clinical pharmacy manager falsified hepatitis C drug prior authorization submissions to Virginia Medicaid. See United States v. Walgreen Co., 2021 WL 5760307 (W.D. Va. Dec. 3, 2021).

Reasons for Dismissal

In dismissing the case, the district court reasoned that the prior authorization requirements were not “material” to payment as required to state an FCA claim within the meaning of the Supreme Court’s opinion in Universal Health Servs., Inc. v. U.S. ex rel. Escobar because Virginia Medicaid’s prior authorization requirements were unlawful under §1927(d)(1) and (2) of the Social Security Act.  The district court’s opinion entirely rejected the government’s theory of FCA liability, concluding that “[t]he allegations reveal that Walgreens did not receive any payment that it was not entitled to receive.”

Details of the Suit

The Virginia Department of Medical Assistance Services (DMAS) administers the Virginia Medicaid program through contracted third parties, including Managed Care Organizations (MCOs), to provide prescription drugs and other services to Virginia Medicaid recipients.

Continue Reading FCA Lawsuit Against Walgreens Dismissed Because Government Fails to Plead Materiality

On December 13, the Department of Justice (DOJ) published its Final Rule on the Civil Monetary Penalties Inflation Adjustment for 2021.  Under the Bipartisan Budget Act of 2015, the DOJ annually adjusts for inflation civil monetary penalties provided by law that are within the jurisdiction of the DOJ, with respect to violations occurring after November 2, 2015.

Under the 2021 annual adjustment, the minimum False Claims Act penalty assessed per violation occurring after December 13, 2021, will be not less than $11,803 and not more than $23,607.  This per violation statutory penalty is in addition to the statutory penalty of three times the amount of damages which the government sustains because of the violation.  31 U.S.C. 3729(a)(1).  The below chart snippet from the final rule shows the increase in penalties due to inflation from 2016 to 2021.

If you have any questions related to the calculation of penalties under the False Claims Act, please contact the authors of this post.


Bass, Berry & Sims and the Tennessee Hospital Association hosted the Seventh Annual Healthcare Fraud Conference on December 1 and 2. The virtual conference featured more than 40 speakers and 500 attendees from over 40 states and the District of Columbia.

“The healthcare industry remains under intense scrutiny, making it more important than ever for providers to stay up to date on the latest developments concerning the FCA and fraud and abuse,” said Brian Roark, chair of the Bass, Berry & Sims Healthcare Fraud Task Force.  “This conference examines those developments, provides practical solutions, and forecasts the most pressing issues ahead for healthcare providers.”

Topics Covered During Conference

Day 1 sessions covered conducting effective investigative interviews, navigating privilege issues in investigations, building effective compliance programs, navigating challenges posed by whistleblowers, understanding recent Stark Law and Anti-Kickback Statute developments, and False Claims Act self-disclosure considerations.

Day 2 kicked off with a review of the past year’s key healthcare fraud developments and looked at the future of the False Claims Act. Other sessions covered litigating healthcare fraud enforcement cases, provider relief fund audits and investigations, navigating contractor audits and administrative enforcement remedies, and hot topics in healthcare fraud. The day concluded with a 90-minute healthcare fraud hypothetical.

Click to access a recording of the conference. On-demand CLE is available for those that are interested.

Continue Reading Seventh Annual Healthcare Fraud Conference Highlights Key Risk Areas and Enforcement Developments for Healthcare Providers

Bass, Berry & Sims was recently recognized among leading False Claims Act (FCA) defense firms based on the number of FCA lawsuits in which the firm appeared on behalf of clients during the time period of 2016 through 2020. The third-party report was based on a review of federal court docket entries in FCA lawsuits throughout the country and listed firms based on the number of lawsuits and number of judicial districts in which the firms had appeared.

“We are pleased to be recognized as among the leading defense firms handling False Claims Act litigation,” said Brian Roark, who chairs the firm’s Healthcare Fraud Task Force. “We believe it speaks to the confidence clients have in our False Claims Act and government enforcement practices that we have been engaged to defend healthcare providers and government contractors in significant government investigations and litigation throughout the country.”

Since the Patient Protection and Affordable Care Act (PPACA) was signed into law in March 2010, there has been a significant proliferation of FCA litigation, particularly involving healthcare providers. During that time, Bass, Berry & Sims has represented clients in more than 50 FCA investigations and related FCA lawsuits in judicial districts across more than 25 states. These cases have resulted in some of the leading FCA appellate decisions, including key decisions by the U.S. Courts of Appeal in the Fourth, Sixth, Eighth and Ninth Circuits, and numerous district court opinions throughout the country in which the firm has successfully convinced district courts to dismiss FCA lawsuits against firm clients.

Continue Reading Bass, Berry & Sims Included Among Leading FCA Defense Firms