Please join us for the Compliance & Government Investigations Seminar hosted by Bass, Berry & Sims and FTI Consulting. Due to ongoing COVID-19 concerns, this event will be virtual only.

We are excited for this year’s complimentary CLE program, which will provide the same caliber of practical advice, insight into government developments, and thoughtful discussion from industry panelists you have come to expect from this seminar. This year’s topics include:

  • Inside Scoop: Top Issues In-House Counsel Currently Face
  • Update on International Trade Regulations and Enforcement
  • SEC Update: Key Enforcement and Regulatory Priorities
  • Running an Investigation
  • Antitrust Is Back: DOJ and FTC Signal Significant Increase in Antitrust Enforcement
  • Data Privacy Update
  • Healthcare Fraud Enforcement Updates
  • Hot Topics in Procurement Fraud in 2021 and Beyond
  • COVID-19 Funding Fallout: Preparation for Government Scrutiny

This year’s seminar will be held from 8:30 a.m.–3:45 p.m. CDT on Tuesday, September 28. To register, please click here.

Click here to view the agenda.

Continue Reading [Virtual Event] 8th Annual Compliance & Government Investigations Seminar

The U.S. Court of Appeals for the Seventh Circuit recently joined the ranks of every other circuit court of appeal to have considered the issue in holding that the False Claims Act (FCA) requires an objective scienter standard.  Under this standard, defendants who act under an incorrect interpretation of the relevant statute or regulation do not act “knowingly” under the FCA if both of the following are true:

  1. The interpretation was objectively reasonable.
  2. “Authoritative guidance” did not warn the defendant away from their interpretation.

Background on Objective Scienter Standard

The FCA imposes liability on those who “knowingly” submit false claims to the government. The term “knowingly” is statutorily defined to cover defendants who act with “actual knowledge,” “deliberate ignorance,” or “reckless disregard.”

In construing the scienter requirement of the Fair Credit Reporting Act (FCRA) in Safeco Insurance Co. of Am. v. Burr, which punishes “willful” violations, the Supreme Court analyzed the common-law definition of that term and noted that willfulness as a statutory condition of civil liability has generally been understood to cover both knowing and reckless violations of a standard.  The Court then held that a defendant interpreting an ambiguous statute or regulation did not act with “reckless disregard” where their interpretation was objectively reasonable and no authoritative guidance warned them away from their interpretation.

Continue Reading Seventh Circuit Holds FCA Requires Objective Scienter Standard

On July 26, Senator Chuck Grassley (R-IA) introduced a long-promised bill to amend the False Claims Act (FCA).  Not-so-creatively entitled the False Claims Act Amendments Act of 2021 (S.B. 2428), the proposed legislation is notably co-sponsored by a prominent—and bipartisan—group of senators.  The text of the bill, available here, would most importantly bring changes to the analysis of the FCA’s materiality element while also affecting the process through which defendants may obtain discovery from the government.

According to a press release issued by Senator Grassley, the legislation is mainly intended to “clarif[y] the current law following confusion and misinterpretation of the Supreme Court decision in United Health Services v. United States ex rel. Escobar.”  As we have previously covered at length (in blog posts dated June 23, 2016; March 20, 2020; April 8, 2020; and June 25, 2021) the U.S. Supreme Court’s 2016 decision in Escobar confirmed that the FCA’s materiality element is “rigorous” and “demanding,” and that it cannot be satisfied simply by showing that the government would have had the “option” to decline payment had it known the facts underlying an allegedly fraudulent claim.

Instead, Escobar focuses the materiality inquiry on the government’s actual or likely response to alleged fraud: if the government regularly pays similar claims with knowledge of the facts, that is “strong evidence” that the alleged misrepresentations are not material; on the other hand, if the government often denies payment under similar circumstances, that supports a finding of materiality.

In Senator Grassley’s view, however, Escobar has given way to “confusion” and “misinterpretation” that “has made it all too easy for fraudsters to argue that their obvious fraud was not material simply because the government continued payment.”   Consistent with that view, the proposed legislation appears calculated to make materiality-based dismissals—as well as other kinds of dismissals—more difficult for FCA defendants to obtain.  Whether it would succeed in that aim, however, is open to debate.

Continue Reading Changes Coming to the FCA?  Proposed Amendments Would Impact Materiality Analysis, Government Discovery, Among Other Issues

We are looking forward to our involvement in the American Health Law Association Annual Fraud and Compliance Forum 2021 next month. Compliance & Government Investigations attorney John Kelly is serving as co-chair of the program, which will address emerging regulatory and enforcement trends, recent case law and legislative developments and best compliance practices in healthcare. This program brings together legal counsel, compliance officers, and government representatives for an invaluable learning and networking opportunity.

Healthcare attorney Danielle Sloane will co-present a session titled “Clinical Laboratory Regulatory and Enforcement Update for 2022,” on September 21, from 1:45 to 2:45 PM EST. The program will highlight the important role of clinical laboratories in the healthcare system and the many compliance and regulatory issues that are particular to clinical labs.

The 2021 event will be a hybrid virtual and in-person format. Participants can register for the virtual event, being held September 21-22, which will include 18 in-depth breakout sessions with live interactive Q&A. The in-person event will be held September 30-October 1 at the Renaissance Baltimore Hotel. The in-person program will include eight in-depth breakout sessions and time for networking with colleagues. More details and registration information can be found on the AHLA website.

I recently discussed the trends related to False Claims Act (FCA) settlements in the home health sector, as revealed in the Healthcare Fraud & Abuse Settlements Database which we launched earlier this year. The database was part of the comprehensive Healthcare Fraud & Abuse Resource Center that provides an overview of FCA enforcement settlements, court decisions, updates involving the Stark Law and Anti-Kickback Statute, and other developments affecting the healthcare industry.

“We wanted to create a database of False Claims Act settlements to allow providers to have easy access to information, to see the cases that the government or regulators have resolved in the health care fraud space,” I told Home Health Care News. “This is the first publicly available database of this type.”

According to the information in the database, home health providers have paid at least $422.6 million since 2012 to settle FCA allegations. This represents 51 different cases over the time period from 2012-2020.

Continue Reading False Claims Act Cases in Home Health Sector

During the COVID-19 pandemic, many healthcare providers have relied on telehealth options to provide patients access to care. But, as I discussed in a recent article for Physicians Practice, “As long as utilization of telehealth services remains high, corresponding scrutiny and government enforcement efforts will remain focused on this area.”

In the article, I recommend ways that physicians and other providers can prepare for this additional scrutiny:

Continue Reading Telehealth Scrutiny Following COVID-19 Pandemic

We explored the impact of the Supreme Court’s decision in Universal Health Servs., Inc. v. U.S. ex rel. Escobar to mark the fifth anniversary of this key False Claims Act opinion in a recent article for Law360. As we point out in the article, the Supreme Court’s decision “continues to have a profound impact on the manner in which FCA allegations are pleaded in FCA complaints, investigated by the government and litigated by parties to FCA lawsuits.”

In the article, we examine significant cases that have followed in the five years since Escobar’s consideration of the False Claims Act’s materiality standard and how the Supreme Court’s ruling has impacted the approach to dispositive motions in False Claims Act litigation, the significance of the government’s intervention decision in qui tam actions, and the pursuit of discovery from the government in False Claims Act cases. We also outline how the U.S. Department of Justice’s 2018 Granston memo addressing DOJ’s dismissal authority under the False Claims Act intersects with the Court’s decision in Escobar.

The full article, “Where FCA Litigation stands 5 Years After Escobar,” was published by Law360 on June 23 and is available online.

We are excited to announce the launch of our new Healthcare Fraud & Abuse Resource Center, which will provide a central location for healthcare leaders to access tools and information, including:

  • An innovative, searchable database featuring more than 1,300 significant False Claims Act (FCA) settlements from the last decade.
  • The most recent edition of our Healthcare Fraud & Abuse Annual Review, an in-depth and comprehensive analysis of the past year’s court decisions involving the FCA and enforcement developments affecting the healthcare industry.
  • A video library where visitors can watch segments (some for CLE credit) about fraud and abuse issues facing the healthcare industry, as well as practical tips and takeaways for preparing for, responding to and resolving a healthcare fraud investigation.

In addition, previous editions of our Annual Review publications can be accessed at the Resource Center, along with quick links to posts from this blog and to other publications and events that may be of interest.

In the last year, the Department of Justice (DOJ) has brought more than 100 criminal cases relating to Paycheck Protection Program (PPP) Fraud.  These criminal prosecutions started at a blistering pace, with the first indictments coming within the very first months of the program’s inception. This wave of criminal prosecutions and convictions related to some of the more flagrant abuses – individuals who fraudulently obtained funds from the program and then went on spending sprees for things like Lamborghinis, mansions, and private jet travel.

These prosecutions focused on individuals and organized groups who obtained or used PPP funds fraudulently, often including charges for false statements (18 U.S.C. § 1001), aggravated identify theft (18 U.S.C. § 1028A(a)(1)), false statements in a loan application (18 U.S.C. § 1014), wire fraud (18 U.S.C. § 1343), bank fraud (18 U.S.C. § 1344), and Title 26 tax charges. Along with these prosecutions came significant resources, including new fraud coordinators and data analytics teams across the country.

Now, we are starting to see the first civil enforcement actions relating to the program. This signals a new phase of enforcement for the DOJ and all organizations who benefited from the program must pay close attention.

Continue Reading PPP Investigations, Settlements and Litigation on the Horizon

How should a court evaluate the FCA’s materiality requirement when the government’s ability to deny claims is constrained? According to a recent decision from the Eleventh Circuit, the court should “broadly” consider the government’s “pattern of behavior as a whole,” and may find evidence of materiality in administrative actions that might not support materiality in other cases.

Background

The case, U.S. ex rel. Donnell v. Mortgage Investors Corporation, was brought by two mortgage brokers who specialized in originating mortgage loans guaranteed by the United States Department of Veterans Affairs (VA). Under the program at issue, VA regulations limited the fees and costs lenders could collect from veterans and required lenders seeking VA guarantees to certify compliance with the fee-and-cost restrictions. The relators alleged that the defendant, Mortgage Investors Corporation (MIC), defrauded the VA by charging veterans prohibited fees and falsely certifying they had not done so.

After originating loans and obtaining VA guarantees, MIC typically sold its loans on the secondary market to holders in due course. This introduced an “important wrinkle,” the appeals court noted, because the VA is statutorily required to honor its guarantee when borrowers default on loans possessed by holders in due course.

Continue Reading Eleventh Circuit Broadens Materiality Analysis for Some Cases