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

Pfizer lost a legal battle focused on the company’s financial assistance program against the Department of Health and Human Services Office of Inspector General (OIG) in the U.S. District Court for the Southern District of New York. The agency denied the pharmaceutical company’s request to vacate an OIG advisory opinion that effectively precludes the manufacturer

The False Claims Act (FCA) prohibits employers from retaliating against whistleblowers who report FCA violations. 31 U.S.C. § 3730(h). To plead a claim under this anti-retaliation provision of the FCA, an employee must show the following three elements:

  • The employee engaged in protected activity.
  • The employer knew the employee engaged in protected activity.
  • The employer took an adverse action against the employee as a result of the employee’s protected activity.

Courts state and apply these basic elements slightly differently, and this post examines three rulings from district courts across different circuits at the end of last month.

Vaughn v. Harris County Hospital District

On September 29, the District Court for the Southern District of Texas adopted the memorandum and recommendation of the magistrate judge denying the motion to dismiss a former employee’s retaliation claim, holding he satisfied his pleading requirements.

Continue Reading Trio of False Claims Act Retaliation Rulings from September

We released our Healthcare Fraud & Abuse Annual Review earlier this month. To serve as a companion to the Review, we’re hosting a complimentary webinar on Thursday, February 18, 2021 from 8:00-10:00 a.m. PT / 10:00 a.m.-12:00 p.m. CT / 11:00 a.m.-1:00 p.m. ET. that will take a deeper dive into key focus areas covered

Bass, Berry & Sims is pleased to announce the release of the newest edition of its Healthcare Fraud & Abuse Annual Review examining important healthcare fraud developments in 2020. Compiled by the firm’s Healthcare Fraud Task Force, the Review provides an in-depth and comprehensive analysis of the past year’s court decisions involving the False

On May 6, the U.S. District Court for the District of South Carolina entered final judgment dismissing with prejudice a relator’s qui tam False Claims Act (FCA) suit against the defendant wholesale pharmacy. The relator, a former pharmacist who worked for the defendant, alleged that the defendant submitted false claims to government healthcare programs in connection with prescription medications dispensed for use at nursing homes and assisted living facilities. The relator alleged a scheme in which the defendant manually filled “thousands” of prescriptions with less-expensive generic medications while billing for more-expensive alternative medications stocked in its automated dispensing system.

A qui tam complaint containing similar allegations filed against Omnicare Inc. in the U.S. District Court for the District of New Jersey resulted in an $8 million settlement in 2017. In this lawsuit, however, the defendant, represented by Bass, Berry & Sims and others, obtained full dismissal with prejudice of the relator’s FCA and retaliation claims.

Continue Reading Qui Tam Complaint Against Pharmacy Dismissed for Lack of Particularity

Bass, Berry & Sims is pleased to announce the release of the 2019 edition of its Healthcare Fraud & Abuse Annual Review. Compiled by the firm’s Healthcare Fraud Task Force​​​​​​​, the Review is an in-depth and comprehensive analysis of enforcement settlements, court decisions, and recent developments affecting the healthcare industry.

The Review details

In two prior posts [Government Files Amended FCA Complaint Against Private Equity Firm and its Portfolio Company and DOJ Intervention in Healthcare Fraud Case Highlights Potential Risks for Private Equity Firms], we wrote about the Department of Justice’s (DOJ) decision to intervene in a False Claims Act (FCA) case against a compounding pharmacy and its private equity backer.

The case, Medrano v. Diabetic Care Rx, LLC, was the first time we had seen the DOJ name a private equity firm in a FCA case involving allegations of wrongdoing by one of its portfolio companies, and we noted that this should be a wake-up call to private equity firms who are actively engaged in the management and control of healthcare companies in which they invest.

The alarm rang once again in September 2019, as the DOJ announced that it reached a $21.36 million settlement with Patient Care America (PCA), the compounding pharmacy at issue in the case, two of the company’s executives and, most notably, the private equity firm Riordan, Lewis & Haden Inc. (RLH) that managed PCA on behalf of its investors.  The settlement was reached on ability to pay grounds.

Continue Reading Private Equity Firm Settles FCA Case

Download Annual Healthcare Fraud & Abuse ReviewBass, Berry & Sims is pleased to announce the release of its seventh annual Healthcare Fraud and Abuse Review. The Review, compiled by the firm’s Healthcare Fraud Task Force, is an in-depth and comprehensive review of enforcement settlements, court decisions and developments affecting the healthcare industry.

The Review is intended to assist healthcare

In a remarkable move, the Department of Justice (DOJ) recently sought dismissal of 11 False Claims Act (FCA) cases, each of which assert that patient assistance services supplied by pharmaceutical manufacturers constitute unlawful kickbacks. The 11 complaints were brought against various pharmaceutical companies by what DOJ described as “shell companies” backed by the National Healthcare Analysis Group, a company formed for the purpose of filing FCA cases. In seeking dismissal, DOJ argued that the suits ran counter to government interests and wasted “scarce government resources.”

According to the DOJ, the 11 lawsuits involved “essentially the same theories of FCA liability” concerning “white coat marketing,” free “nurse services,” and “reimbursement support services.” Specifically, in a motion to dismiss filed on December 17, 2018, in the Eastern District of Texas, DOJ seemingly defended these manufacturer programs noting the government’s “strong interest” in ensuring that “patients have access to basic product support related to their medication, such as access to a toll-free patient-assistance line or instructions on how to properly inject or store their medication.” The government further argued that the allegations “conflict with important policy and enforcement prerogatives” of federal healthcare programs, and asserted that the relators “should not be permitted to indiscriminately advance claims…against an entire industry that would undermine common industry practices the federal government has determined are, in this particular case, appropriate and beneficial to federal healthcare programs and their beneficiaries.”

Continue Reading DOJ Moves to Dismiss 11 Patient Assistance Services FCA Cases