Over the past few weeks, we have covered recent updates to the False Claims Act (“FCA”), first discussing the recent recension of the “Brand Memo” and the resulting restoration of the Department of Justice’s willingness to use sub-regulatory guidance to bring FCA enforcement actions. In our second post, we outlined S.B. 2428’s proposal to shift the burden of proving materiality to defendants, provide for discovery reimbursement, address deference standards in motions to dismiss brought by the government in qui tam complaints, and extend whistleblower anti-retaliation protections. In this final post of our three-part series, we close out our discussion of the FCA with a review of a recent Seventh Circuit decision endorsing the use of an “objective reasonableness” defense in litigation brought under the FCA. We also highlight other recent court activity affecting enforcement of the FCA.
This is the second installment in our series of posts covering recent developments in False Claims Act (“FCA”) doctrine and practice, with the first post discussing the rescission of the “Brand Memo” and restoring the role of sub-regulatory guidance in FCA enforcement actions. A third post, to come later this week, will address recent federal court cases construing the FCA.
In July 2021, Senator Chuck Grassley led a bipartisan group of senators in introducing S.B. 2428, the “False Claims Amendments Act of 2021,” which aims to address legal developments in FCA doctrine that, according to the bill’s sponsors, made it “more difficult for plaintiffs and whistleblowers to succeed in lawsuits against government contractors engaged in fraud.” S.B. 2428 proposes amendments to the FCA in four key areas more fully described below:
- to shift the burden to defendants to disprove plaintiffs’ showing of materiality of alleged FCA misconduct;
- to provide a means by which the government can seek reimbursement for costs incurred for responding to burdensome discovery requests;
- to resolve a Circuit Court split regarding the appropriate standard of review for evaluating government’s (c)(2)(A) motions to dismiss qui tam complaints; and
- to extend the FCA’s anti-retaliation whistleblower protections.
The False Claims Act (“FCA”) is a punitive civil statute that acts as the federal government’s primary tool for combatting fraud in government health care programs, such as Medicare, Medicaid, and Tricare. In fiscal year 2020 alone, the Department of Justice (“DOJ”) obtained more than $2.2 billion in FCA settlements and judgments (not including potential recoveries from pending cases or ongoing negotiations); the largest of these many recoveries came in the health care and pharmaceutical sectors, with several recoveries totaling over $100 million each.
Given the frequency of FCA application in the health care context, and despite this vast body of law and commentary spanning more than a century and a half since the FCA’s inception, novel applications and interpretations of the law still arise, especially as the health care industry evolves and new modes of payment and care delivery come to the fore. In 2021, the FCA has once again been the focal point of government attention, with a DOJ memorandum, proposed federal legislation, and recent federal court decisions adding new context and authority to guide future applications of the law.
This post is the first of three covering recent FCA updates, and in it we discuss the re-emergence of federal guidance as a tool in the belt of the DOJ in enforcing the FCA.
The U.S. Department of Justice (the “DOJ”) recently settled whistleblower False Claims Act (“FCA”) allegations against The University of Miami (“UMiami”) for $22 million, which resolves claims from three separate lawsuits related to billing practices at UMiami’s off-campus hospital-based facilities (“Off-Campus Hospital Facilities”) and fraudulent claims for laboratory services.