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Category Archives: Litigation

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FY 2016 False Claims Act Recoveries: Government Enforcement Remains Lucrative and a Continued Source of Risk for Health Care Entities—But Will This Change in a Trump Administration?

The federal government continues to secure significant recoveries through settlements and court awards related to its enforcement of the False Claims Act (FCA), particularly resulting from actions brought by qui tam relators. In fiscal year (FY) 2016, the federal government reported that it recovered $2.5 billion from the health care industry. Of that $2.5 billion, $1.2 billion was recovered from the drug and medical device industry.  Another $360 million was recovered from hospitals and outpatient clinics.

Government Intervention Drives Recoveries

The FY 2016 FCA statistics reflect that more than 97% of the recoveries from qui tam cases resulted from matters … Continue Reading

NY High Court Rejects Expansion of Common-Interest Doctrine

In 2008, Ambac v. Countrywide defendants Bank of America Corporation and Countrywide Financial Corporation merged into a wholly-owned subsidiary of Bank of America.  In discovery, Bank of America withheld communications between Bank of America and Countrywide that occurred before the merger, on the basis that they were privileged attorney-client communications that were protected from disclosure under the common-interest doctrine.  In 2014, the New York Appellate Division, First Department, acknowledged that “New York courts have taken a narrow view of the common-interest [doctrine], holding it applies only with respect to legal advice in pending or reasonably anticipated litigation,” but rejected the … Continue Reading

Supreme Court: False Claims Act & Materiality Requirement

Stuart GersonThe U.S. Supreme Court has rendered a unanimous decision in the hotly-awaited False Claims Act case of Universal Health Services v. United States ex rel. Escobar.  This case squarely presented the issue of whether liability may be based on the so-called “implied false certification” theory.  Universal Health Service’s (“UHS) problem originated when it was discovered that its contractor’s employees who were providing mental health services and medication were not actually licensed to do so. The relator and government alleged that UHS had filed false claims for payment because they did not disclose this fact and thus had impliedly certified … Continue Reading

District Court Invalidates Payment of Cost-Sharing Subsidies, Setting Up Additional Legal Tests for the Affordable Care Act

In its recent decision in U.S. House of Representatives v. Burwell,[1] the U.S. District Court for the District of Columbia ruled that the Obama administration’s payment of cost-sharing subsidies for enrollees in plans offered through the Affordable Care Act’s Exchanges is unauthorized for lack of Congressional appropriation. The decision would affect future cost-sharing subsidies, though the court immediately stayed the decision pending its outcome on appeal.[2]

In its decision, the court found in favor of the members of the House of Representatives, based upon its interpretation of the applicable law. Specifically, the court found that, when Congress passed … Continue Reading

Another Setback for State Regulatory Boards: Federal Court Denies Texas Medical Board’s Motion to Dismiss Teladoc’s Antitrust Lawsuit

On December 14, 2015, the U.S. District Court for the Western District of Texas denied the Texas Medical Board’s (“TMB”) motion to dismiss an antitrust lawsuit brought by Teladoc, one of the nation’s largest providers of telehealth services.[1]  Teladoc sued the TMB in April 2015, challenging a rule requiring a face-to-face visit before a physician can issue a prescription to a patient.  Following two recent Supreme Court cases stringently applying the state action doctrine, this case demonstrates the latest of the continued trend where state-sanctioned boards of market participants face increased judicial scrutiny with respect to the state action … Continue Reading

DC Circuit: No False Claims Act Liability for Reasonable, Good Faith Interpretations of Ambiguous Regulations

On November 24, 2015, in United States ex rel. Purcell v. MWI Corp., No. 14-5210, slip op. (D.C. Cir. Nov. 24, 2015), the District of Columbia Circuit Court of Appeals ruled that federal False Claims Act (“FCA”) liability cannot attach to a defendant’s objectively reasonable interpretation of an ambiguous regulatory provision. While outside of the health care arena, this decision has implications for all industries exposed to liability under the FCA.

In Purcell, the government alleged that false claims had been submitted as a result of certifications made by defendant MWI Corporation to the Export-Import Bank in order to secure … Continue Reading

U.S. District Court Vacates HRSA’s Interpretative Rule on Orphan Drugs

On Wednesday, October 14, 2015, the U.S. District Court for the District of Columbia (the “Court”), Judge Rudolph Contreras, vacated the Health Resources and Services Administration’s (“HRSA”) interpretive rule on Orphan Drugs (“the Interpretative Rule”) as “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.”[1]  As a result of the ruling, pharmaceutical manufacturers are not required to provide 340B discounts to certain types of covered entities for Orphan Drugs, even when the drugs are prescribed for uses other than to treat the rare conditions for which the Orphan Drug designation was given.[2]  This issue … Continue Reading

Supreme Court Lowers the Bar for Class Action Removal

Stuart M. GersonOn December 15, 2014, the Supreme Court of the United States decided Dart Cherokee Basin Operating Co. v. Owens, a class action removal case.

In short, the Dart case is welcome news to employers. Standards for removing a case from state to federal court have been an abiding point of concern for employers faced with “home town” class actions. In more recent times, this problem has become a point of interest to employers in health care and other industries that are beset by cybersecurity and data breach cases originating in state courts but calling for the application of federal privacy … Continue Reading