On February 28, the Department of Health and Human Services (HHS) announced that it was rescinding the Richardson Waiver, a policy in place since 1971 which said HHS would provide notice of proposed rulemaking in certain cases where it was not otherwise required to do so by law. This announcement signals a policy shift for the agency and suggests that where permitted by law, HHS will generally now issue rules relating to “agency management or personnel or to public property, loans, grants, benefits, or contracts” without providing notice and comment to stakeholders, and may otherwise find good cause to forego notice and comment procedures.

Continue Reading HHS Suggests It Will Provide Less Notice and Opportunity for Comment on Grant and Contract Rules

The United States Court of Appeals for the First Circuit issued a pivotal ruling earlier this week, finding that in order to establish falsity in a False Claims Act (“FCA”) case premised on Anti-Kickback Statute (“AKS”) liability, the kickback must have been the “but-for” cause of the submission of the claim. The court’s decision hinged on the meaning of the phrase “resulting from” within the 2010 amendment to the AKS, which provided that a claim that includes items or services “resulting from” a violation of the AKS constitutes a false or fraudulent claim for purposes of the FCA. The meaning of “resulting from” for purposes of establishing such FCA liability has been hotly debated by courts. The First Circuit now joins the Sixth and Eighth Circuits in adopting this stricter but-for standard, while the Third Circuit has opted for a much looser approach.

This case, United States of America v. Regeneron Pharmaceuticals, Inc., centered on whether Medicare claims for the drug Eylea, which were allegedly influenced by AKS violations through copayment coverages, constituted false or fraudulent claims under the FCA.  On the question of causation under the AKS, Regeneron claimed that the 2010 amendment imposed a “but-for” causation standard and urged the court to adopt the standards applied by the Eight and Sixth Circuits.  Regeneron argued that the government “b[ore] the burden of proving that an AKS violation . . . actually caused [a] physician to provide different medical treatment (and thus caused the false claims).” United States v. Regeneron Pharms., Inc., No. 20-11217, 2023 WL 6296393, at *10 (D. Mass. Sept. 27, 2023).  The government, on the other hand, urged the court to adopt the Third Circuit’s view that the AKS only requires proof of a causal link between a claim submitted to the government and medical care that was provided in violation of the AKS. Id.

The First Circuit’s adoption of the but-for causation standard is expected to have broad implications on the FCA landscape, potentially narrowing the field of actionable claims under the FCA, impacting both the government’s and whistleblowers’ ability to pursue damages for AKS violations that result in false claims to federal healthcare programs.

“Note: Our lawyers leveraged AI in creating this blog post, including using a transcript summary created by generative AI. As we explore the potential of generative AI in the legal space, it is our intention and our practice to be transparent with our readers and to showcase the results we are achieving using generative AI with publicly available resources. Crowell’s AI group is comprised of lawyers and professionals across our global offices, including from Crowell Global Advisors (CGA), our international public policy entity, with decades of sector-specific experience. We intend to lead by example in our own responsible use of AI, as it pertains to both the risks and benefits. Should you have questions about the use of generative AI in the legal sector or Crowell’s use of AI, please contact innovation@crowell.com.”

On January 7, 2025, in the last weeks of the Biden Administration and before President Trump returned to the White House, the Food and Drug Administration (FDA) issued draft guidance, entitled “Considerations for the Use of Artificial Intelligence To Support Regulatory Decision-Making for Drug and Biological Products.” This guidance provides recommendations on the use of AI intended to support a regulatory decision about a drug or biological product’s safety, effectiveness, or quality. The guidance discusses the use of AI models in the nonclinical, clinical, post-marketing, and manufacturing phases of the drug product life cycle. This is the first time FDA has proposed draft guidance on the use of AI for the development of drug and biological products and may provide insight on how AI models in medical product regulation should be assessed. The FDA is seeking public comment on the proposed guidance by April 7, 2025.     

Continue Reading FDA Proposes Framework to Assess AI Model Output Credibility to Support Regulatory Decision-Making

Dr. John Pepe and Dr. Richard Sherman (“Relators”), acting as whistleblowers, brought a qui tam action against Fresenius Medical Care Holdings, Fresenius Vascular Care, Inc., and Dr. Gregg Miller (“Defendants”).  Relators’ complaint alleged that the Defendants engaged in fraudulent billing practices under the False Claims Act (“FCA”) and analogous state laws.  Last week, the United States District Court for the Eastern District of New York dismissed Relators’ case because they failed to plead their allegations with particularity as required by Federal Rule of Civil Procedure 9(b).

Continue Reading Stringent Requirements for Pleading Fraud Under Rule 9(b).

The United States District Court for the Northern District of Indiana recently dismissed a case involving allegations of fraudulent Medicaid claims and self-referrals.  The case, United States of America and State of Indiana ex rel. Bradley A. Stephens v. Nuclear Cardiology Associates (“NCA”), serves as a critical reminder of the stringent requirements for pleading fraud under the False Claims Act (FCA) and the Stark Law.

Continue Reading General Allegations Without Representative Examples Are Insufficient to Survive a Motion to Dismiss

In the world of False Claims Act (“FCA”) litigation, the recent case United States ex rel. Robert C. O’Laughlin, M.D. v. Radiation Therapy Services, P.S.C., et al. serves as an important reminder of the need for concrete evidence when asserting qui tam FCA claims.

Continue Reading The Anatomy of a Failed Qui Tam Case: Lessons from U.S v. Radiation Therapy Services

The United States District Court for the Eastern District of Michigan recently dismissed a False Claims Act (“FCA”) lawsuit brought against the City of Detroit.  The core issue in United States ex rel. Lynn v. City of Detroit revolved around Detroit’s annual certifications and assurances to comply with federal laws and regulations as a condition for receiving federal funds.  The relators argued that these certifications were false, thus constituting fraudulent claims under the FCA.

The court’s decision to grant summary judgment in favor of Detroit was based on the distinction between future promises and fraud.  The court noted that the certifications in question were forward-looking statements about future compliance, not assertions about past or present compliance.  This distinction was crucial because, under established legal principles, fraud claims must relate to misrepresentations about past or existing facts.  Future promises, on the other hand, are considered contractual and do not constitute fraud.

While some courts have recognized a “promissory fraud” exception, allowing fraud claims based on future promises if the plaintiff can prove that the defendant had no intention of complying at the time the promise was made, the Sixth Circuit has not endorsed this exception in the FCA context.  Though even if it had, the outcome here would not change.  The court explained that relators in this case failed to allege or provide evidence that the City officials who signed the certifications had no intention of complying with federal laws and regulations at the time they made the certifications.

This dismissal underscores the critical distinction between future promises and fraud, as well as the stringent requirements for invoking the promissory fraud exception.  In the end, the court’s ruling provides a clear message: future promises of compliance, without more, cannot form the basis of a fraud claim under the FCA.  

Note: Our lawyers leveraged AI in creating this blog post.  As we explore the potential of generative AI in the legal space, it is our intention and our practice to be transparent with our readers and to showcase the results we are achieving using generative AI with publicly available resources. Crowell’s AI group is comprised of lawyers and professionals across our global offices, including from Crowell & Moring International (CMI), our international public policy entity, with decades of sector-specific experience. We intend to lead by example in our own responsible use of AI, as it pertains to both the risks and benefits. Should you have questions about the use of generative AI in the legal sector or Crowell’s use of AI, please contact inovation@crowell.com. 

United States of America v. Sutter Health is exemplary of the delicate balance courts must strike when dealing with attorney-client privilege.  Here, the United States District Court for the Northern District of California denied the relator’s motion for determination as to waiver of privilege, but granted alternative relief.  

This case involves alleged violations of the False Claims Act (“FCA”) and the Anti-Kickback Statute (“AKS”) by Sutter Health (“Sutter”), and at the core of this case is the relator’s motion arguing that Sutter waived attorney-client privilege over communications related to its internal review of the fair market value and commercial reasonableness of certain financial arrangements.  Specifically, the relator contended that Sutter’s references to legal consultations in their summary judgment motion constituted a waiver of this privilege.

The court instead found that Sutter’s references were merely “background facts” and not detailed disclosures that would necessitate a waiver of privilege.  The court’s ruling also emphasized that Sutter did not assert an advice of counsel defense, which would have put the content of the legal advice directly at issue.  This distinction is crucial for legal practitioners, as it highlights the importance of how and when legal advice is referenced in litigation. 

While the court denied the motion for a wholesale waiver of privilege, it nevertheless recognized the potential unfairness to the relator if Sutter were allowed to reference its legal consultations without providing access to the underlying communications.  To address this, the court precluded Sutter from introducing any evidence at trial that its “rigorous process” of ensuring its arrangements were supported by a third-party fair market value appraisal included consultations with its legal team. 

The court’s decision in this case offers strategic insights for legal practitioners involved in FCA and AKS litigation:

  • When referencing legal consultations in litigation, it is essential to avoid detailed disclosures that could be construed as waiving attorney-client privilege.  Background references should be carefully crafted to provide necessary context without delving into the substance of legal advice.
  • Parties should be prepared for the possibility that references to legal consultations may lead to the preclusion of related evidence at trial.  This requires a strategic approach to presenting defenses and ensuring that non-privileged evidence is robust enough to support the case.

Note: Our lawyers leveraged AI in creating this blog post, including using a transcript summary created by generative AI.  As we explore the potential of generative AI in the legal space, it is our intention and our practice to be transparent with our readers and to showcase the results we are achieving using generative AI with publicly available resources.  Crowell’s AI group is comprised of lawyers and professionals across our global offices, including from Crowell & Moring International (CMI), our international public policy entity, with decades of sector-specific experience.  We intend to lead by example in our own responsible use of AI, as it pertains to both the risks and benefits.  Should you have questions about the use of generative AI in the legal sector or Crowell’s use of AI, please contact innovation@crowell.com.

In the world of legal battles, few are as complex and as fraught with procedural intricacies as qui tam actions brought under the False Claims Act (“FCA”).  The qui tam provision of the FCA allows private individuals, known as relators, to file lawsuits on behalf of the government and if successful, relators can receive a portion of the recovered damages.  A recent case, United States ex rel. John Doe v. Credit Suisse AG, offers a glimpse into the procedural labyrinth that governs these actions and underscores the delicate balance between private citizens’ rights to pursue fraud claims and the government’s overarching authority to control litigation brought on its behalf.

In this case, John Doe, a former employee of Credit Suisse, alleged that the bank continued its criminal conduct of helping U.S. taxpayers shield offshore assets even after pleading guilty to conspiracy charges in 2014.  Doe claimed that Credit Suisse’s failure to disclose this ongoing conduct allowed it to avoid paying additional penalties, thus violating the FCA’s “reverse false claims” provision.  The government moved to dismiss Doe’s action, arguing that his allegations did not state a viable claim under the FCA and that continued litigation would strain government resources and interfere with ongoing monitoring of Credit Suisse’s compliance with its plea agreement.  

The district court granted the government’s motion without holding an in-person hearing, relying instead on written submissions from both parties.  Doe appealed, arguing that the dismissal was improper because he was denied an actual “hearing” as required under the FCA.

The Fourth Circuit disagreed with Doe and affirmed the district court’s decision, holding that the “hearing” requirement can be satisfied through written submissions rather than an in-person hearing.

The Fourth Circuit’s decision underscores the flexibility courts have in interpreting the “hearing” requirement under the FCA as allowing for written submissions rather than an in-person proceeding, particularly when the government’s reasons for dismissal are clear and uncontroverted.  This interpretation aligns with the broader trend in federal litigation towards greater reliance on written briefs and submissions, which can streamline proceedings and reduce the burden on judicial resources. However, it also raises questions about the extent to which relators can effectively challenge government dismissals without the opportunity for oral argument.

The Fourth Circuit’s decision also aligns with the Supreme Court’s recent ruling in United States ex rel. Polansky v. Exec. Health Res., Inc., which emphasized the government’s broad authority to dismiss qui tam actions and the substantial deference courts must give to the government’s assessment of whether continued litigation serves the public interest.  The government’s authority to dismiss qui tam actions is a critical aspect of the FCA’s framework, ensuring that the government retains control over litigation conducted in its name and allowing it to prioritize resources and avoid cases that do not align with its enforcement strategies.

This case serves as a reminder of evolving landscape and complexities of FCA litigation.

The United States District Court for the District of Rhode Island cast a spotlight on the doctrine of implied waiver of attorney-client privilege in a recent False Claims Act (“FCA”) case.  The case, United States of America ex rel. James R. Berkley v. Ocean State, LLC, et al., Case No. 20-538-JJM-PAS (D.R.I., June 26, 2024), delves into the implications of asserting an affirmative defense in an FCA case based partly on advice of counsel.

Continue Reading Navigating the Attorney-Client Privilege Waiver Tightrope