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.

In January 2024, the Centers for Medicare and Medicaid Services (CMS) announced a new innovation care delivery model that seeks to bridge the gap between behavioral and physical health. The Innovation in Behavioral Health (IBH) Model aims to improve the quality of care and behavioral and physical health outcomes for adults with moderate to severe mental health conditions and substance use disorders (SUDs). The IBH Model will service beneficiaries who are enrolled in Medicare and Medicaid, including those who are dual eligible.[1] These populations experience higher than average rates of mental health conditions or SUDs, or both, highlighting the importance of a model that integrates behavioral and physical healthcare as well as addressing health-related social needs (HRSN).[2]

Continue Reading CMS Notice of Funding Opportunity for the Innovation in Behavioral Health Model Open Until September 9, 2024

Linda Malek and Jason Johnson are partners in Crowell’s Health Care and Privacy & Cybersecurity Groups, and have a particular focus on advising clients on compliance issues related to clinical research and clinical trials. Stephen Holland is Senior Counsel in Crowell’s Government Affairs Group and previously served as Senior Health Counsel to the U.S. House Committee on Energy and Commerce, where he advised on FDA policy, including legislation related to medical devices and laboratory developed tests.

The FDA has provided answers to the most common questions it has received regarding its final rule on laboratory developed tests (LDTs) (the “Final Rule”).  The answers are styled as FAQs that are organized by topic areas.  The FAQs can be found here.  If there is a question that is not answered, the FDA encourages individuals to submit questions to the FDA through the mailbox at ldtfinalrule@fda.hhs.gov.  The FDA notes that it intends to update the FAQs periodically so entities should check the webpage often for additional answers. 

Continue Reading FDA Publishes FAQs Around Its Recent Laboratory Developed Tests Final Rule

Linda Malek and Jason Johnson are partners in Crowell’s Health Care and Privacy & Cybersecurity Groups, and have a particular focus on advising clients on compliance issues related to clinical research and clinical trials. Stephen Holland is Senior Counsel in Crowell’s Government Affairs Group and previously served as Senior Health Counsel to the U.S. House Committee on Energy and Commerce, where he advised Members of Congress and their staffs on FDA policy.

On July 25, the Food and Drug Administration (FDA) issued final guidance entitled Real-World Data: Assessing Electronic Health Records and Medical Claims Data to Support Regulatory Decision-Making for Drug and Biological Products. The guidance aims to provide drug sponsors with considerations should they wish to use real-world data (RWD) drawn from electronic health records (EHRs) or medical claims data in their clinical studies to support regulatory decisions related to the safety and efficacy of a drug.

Continue Reading FDA Issues Guidance on Using Electronic Health Records and Medical Claims Data in Clinical Studies

In December 2023, the Centers for Medicare & Medicaid Services (CMS) announced a new model called the Transforming Maternal Health (TMaH) Model, the first of its kind to focus solely on improving maternal health care for Medicaid and Children’s Health Insurance Program (CHIP) beneficiaries. The model is intended to support state Medicaid agencies to address the physical health, mental health and social needs of mothers by developing whole-person approaches to pregnancy, childbirth, and postpartum care. The model’s overarching goal is to reduce disparities in access and treatment and to improve outcomes and experiences for mothers and their newborns. On June 26, 2024, CMS released the Notice of Funding Opportunity (NOFO) for states to apply. The NOFO will close for applications on September 20, 2024.

Continue Reading CMS opens Notice of Funding Opportunity (NOFO) for the Transforming Maternal Health (TMaH) Model

On July 9, 2024, the Office of Science and Technology Policy (OSTP) released new guidance for federal research agencies that require certain research institutions (“covered institutions”) to certify that the institution has established and operates a research security program that includes certain specific standardized requirements.  The certification requirements are in accordance with the National Security Presidential Memorandum-33 (NSPM-33) and the CHIPS and Science Act. The purpose of these guidelines is to address increased foreign risk to research security in the U.S. Research and Development (“R&D”) landscape and to preserve the open and collaborative nature of the R&D environment. The research security requirements are summarized below. 

Continue Reading New federal guidelines for research security programs at covered institutions

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

On April 25, 2024, the U.S. Food and Drug Administration (FDA) issued and requested public comment on a revised draft guidance (Draft Guidance) providing recommendations related to promotional labeling and advertising that manufacturers, packers, and distributors (collectively “Firms”) should consider when promoting or advertising biosimilar products, including interchangeable biosimilar products, and their reference products. Stakeholders had until June 24, 2024 to submit comments on the Draft Guidance.

Continue Reading FDA Releases Revised Guidance on Promotional Labeling and Advertising Considerations of Biosimilar Products

On June 24, 2024, the Department of Health and Human Services (“HHS”) released a final rule (“Disincentives Final Rule”) establishing disincentives for certain healthcare providers that have committed information blocking. The information blocking disincentives directly impact Medicare-enrolled healthcare providers or suppliers including hospitals, critical access hospitals, MIPS-eligible clinicians, and ACOs. The Disincentives Final Rule has been submitted to the Office of the Federal Register for publication and will become effective 30 days after Federal Register publication.

Continue Reading Healthcare Providers Who Engage in Information Blocking Will Face Disincentives Described in an HHS Final Rule