Now that you understand what prompts an agency subpoena or CID, the next step is to have a strategy, which involves answering the question, “what should I do?” Taking the right approach from the outset is critical to protecting your company’s interests.
Continue Reading You’ve Been Served—What to Do When You Receive an Agency Subpoena or CID (Part II)
Investigations-Archive
You’ve Been Served—What to Do When You Receive an Agency Subpoena or CID (Part I)
Nothing sends chills through a Compliance Officer or General Counsel faster than receiving an agency subpoena or civil investigative demand (CID). The first questions that immediately come to mind are “what does it mean” and “what should I do?”
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Hundreds of Hospitals Will Pay Over $250 Million in Nationwide FCA Settlement
457 hospitals (or, expressed differently, nearly 10% of all of the hospitals in the United States) have recently agreed to settlements worth more than a quarter of a billion dollars arising out of an investigation into Medicare billings for allegedly unnecessary cardiac implants known as implantable cardioverter defibrillators, or ICDs. ICDs regulate heart rhythms and cost about $25,000 per device. Whether Medicare covers ICD implants is dependent on the National Coverage Determination (“NCD”). The NCD states that ICDs should not be implanted in patients who recently suffered a heart attack or heart bypass surgery or angioplasty, and has set waiting periods for the procedure of 40 days after a heart attack and 90 days after a bypass or angioplasty.
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Managed Care Plans: New Targets for Whistleblowers
With two recent False Claims Act cases (and six in the last decade), relators have taken aim at a new target for FCA enforcement and liability: Managed Care Plans. Managed Care providers should be aware of this growing threat and take steps to reduce their exposure.
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The Ninth Circuit Overrules Decades of Precedent To Make It Easier For Relators To Qualify As An “Original Source”
A relator bringing an action under the civil False Claims Act (FCA) is required to be an “original source” of the allegations. 31 U.S.C. § 3730(e)(4). To qualify as an original source under the statute, the relator must (1) have “direct and independent knowledge” of the information giving rise to the claims and (2) “provide[] the information to the Government before filing the action.” For the past 23 years, the Ninth Circuit also had a third requirement to qualify as an original source: the relator must have had “a hand in the public disclosure of allegations that are a part of [the] suit.” That third requirement, however, came to an abrupt end on July 7, 2015, when the Ninth Circuit in United States ex rel. Hartpence v. Kinetic Concepts reversed course, ruling that its holding in United States ex rel. Wang v. FMC Corp., 975 F.2d 1412 (9th Cir. 1992) was “wrongly decided” and that only the two requirements specified in the statutory language of the FCA must be satisfied for a relator to qualify as an original source. Plaintiffs’ lawyers throughout the Ninth Circuit are rejoicing.
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What’s Next: The Future of False Claims Act Litigation After KBR v. U.S. ex rel. Carter
The last Supreme Court term was a big one. Most observers will remember it as the term that upheld Obamacare, established a constitutional right to same-sex marriage, and introduced the American lexicon to “jiggery-pokery.” Those staying abreast of developments in the civil False Claims Act (FCA) jurisprudence, however, will remember the 2014 term for settling some uncertainty in regard to the FCA’s first-to-file bar and statute of limitations in Kellogg Brown & Root Services, Inc. v. United States ex rel. Carter, 135 S.Ct. 1970, __ U.S. ___ (2015). The full slip opinion can be found on the Supreme Court’s website, here; we previously covered the opinion, here.
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Seventh Circuit Rejects FCA Implied False Certification Theory
On June 8, 2015, the U.S. Court of Appeals for the Seventh Circuit rejected the doctrine of implied false certification in a False Claims Act (“FCA”) lawsuit, U.S. ex rel. Nelson v. Sanford-Brown Ltd. No. 14-2506, 2015 WL 3541422. In a welcome decision for government contractors, the Court held that the FCA is “not the proper mechanism” for Government enforcement of regulations. Instead, regulatory violations should be handled by the appropriate Government agency–not the courts.
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SCOTUS: No Unlimited Suspension of the Statute of Limitations Under the False Claims Act; “First-to-File” Doctrine Does Not Bar Related Suits in Perpetuity
In an opinion released May 26, 2015, Kellogg Brown & Roots Services, Inc. v. United States ex rel. Carter, the U.S. Supreme Court unanimously held that whistleblowers cannot extend the statute of limitations for war-related civil false claims under the Wartime Suspension of Limitations Act (“WSLA”), reinstating an already generous statute of limitations period under the civil False Claims Act (“FCA”). The Court also settled a split between the U.S. Courts of Appeals for the D.C. Circuit and the Fourth Circuit. For purposes of the FCA’s “first-to-file” bar, the FCA only limits a lawsuit based on the same underlying facts as another case that is actually open and pending when the later lawsuit is filed. In reaching these holdings, the Court relied heavily on the plain meaning of the statutory language, simultaneously handing a victory to both Defendants (on the statute of limitations issue) and Plaintiffs (on the first-to-file issue). But, the holding relating to the WSLA may prove to be the greatest legacy from the KBR decision, reigning in aggressive whistleblowers and government lawyers who would try to allege a case of “fraud” decades after the conduct occurred, and long after a Defendant is able to defend itself effectively.
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The Fourth Circuit Strengthens the FCA’s Implied Certification Theory in Triple Canopy
Under the “implied certification” theory of liability, a government contractor can violate the False Claims Act (“FCA”) by submitting a mere invoice for payment. The theory is that the invoice’s submission impliedly certifies compliance with contract conditions. If a contractor is not complying with material contract requirements and — despite the contractor’s noncompliance — submits an invoice for payment, then the Government or a relator might argue that the contractor has violated the FCA.
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