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On September 26, a pharmaceutical company agreed to pay $900 million to resolve allegations that it caused false claim submissions to Medicare and Medicaid by paying kickbacks to physicians as part of a scheme to induce them to prescribe the pharmaceutical company’s drugs. The allegations stem from a qui tam lawsuit filed by a former employer of the pharmaceutical company; the government declined to intervene in the lawsuit, which the whistleblower pursued individually. The whistleblower received 29.6% or approximately $266 million from the settlement proceeds, the largest single whistleblower award on record, according to the whistleblower’s attorney. The $900 million settlement is also the largest recovery ever in a declined case. On appeal, the D.C. Circuit acknowledged that “he FCA says nothing at all about how to address indivisible harms or whether joint and several liability is appropriate.” Id. at 813.
The court noted the difficulty of applying the vague “knowledge” standard set forth in the FCA. The court held that “a defendant cannot act ‘knowingly’ if it bases its actions on an objectively reasonable interpretation of the relevant statute when it has not been warned away from that interpretation by authoritative guidance” – an “objective standard” that precludes inquiry into a defendant’s subjective intent. However, shortly after oral argument and in a per curiam order on rehearing en banc, the full Fourth Circuit vacated the panel opinion and affirmed the district court.
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While the government’s suit against Honeywell was ongoing, the government settled with several other parties involved in manufacturing and supplying the vests to the federal government. Honeywell moved for summary judgment on the issue of damages, claiming that any damages assessed against it should be offset based on the settlements with the other parties. Honeywell “maintained the court should apply a pro tanto approach, reducing any common damages Honeywell owed by the amount of the settlements.” Id. at 811. The district court, however, adopted the proportionate share method for calculating damages advocated for by the government, which meant that “Honeywell would still be responsible for its proportionate share of the $35 million” in claimed damages. On December 14, CMS issued a proposed rule which would, among other things, change the standard for what it means for Medicare program participants to “identify” overpayments.
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The term “Inspector General” has the meaning given that term in section 1034 of this title. A prior section 930 was renumbered section 929a of this title and subsequently omitted from the Code. Any other person living in his or her household and related to him or her by blood or marriage. The term “repeated”, with respect to conduct, means two or more occasions of such conduct. 113–291 substituted “unlawful force” for “force”. A prior section 924 was renumbered section 928a of this title.
Hartpence v. Kinetic Concepts, Inc., 44 F. 4th 838 (9th Cir. 2022), the Ninth Circuit confronted the FCA’s scienter requirement. A relator alleged that a wound care medical device manufacturer and its subsidiary falsely certified compliance with Medicare payment rules about the use of the medical devices. Id. at 841, 844–45.
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HHS OIG provides incentives for states to enact false claims statutes in keeping with the federal FCA. HHS OIG approval for a state’s FCA confers an increase of 10 percentage points in that state’s share of any recoveries in cases involving Medicaid. Such approval requires, among other things, that the state FCA in question “contain provisions that are at least as effective in rewarding and facilitatingqui tamactions for false or fraudulent claims” as are the federal FCA’s provisions.
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