False Claims Act Spotlight (1 Of 3): Sub-Regulatory Guidance Subjugated No More In FCA Enforcement Actions

Published date02 September 2021
Subject MatterFood, Drugs, Healthcare, Life Sciences, Coronavirus (COVID-19), Government Measures
Law FirmProskauer Rose LLP
AuthorMr Daniel S. Weinstein

The False Claims Act ("FCA") is a punitive civil statute that acts as the federal government's primary tool for combatting fraud in government health care programs, such as Medicare, Medicaid, and Tricare. In fiscal year 2020 alone, the Department of Justice ("DOJ") obtained more than $2.2 billion in FCA settlements and judgments (not including potential recoveries from pending cases or ongoing negotiations); the largest of these many recoveries came in the health care and pharmaceutical sectors, with several recoveries totaling over $100 million each.

Given the frequency of FCA application in the health care context, and despite this vast body of law and commentary spanning more than a century and a half since the FCA's inception, novel applications and interpretations of the law still arise, especially as the health care industry evolves and new modes of payment and care delivery come to the fore. In 2021, the FCA has once again been the focal point of government attention, with a DOJ memorandum, proposed federal legislation, and recent federal court decisions adding new context and authority to guide future applications of the law.

This post is the first of three covering recent FCA updates, and in it we discuss the re-emergence of federal guidance as a tool in the belt of the DOJ in enforcing the FCA.

FCA in Brief

Among other provisions, the FCA prohibits and penalizes with treble damages any individual or entity that "knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval" or that makes, or causes to be made, false records or statements material to a false claim. 31 U.S.C. 3729 et seq. It is similarly illegal under the FCA to knowingly either retain payments from the federal government that are not properly due to the recipient or to withhold payments owed to the federal government, and for conspiring to do any of the foregoing. Id. Claims under the FCA can be brought by the government or via individual "relators" with independent knowledge of violations via qui tam suits, with relators that prevail in such suits eligible to receive up to 30 percent of the recovery award.

Brand New Restrictions Under Trump

In July 2021, Attorney General Merrick Garland rescinded two memoranda (those issued by former Associate Attorney General Brand and former Attorney General Sessions) by issuing his own memorandum (the "Garland Memo") aimed at restoring the utility of sub-regulatory guidance to aid the DOJ in fulfilling its prosecutorial duties...

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