2014 Mid-Year False Claims Act Update

July 9, 2014

I.          INTRODUCTION

It has been an explosive past six months in matters under the federal False Claims Act (“FCA”), 31 U.S.C. § 3729 et seq., which prohibits the knowing submission of false claims for payment to the government or false statements material to false claims.  In that time period alone, the Department of Justice (“DOJ”) has announced scores of settlements and judgments under the FCA, totaling more than $2 billion.  And 2014’s second half–the time in which the DOJ usually announces its biggest hauls of the year–is yet to come.  As in years past, the sprawl of FCA liability has continued to reach each and every industry that receives or relies on government dollars in any form, from health care to defense work to education to any of the hundreds of other industries where government dollars flow.

In addition to massive government recoveries, 2014 has seen the DOJ placing a “renewed emphasis” on securing nonmonetary remediation as well in resolving FCA matters.[1]  Indeed, Assistant Attorney General Stuart Delery told attendees at the American Bar Association’s 10th National Institute on the Civil False Claims Act and Qui Tam Enforcement:  “We have made it a priority to continue to use the FCA to encourage the adoption of, and consistent adherence to, best practices.”[2]  As a result, the DOJ is increasingly insisting on stringent adherence to expansive and expensive corporate integrity agreements (“CIAs”) as part of FCA settlements.  According to Delery, “[t]he FCA works because it provides powerful incentives for companies to do business the right way.”[3]

Meanwhile, whistleblowers–i.e., qui tam “relators” under the FCA–continue to file lawsuits at record pace, with more qui tam lawsuits filed last year than any year before.  Indeed, 2013 saw 100 more qui tam lawsuits filed than 2012 (itself a record year), and relators–who can keep up to 30% of what they recover on the government’s behalf–collected more than $387 million in share awards.

Legislative activity has kept pace as well.  There have been several important developments in federal legislation and regulation, especially in connection with how the FCA may apply in connection with health care programs.  And the states have been legislating at a fervent pace, updating or enhancing their own “mini FCAs” to align them with the federal statute (and thereby reap the significant rewards the federal government has provided them for doing so).

Last, the courts continue to redefine the FCA’s scope and reach with developing case law.  A number of important decisions relating to the FCA were issued in the first half of 2014, and a contentious circuit split has deepened over what level of pleading is required for a relator or the government to survive an initial attack on a complaint.  The U.S. Supreme Court appeared interested in this issue, seeking the input of the Solicitor General, but ultimately declined to resolve the split.  In the meantime, the U.S. circuit courts continue to hand down divergent opinions on FCA pleading standards, and–just last week–the Supreme Court agreed to consider different issues under the FCA relating to the FCA’s statute of limitations and jurisdictional “first-to-file” bar.

As in years past, this mid-year alert first discusses legislative activity at the federal and state levels relating to the FCA.  Next, we discuss important FCA settlements that have been announced during the first half of this year.  And finally, we discuss important case law developments that have occurred during the last six months.  A collection of Gibson Dunn’s recent publications on the FCA, including more in-depth discussions of the FCA’s framework and operation along with practical guidance to help companies avoid or limit liability under the FCA, may be found on our Website.

II.        LEGISLATIVE ACTIVITY

Like the last half of 2013, the first half of 2014 has seen federal activity amidst a wild flurry of state activity, driven primarily by the 2005 Federal Deficit Reduction Act (“DRA”), 42 U.S.C. § 1396h.  Before turning to the state-law developments, a number of federal proposals warrant attention.

A.        Federal Activity

In our 2013 Mid-Year False Claims Act Update, we reported that the Fairness in Health Care Claims, Guidance, and Investigations Act (H.R. 2931) had been referred by the House Judiciary Committee to the Subcommittee on the Constitution and Civil Justice.  There has been no specific further action on this front, nor on the Centers for Medicare and Medicaid Services’ (“CMS”) proposed rules regarding the Medicare Incentive Reward Program and Medicare overpayments under Parts A and B.  In the last six months, however, CMS has adopted a final rule addressing Medicare overpayments under Parts C and D–discussed in detail below–with profound implications for FCA cases.  In addition, a bill introduced in May 2014 has the potential for arguably expanding the exposure of health care providers under the physician self-referral restrictions in the Social Security Act (commonly known as the Stark Law).

  • Medicare Overpayments for MAOs and PDPs – On January 10, 2014, CMS proposed a rule that, among other things, implemented the Patient Protection and Affordable Care Act (“PPACA”) requirement that Medicare Advantage organizations and Part D sponsors report and return Medicare overpayments within sixty (60) days of identifying them or be subject to liability under the FCA.[4]  The proposed rule, like the 2012 proposed rule for Parts A and B, largely mirrored the PPACA language, but added a “lookback period” that required reporting and repayment of any overpayment identified within six (6) years of when it was received.On May 23, 2014, after receiving public comments, CMS published its final rule.[5]  Significantly, the final rule retains the six-year “lookback period” and departs dramatically from the language of the PPACA and the FCA’s well-established requirement of “actual knowledge,” “reckless disregard,” or “deliberate ignorance.”  Under the rule, a Medicare Advantage organization or Part D sponsor is deemed to have identified an overpayment–and triggered the sixty-day deadline–whenever it “has determined, or should have determined through the exercise of reasonable diligence, that [it] has received an overpayment.”[6]  Relators and the government will argue that this  suggests that a mere failure to act reasonably could trigger potential FCA liability, expanding FCA exposure for Medicare Advantage organizations and Part D sponsors that fail to identify overpayments.  We will keep a close eye on the enforcement of this new rule.
  • Medicaid Physician Self-Referral Act of 2014 – Introduced on May 19, 2014, by Rep. Jim McDermott (D-WA), the Medicaid Physician Self-Referral Act (H.R. 4676) would provide that the Stark Law’s self-referral restrictions also apply to health services covered by Medicaid.[7]  Because Stark Law violations can lead to FCA liability, and because the Stark Law has historically been applied only to Medicare, this legislation could lead to increased FCA exposure for health care providers.  The bill comes on the heels of several recent cases in which the DOJ and relators have alleged FCA violations stemming from claims based on prohibited Medicaid referrals.[8]  A CMS spokesperson recently indicated that CMS believes the Stark Law already applies to claims for designated health services submitted to Medicaid, even though CMS has not published regulations to that effect.[9]  Notably, certain HHS OIG publications echo this expansive view, although the HHS OIG’s Self-Disclosure Protocol (“SDP”)–discussed in our 2013 Mid-Year Update–is not designed for resolution of Medicaid-related claims.  On May 19, 2014, H.R. 4676 was referred to the House Committee on Energy and Commerce and also to the House Committee on Ways and Means.

Meanwhile, Senator Charles Grassley (R-IA), an author of the 1986 update to the federal FCA that included qui tam provisions, announced plans in April 2014 to recruit colleagues in the coming months to join a Senate Whistleblower Protection Caucus and to establish the caucus by the start of the 114th U.S. Congress.[10]

B.        State Activity

As discussed in prior alerts, the 2005 DRA included a financial incentive designed to prompt states to adopt false claims acts “at least as effective” as the federal FCA in combating false or fraudulent Medicaid claims.  The DRA allows states that enact qualifying laws, as determined by HHS OIG, to collect an additional 10% of any federal Medicaid funds recovered through a state action.  After important FCA revisions under the PPACA, the Fraud Enforcement and Recovery Act of 2009, and the Dodd-Frank Wall Street Reform and Consumer Protection Act, OIG provided a two-year grace period for states with false claims acts that OIG had previously approved to continue to receive the incentive.  Our past alerts documented the spike of activity around the expiration of the grace period for a number of states, as they sought to preserve their incentive by achieving compliance with the DRA requirements.  The grace period has now elapsed for all states.

In the 2013 Year-End False Claims Act Update, we noted that several states had passed new false claims laws that were still awaiting HHS OIG determination of DRA compliance.  Since that time, several other states have passed or attempted to pass new or amended laws and OIG has made a number of determinations about DRA compliance.  Those states are listed below:

  • Georgia:  As projected in our 2013 Mid-Year Update, Georgia amended its state false claims act for the second time to bring it in line with the federal FCA.[11]  In May 2014, HHS OIG concluded that the Georgia State False Medicaid Claims Act is compliant with the DRA requirements.[12]
  • Kentucky:  In February 2014, Kentucky state legislators proposed H.B. 335, a bill that would establish a Kentucky False Claims Act that mirrors the general provisions of the federal FCA.[13]  Kentucky’s house committee took no further action on the bill before the end of the legislative session.
  • Maryland:  In February 2014, Maryland state legislators proposed H.B. 867, which, in addition to adopting the general features of the federal FCA would allow the state to recover double its attorneys’ fees and costs, extend the statute of limitations, and authorize stricter penalties for employers who retaliate against a whistleblower.[14]  H.B. 867 passed the House with broad support in March, but Maryland’s Senate rejected the bill in April apparently in response to growing opposition from the Maryland business community.[15]
  • Mississippi:  In January 2014, Mississippi legislators introduced two bills related to false claims.  Both H.B. 58 and H.B. 196 would have enacted the general provisions of the federal FCA, with slightly differing statutes of limitation.[16]  Both died in committee in February 2014.
  • Nevada:  As noted in our 2013 Year-End Update, Nevada recently amended its state false claims act.[17]  In March 2014, HHS OIG determined that the amended Nevada FCA is not compliant with the DRA requirements because its retaliation section, Nev. Rev. Stat. § 257.250, “provides relief in fewer situations than under the Federal False Claims Act.”[18]
  • New York:  As reported in our 2013 Year-End Update, last year the governor of New York signed into law a bill that, among other things, revised and expanded the New York False Claims Act–making it even more expansive than the federal FCA.[19]  In October 2013, New York Attorney General Eric Schneiderman announced proposed changes to the procedural regulations implementing the New York False Claims Act.[20]  Those proposed changes have since been implemented.[21]  In February 2014, HHS OIG determined that both the New York FCA and the accompanying procedural regulations comply with the DRA’s requirements.[22]
  • West Virginia:  In January 2014, West Virginia legislators proposed H.B. 4001, which would have mirrored the federal FCA in most respects, but also would have provided a more generous qui tam provision by relaxing the “public disclosure” bar.[23]  After garnering fierce support and opposition, H.B. 4001 was defeated in February 2014.
  • Wyoming:  As reported in our last alert, Wyoming enacted a law entitled the Wyoming Medicaid False Claims Act.[24]  As of June 2014, HHS OIG has still not announced its determination as to whether the law is in compliance with the DRA requirements.

A few other bills to enact false claims laws or amend existing statutes continue to proceed through state houses across the country.  States with currently pending legislation include Michigan (H.B. 4010) and Pennsylvania (H.B. 1493).  In our 2013 Year-End Update, we also reported pending legislation in Alabama, New Mexico, and South Carolina.  None of those bills passed before the close of the states’ legislative sessions preceding this update.  We also reported that North Dakota had adopted a concurrent resolution to study the use of qui tam actions in other states and to determine whether that approach is “feasible and desirable.”[25]  The state’s interim legislature did not prioritize that study.[26]  Although state legislative activity has slowed somewhat following the expiration of the HHS OIG grace period, we expect to see continued interest in state FCA enactment and enforcement.

III.       NOTEWORTHY SETTLEMENTS AND JUDGMENTS DURING THE FIRST HALF OF 2014

The record run of multi-billion dollar FCA settlements has been well-chronicled in these pages, and the government’s enforcement activity (and resulting resolutions of FCA cases) has continued apace in 2014.  As mentioned above, this year has already seen over $2.06 billion in FCA settlements, putting the government on pace for an incredible fifth straight year with more than $3 billion in recoveries.  Among other large settlements, the government announced more than $1.2 billion in settlements with three large financial service providers related to their mortgage origination and underwriting practices.  The growth in state FCA enforcement activity also continued, as a number of states announced their own individual recoveries.

The DOJ’s “renewed emphasis” on nonmonetary remediation is evident from many of these settlements.  Indeed, AAG Delery recently announced that the government will focus on pressing companies to publicly acknowledge their wrongdoing as part of settlements of FCA and related matters.[27]  This featured in some of the major settlements announced thus far in 2014, as did other nonmonetary measures such as mandatory compliance programs and reporting.  But the government’s core interest clearly remains with monetary recoveries, as numerous settlements in excess of $100 million have already been announced this year.  We discuss these and other notable settlements from the past six months below.

A.        Health Care

Although settlements of health care matters have not made up the majority of the amounts recovered in 2014, they continue to be a key component of the government’s enforcement agenda.  Indeed, dozens of health care matters settled since our last update.

  • On December 20, 2013, a biotechnology company agreed to pay $22.28 million to settle allegations that it fraudulently marketed and caused false claims to be submitted to federal and state health care programs for one of its products.  The government alleged that the company’s sale representatives taught doctors techniques for using their products in ways that had not been approved by the FDA.  This allegedly caused hospitals to submit false claims to federal health care programs that were not reimbursable.  This recovery originated with two qui tam whistleblower lawsuits.[28]
  • On December 27, 2013, a global pharmaceutical and health care company resolved allegations that it paid kickbacks to physicians by agreeing to a $5.475 million settlement with the DOJ.  The government alleged that the company paid kickbacks by offering physicians teaching assignments, speaking engagements, and trips to conferences with the understanding that these physicians would use the company’s products at their respective hospitals.  The government alleges that this conduct violated the Anti-Kickback Statute and, as a result, caused false claims to be submitted for Medicare procedures.[29]
  • On January 9, 2014, a California-based medical technology company agreed to pay $40.1 million to settle allegations that it paid kickbacks to doctors and promoted improper uses for its products.  Allegedly, the company paid as much as $11.6 million in kickbacks to a single doctor to promote the use of the company’s products.  The whistleblower, a former vice president of the company, will receive $3.26 million of the settlement proceeds.[30]
  • On January 17, 2014, a group of nationwide contract therapy providers agreed to pay $30 million to settle claims that they engaged in a kickback scheme for referrals of nursing home business.  The therapy provider allegedly paid six-figure amounts for referrals and allowed referrers to keep a portion of the revenue generated by the referrals.  The case was brought to the government’s attention by a whistleblower who will receive a $5.7 million share of the recovery.[31]
  • On January 29, 2014, an operator of numerous hospitals in Kentucky agreed to pay $16.5 million to settle allegations that it submitted false claims to the Medicare and Kentucky Medicaid programs for medically unnecessary cardiac procedures.  In addition to the allegations that physicians, with the knowledge of the hospital, performed numerous invasive but medically unnecessary cardiac procedures, the government further alleged that the hospital entered into sham management agreements as kickbacks that incentivized doctors to refer more patients to the hospitals.  Those physicians reportedly are under further investigation.  The company was required to enter into a CIA as part of the settlement.  The case began with qui tam suits by three cardiologists, who will receive $2.46 million of the settlement funds.[32]
  • On February 10, 2014, a chain of addiction clinics, a clinical laboratory, and their owners agreed to pay $15.75 million to resolve allegations that they submitted false claims to Medicare and Kentucky’s Medicaid program.  Allegedly, the clinics referred patients to the clinical laboratory for tests that were either medically unnecessary or more expensive than those that were necessary.  The government also alleged violations of the Stark Law, which forbids a laboratory from billing Medicare and Medicaid for services referred by physicians having a financial relationship with the laboratory.[33]
  • On February 19, 2014, a Washington-based medical device manufacturer agreed to pay $5.25 million to resolve allegations that it caused health care providers to improperly bill procedures using its devices so as to receive higher reimbursements.  The government further alleges that the company paid illegal kickbacks to physicians in the form of payments for participation in seminars and co-marketing agreements, violating the Anti-Kickback Statute.  The company also agreed to enter into a CIA as part of the settlement.  A former employee of the company who brought the qui tam suit will receive $945,000.[34]
  • On February 21, 2014, a national pharmaceutical company and its subsidiary agreed to pay $192.7 million to resolve criminal and civil allegations related to off-label promotion of certain drugs.  Of that amount, $171.9 million was devoted to civil false claims settlements with the federal government and individual states, with an additional $20.8 million in criminal forfeiture.  The company allegedly misbranded one of its products by instructing sales representatives how to encourage the use of the product for treatments not approved by the FDA.  As part of the settlement, the company admitted that it intended its product to be used for unapproved indications.  The company also agreed to implement enhanced compliance measures (e.g., publicizing the results of certain clinical trials and providing an annual review of compliance efforts by the CEO of its parent company).  Finally, the subsidiary entered into a CIA which requires internal risk assessment and mitigation as well as internal and external reviews of its promotional practices, compliance certifications by key executives and individual board members, and reporting of information about financial arrangements with physicians.  The settlement also resolved suits brought by three whistleblowers.[35]
  • On February 25, 2014, a group that operates a chain of diagnostic imaging facilities agreed to pay $15.5 million to resolve allegations that it paid kickbacks to physicians and submitted false claims to Medicare and the New Jersey and New York Medicaid programs.  The group allegedly required medically unnecessary tests to be performed by bundling tests together on the facilities’ order forms.  Personnel of the group also allegedly paid kickbacks for referrals of diagnostic tests.  The three whistleblowers in the case will receive a total of $2.9 million.[36]
  • On March 11, 2014, a Florida-based hospital system agreed to pay $85 million to resolve allegations that it violated the Stark Law by billing Medicare for services referred to the hospital by physicians with a financial relationship with the hospital.  In 2013, the U.S. District Court for the Middle District of Florida ruled that the hospital system’s contracts with certain oncologists violated the Stark Law and the case settled shortly thereafter.  The hospital was required to enter into a CIA which requires substantial compliance reform as well as independent review of its federal health care programs for the next five years.  The relator will receive $20.8 million.[37]
  • On March 11, 2014, a major pharmaceutical manufacturer and its subsidiary agreed to pay $27.6 million to settle allegations that the companies made improper payments to an Illinois physician to prescribe one of their drugs.  The physician allegedly had received numerous payments and other benefits and soon became the largest prescriber of the drug in the United States, submitting thousands of false claims to Medicare and Medicaid.[38]
  • On March 13, 2014, an Ohio hospital agreed to pay $8.5 million to settle claims that, in its dealings with two physicians, it violated the FCA, Anti-Kickback Statute, and Stark Law.  The government alleged certain physicians made improper referrals to the hospital in exchange for the hospital repurchasing intraocular lenses from the physicians at inflated prices.[39]
  • On April 16, 2014, a national pharmaceutical company paid $7.3 million to resolve claims that it marketed and promoted one of its drugs for pediatric use, when only adult use was medically accepted.  The allegations were brought in a suit by a former sales representative who will receive $708,852 of the settlement proceeds.[40]
  • On April 16, 2014, a nationwide provider of substance abuse and mental health treatment services agreed to pay $9.25 million to settle allegations that the company charged Medicare and Tennessee Medicaid for treatments that either were not provided or were improperly provided by unlicensed therapists.  The relator will receive a $1.5 million share of the government’s recovery.[41]
  • On April 23, 2014, one of the nation’s largest providers of home health services agreed to pay $150 million to settle claims that some offices of the company billed Medicare for ineligible patients and services.  The violations allegedly occurred because of pressure from management to focus on the financial health of the company rather than the needs of the patients.  The settlement also resolves allegations that the company violated the Anti-Kickback Statute and the Stark Law by maintaining improper financial relationships with referring physicians.  The company entered into a CIA requiring additional compliance measures to avoid or detect and remediate similar conduct.  The settlement resolves seven pending qui tam suits by relators who will split $26 million of the settlement funds.[42]
  • On May 28, 2014, a Kentucky-based hospital agreed to pay $40.9 million to settle allegations that physicians working for the hospital falsified medical records to justify medically unnecessary coronary stents and diagnostic catheterizations.  The government further alleged that the hospital violated the Stark Law by paying certain cardiologists salaries that exceeded fair market value.  The hospital agreed to enter into a CIA requiring internal compliance measures and third-party review of federal health care programs for five years.[43]
  • On May 28, 2014, a Minnesota-based medical device company agreed to pay $9.9 million to resolve claims that the company used multiple types of kickbacks to induce physicians to use its pacemakers and defibrillators.  The company allegedly paid physicians to speak at events and provided free business plans and tickets to sporting events.  The former employee who brought the qui tam suit will receive $1.73 million from the settlement.[44]
  • On June 12, 2014, a Florida-based hospital group agreed to pay $26 million to settle allegations that six of its hospitals had submitted inpatient claims for services only billable as outpatient services.  The company became aware of the claims through audits commissioned by its own corporate compliance department in 2006 and 2007.  In 2008, the auditing company filed the qui tam suit that led to this settlement.[45]
  • On June 25, 2014, a national provider of pharmaceuticals and pharmacy services to nursing homes agreed to pay $124.24 million to resolve allegations that it offered improper financial incentives to skilled nursing facilities in exchange for contracts to be the supplier of the facilities’ pharmaceutical needs.  Specifically, the company allegedly agreed to below-cost contracts for provision of pharmaceutical supplies to induce skilled nursing facilities to select the company as their supplier.  The settlement resolves two qui tam suits, and the first-in-time relator, a former employee of the company, will receive a $17.24 million share of the recovery.[46]

B.        Procurement and Defense

Notable settlements from matters involving the government’s procurement activities include the following:

  • On January 9, 2014, two related Michigan-based construction companies agreed to pay $3.8 million to resolve allegations that they falsely claimed Disadvantaged Business Enterprise (“DBE”) credits on federally funded transportation projects.  Certain federally funded contracts require companies to make good-faith attempts to use DBE subcontractors.  Allegedly, the two companies used a third pass-through company that did not actually perform any function to meet the DBE requirement.[47]
  • On January 23, 2014, the government announced a nuclear energy corporation had agreed to pay $2.7 million to settle allegations that the company submitted false statements to the Nuclear Regulatory Commission (“NRC”).  The company allegedly falsely represented or concealed known flaws in its steam dryer analysis submitted to the NRC.  The allegations arose from a whistleblower action initiated by a former employee of the company.[48]
  • On February 7, 2014, a mapping company agreed to pay $2.1 million to resolve allegations that it submitted false claims to the Army Corps of Engineers for military and civilian mapping work done around the world.  The company allegedly used unapproved subcontractors to complete projects when all work was supposed to be completed in-house.  The government further alleged that the company charged unrelated work to the government.  The allegations arose when a former employee of the company initiated a qui tam suit.[49]
  • On February 12, 2014, a defense contractor agreed to pay $3.2 million to resolve allegations that it submitted false labor charges for work done to re-design and build from scratch a new Afghan Defense Sector.  The government alleged that the company billed for work done by employees who were actually on leave at the time.  The allegations were originally brought in a whistleblower suit filed by a former financial officer of the company who will receive $576,000 as his part of the settlement proceeds.[50]
  • On February 18, 2014, an information technology, systems engineering, program management, and consulting firm agreed to pay $6.5 million to settle allegations that it inflated claims for payment under Navy contracts.  The government alleged that the firm inflated indirect costs (overhead costs not directly attributable to the contract) and claimed costs that it never incurred.  The whistleblower who brought the suit will receive a $1.28 million share of the settlement amount.[51]
  • On March 7, 2014, two shipping companies agreed to pay $3.4 million to resolve allegations that the companies communicated confidential bidding information to obtain preferential rates on particular routes for government contracts, leading to the submission of false claims.  The companies both pleaded guilty in related suits under the Sherman Act.[52]
  • On May 1, 2014, a construction company agreed to pay $12 million to settle allegations that it fraudulently used businesses owned by women to secure government contracts with DBE requirements.  The government alleges that the businesses did not meet the legal requirement for a DBE subcontractor and submitted false claims to the state when those businesses did not complete the level of work required by law.  The allegations originated in a qui tam suit filed by a former employee.[53]

C.        Financial

The three largest monetary settlements of the last six months resulted from cases involving allegations of faulty mortgage origination and underwriting related to government insurance programs:

  • On February 4, 2014, a national bank agreed to pay $614 million to resolve claims it violated the FCA by originating and underwriting non-compliant mortgage loans submitted for insurance coverage and guarantees by the Department of Housing and Urban Development’s Federal Housing Administration (“FHA”) and the Department of Veteran Affairs (“VA”).  The settlement also required the bank to admit that it approved thousands of FHA loans and hundreds of VA loans that were not eligible for insurance because they did not meet agency requirements.  Further, the bank had to admit that it failed to inform the agencies when it discovered, through its own internal reviews, that defective loans had been submitted to the agencies.  Finally, the bank must implement new and tighter controls on its underwriting system.  The settlement resolves complaints that were initially brought by a whistleblower.[54]
  • On June 17, 2014, another national bank agreed to pay $968 million to settle various allegations relating to improper mortgage origination and service practices with the DOJ, 49 state attorneys general, and the District of Columbia’s attorney general.  Of the total recovery, $418 million was tied to allegations that the bank originated and underwrote loans in violation of its obligations to the FHA.  As part of the settlement, the bank admitted wrongdoing related to the mortgages as well as its knowledge of the wrongdoing and failure to report the misconduct.  The agreement also requires changes in oversight related to the bank’s mortgage and foreclosure practices.  An independent monitor will oversee compliance with the agreement and will have the power to impose fines of as much as $1 million for violations of the settlement’s terms.[55]
  • On June 30, 2014, the third national bank in just five months agreed to pay $200 million to resolve allegations it violated the False Claims Act by knowingly originating and underwriting FHA-insured loans that did not meet the government’s requirements.  Specifically, the Department of Justice alleged that the bank, an FHA direct endorsement lender (“DEL”), failed to maintain a sufficient quality control program to identify deficiencies in many loans it certified for FHA insurance and did not report those deficiencies or take corrective action after the fact.  As part of the settlement, the bank admitted that this conduct caused FHA to insure thousands of loans that were ineligible for government insurance.[56]

D.        State Settlements

As more states adopt new false claims laws or expand existing ones, individual states’ FCA enforcement activities have grown steadily alongside their involvement in national FCA investigations and resolutions.  The first six months of 2014 were no exception to that phenomenon, as a number of states touted recoveries they obtained in FCA cases:

  • On January 7, 2014, a pharmaceutical manufacturer agreed to pay $25 million to the State of Texas and the federal government to resolve Medicaid fraud allegations.  State law requires drug manufacturers to report the prices that they charge to distributors of their products as part of the calculation for Medicaid reimbursements.  The company allegedly misreported the costs of various generic drugs causing the state to reimburse them at inflated rates.[57]
  • On February 27, 2014, an oil company agreed to pay the Commonwealth of Massachusetts $4 million to settle allegations that it received reimbursements from the state on false claims related to environmental cleanup projects.  The government alleged that the company sought reimbursement for the cleanups despite having sought and received payments for the same cleanups by its insurers.  Massachusetts has recovered a total of $8 million from different oil companies for similar allegations of false reimbursement claims in recent years.[58]
  • On March 14, 2014, a medical imaging company and its parent company agreed to pay New York State $6.2 million to settle claims that the companies knowingly evaded New York State and City taxes.  (New York’s False Claims Act is the only false claims act in the nation to cover tax fraud.)  A whistleblower, who filed the complaint under the qui tam provision of New York’s False Claims Act, will receive $1.1 million from the settlement.[59]
  • On March 21, 2014, a San Antonio-based grocery chain agreed to pay the State of Texas and the federal government $12 million to settle allegations that it submitted inflated prices for drug prescriptions through its pharmacy.  The chain offered a 30-day supply of hundreds of common drugs for $5 but failed to charge this same rate to the Texas Medicaid program.  The whistleblowers in the case were three pharmacists from neighboring states who filled prescriptions for customers of the chain but were not themselves employees of the chain.[60]
  • On April 29, 2014, a hospital group agreed to pay $7 million to the State of Florida and the federal government to settle allegations that it negotiated above-market compensation agreements with certain physicians and provided inappropriate productivity bonuses in violation of the Stark Law.  The federal government declined to intervene in the case but did file a Statement of Interest arguing that the Stark Law is applicable to both Medicaid and Medicare payments.[61]
  • On May 7, 2014, one of the nation’s largest office supply companies agreed to pay New York State $475,000 to settle allegations that it had overcharged more than 500 government entities for office supplies.  The settlement represents a 100% return of the allegedly overcharged amount, and a new office supply contract was awarded to a different company.[62]

IV.       CASE LAW DEVELOPMENTS

The first six months of 2014 also saw several interesting case law developments.  Perhaps most notable was the Supreme Court opting not to resolve the growing circuit split over proper pleading standards in FCA cases, but later deciding to consider specific issues under the FCA relating to the first-to-file bar and statute of limitations.  A discussion of the most important case law developments follows below.

A.        Despite Growing Disagreement among the Circuits, the Supreme Court Declines to Address the Application of Rule 9(b) to FCA Cases

Federal Rule of Civil Procedure 9(b) imposes a heightened burden on plaintiffs attempting to plead claims of “fraud.”  Specifically, Rule 9(b) provides that a “party must state with particularity the circumstances constituting fraud,” as opposed to the more general pleading rule that applies in most cases.  (Emphasis added).  Courts universally have recognized that Rule 9(b) applies in FCA cases because they sound in “fraud.”  See, e.g., United States ex rel. Clausen v. Lab. Corp. of Am., Inc., 125 F.3d 899, 903 (5th Cir. 1997).  What is unclear, however, is exactly what burden Rule 9(b) imposes; in other words, what must a plaintiff plead to satisfy Rule 9(b)’s “particularity” requirement in FCA cases?

On one side of the circuit split on this issue are the Fourth, Sixth, Eighth, and Eleventh Circuits, which have concluded that Rule 9(b) requires the plaintiff (whether the government or a relator) to plead facts showing that “specific false claims actually were presented to the government for payment.”  United States ex rel. Nathan v. Takeda Pharm., 707 F.3d 451, 457 (4th Cir. 2013) (emphasis added), cert. denied, 81 U.S.L.W. 3650 (U.S. Mar. 31, 2014) (No. 12-1349); see also United States ex rel. Bledsoe v. Cmty. Health Sys., Inc., 501 F.3d 493, 504 (6th Cir. 2007); United States ex rel. Joshi v. St. Luke’s Hospital, Inc., 441 F.3d 552, 560 (8th Cir. 2005).  Courts imposing this standard often require the plaintiff to identify at least some specific false claims in the complaint and state that a complaint should be dismissed where the alleged conduct “could have led, but need not necessarily have led, to the submission of false claims . . . .”  Nathan, 707 F.3d at 457 (emphasis in original).

On the other side of the split are the First, Fifth, Seventh, and Ninth Circuits, which have generally applied a more plaintiff-friendly standard, merely requiring a complaint to include “details of a scheme to submit false claims paired with reliable indicia that lead to a strong inference that claims were actually submitted.”  United States ex rel. Grubbs v. Kanneganti, 565 F.3d 180, 192 (5th Cir. 2009) (emphasis added); see also Ebeid v. Lungwitz, 616 F.3d 993, 998-99 (9th Cir. 2010) (same); United States ex rel. Duxbury v. Ortho Biotech Prods., LP, 579 F.3d 13, 30 (1st Cir. 2009), cert. denied, 130 S. Ct. 3454 (2010); United States ex rel. Lusby v. Rolls-Royce Corp., 570 F.3d 849, 854 (7th Cir. 2009).  Courts applying this standard generally do not require plaintiffs to plead specific examples of false claims; rather, a fraudulent scheme along with “reliable indicia” that claims were submitted is enough.

While there is a clear circuit split over this issue, individual circuits themselves are also in flux as to the standard they will impose.  For instance, the First Circuit recently seemed to apply the stricter approach, see United States ex rel. Ge v. Takeda Pharm. Co. Ltd., 737 F.3d 116, 124 (1st Cir. 2013), despite earlier indications.  Around the same time, the Eighth Circuit adopted the lower standard, see United States ex rel. Simpson v. Bayer Healthcare, 732 F.3d 869, 876-77 (8th Cir. 2013), at least for a subset of FCA cases.  And in the recent case of United States ex rel. Dunn v. North Memorial Health Care, 739 F.3d 417 (8th Cir. 2014), the Eighth Circuit further suggested that it will apply the lower standard only in certain cases:  those in which the government or relator alleges fraud in the inducement of a contract (thereby making all claims submitted under the contract allegedly fraudulent).  The Eighth Circuit indicated that in other types of FCA cases, where a plaintiff alleges false claims for payment, “[the plaintiff] must provide some representative examples of [the defendant’s] fraudulent conduct” under Rule 9(b).  Id. at 420 (emphasis added).    

Joining the fray in the last six months was the Third Circuit, which staked its position by siding with the looser standard.  See United States ex rel. Foglia v. Renal Ventures Mgmt., LLC, No. 12-4050, 2014 U.S. App. LEXIS 10549 (3d Cir. June 6, 2014); see also United States ex rel. Foglia v. Renal Ventures Mgmt., LLC, No. 12-4050, 2014 U.S. App. LEXIS 10726 (3d Cir. June 10, 2014) (notice of amended opinion).  In Foglia, the trial judge dismissed the relator’s claims for failure to “identify representative examples of specific false claims . . . .”  Foglia v. Renal Ventures Mgmt., No. 1-09-cv-01552, 2012 U.S. Dist. LEXIS 139160 (D.N.J. Sept. 26, 2012).  The Third Circuit reversed, pointing to “details of a scheme to submit false claims paired with reliable indicia that lead to a strong inference that claims were actually submitted.”  Foglia, 2014 U.S. App. at *11 (quoting Kanneganti, 565 F.3d at 190).

The Supreme Court had the opportunity to resolve this split earlier this year–and looked primed to do so.  Indeed, the Court asked for the input of the Solicitor General on whether to grant certiorari on this issue in the Fourth Circuit case of United States ex rel. Nathan v. Takeda Pharm., 707 F.3d 451 (4th Cir. 2013).  In its brief, the government wholeheartedly embraced the lower standard for Rule 9(b):  “Several courts of appeals have correctly held that a qui tam complaint satisfies Rule 9(b) if it contains detailed allegations supporting a plausible inference that false claims were submitted . . . even if the complaint does not identify specific requests for payment.”  Brief for the United States as Amicus Curiae at 10, Nathan, 81 U.S.L.W. 3650 (U.S. Feb. 25, 2014) (No. 12-1349).  Yet, instead of confronting this issue, the Supreme Court denied certiorari, see 81 U.S.L.W. 3650 (U.S. Mar. 31, 2014) (No. 12-1349), and the circuit split remains.

B.        Three Courts of Appeals Reach Defense-Friendly Decisions on the Scope of FCA Liability

We have written in these pages about the ever-expanding scope of FCA liability since the 1986 amendments.  In many cases, the reach of the law seemingly expanded from traditional false claims for payment (i.e., false invoices) to regulatory compliance in government programs.  Nowhere has this been more evident than in the development of the “false certification” theory of liability, under which the government and relators argue that a defendant can be liable under the FCA if the defendant, in submitting claims for payment to the government under a government program, either expressly or impliedly falsely certified compliance with laws or rules relating to that program.  In general, courts have been receptive to this argument, albeit with limitations, and the theory has caused the FCA to cover more territory than ever before.

A recent decision from the Fourth Circuit, United States ex rel. Rostholder v. Omnicare, Inc., 745 F.3d 694, 700 (4th Cir. 2014), however, reinforces a well-needed curb on these types of claims.  In that case, a relator sued Omnicare for allegedly selling drugs to government programs while in violation of various rules and regulations prohibiting the cross-contamination of penicillin and non-penicillin drugs.  Id. at 697.  The relator argued that this contamination “adulterated” the drugs under the Food, Drug, and Cosmetic Act and that the defendant therefore committed “fraud” by selling those drugs and then receiving reimbursement from government programs.  The Fourth Circuit rejected this argument, holding that the alleged misconduct was not actionable under the FCA because compliance with the applicable Food and Drug Administration (“FDA”) safety regulations is not an explicit “prerequisite to gaining a [government] benefit.”  Id. at 702.  Further, “[t]o qualify as a ‘covered outpatient drug’ as defined in the Medicare and Medicaid statutes [and as necessary to be reimbursable], a drug merely must be approved by the FDA,” and the drug at issue was approved.  Id. at 701 (emphasis in original).  As the Fourth Circuit recognized:  “Were we to accept relator’s theory of liability based merely on a regulatory violation, we would sanction use of the FCA as a sweeping mechanism to promote regulatory compliance, rather than a set of statutes aimed at protecting the financial resources of the government from the consequences of fraudulent conduct.”  Id. at 702.  Indeed, “[w]hen an agency has broad powers to enforce its own regulations, as the FDA does . . . , allowing FCA liability based on regulatory non-compliance could short-circuit the very remedial process the Government has established to address non-compliance . . . .”  Id. (internal quotation marks omitted).

Rostholder makes clear that a regulatory violation cannot provide the basis for an FCA action on its own; rather, a violation of a regulation or law is only actionable under the FCA if payment is expressly conditioned on compliance with that regulation or law.  This concept, which other circuits have recognized over the years as well, is critical for defendants responding to so-called “false certification” claims.

Along similar lines, the Fifth Circuit also recently reiterated the limits that exist over false certification claims.  In United States ex rel. Spicer v. Westbrook, 751 F.3d 354 (5th Cir. 2014), the government sued a military contractor that built combat vehicles pursuant to government contracts.  The government claimed the contractor cut corners on costs and, by nevertheless delivering the end product, falsely certified compliance with a term of the contract that “imposed a duty . . . to inspect the [vehicles] to ensure compliance with the . . . requirements of the contract.”  Id. at 366.  The Fifth Circuit rejected this argument, concluding that the government had not identified a potentially materially false statement.  “Even assuming arguendo that [the defendant] did falsely certify compliance with the . . . system by delivering the [vehicles], [the plaintiff] d[id] not allege . . . that such certification was a prerequisite to receiving payment under the contract.”  Id.

Finally, the Third Circuit also recently handed down a notable decision on the FCA’s application to allegations of regulatory violations.  In United States ex rel. Arnold v. CMC Engineering, No. 13-2759, 2014 U.S. App. LEXIS 10150 (3d Cir. June 2, 2014), the relator alleged that during highway construction, his boss paid an excessive rate to inspectors in violation of federal contracts.  Id. at *1.  According to the relator, his boss “knowingly request[ed] payment at certain rates for certain inspectors it knew did not meet credentialing requirements.”  Id. at *10.  (Internal quotation marks omitted.)  In response, the defendant argued that it had relied upon a provision that permitted qualification by “any equivalent combination of experience and/or training which provides the required knowledge, skills, and abilities.”  Id. at *11.  The Third Circuit concluded that “[a]s a result of [this] ambiguity” in the regulatory language, there was no evidence from which a jury could find that the defendant “knowingly” overpaid.  Id. at *13.  Indeed, “the contracts themselves are ambiguous concerning the credentials required for particular positions that justify particular pay rates.”  Id. at *11.  Because reasonable people might differ on the “combination of experience and/or training” that would warrant a particular grade, the relator did not adequately allege that defendant “knowingly” overpaid.  This case provides another important defense for FCA defendants sued for alleged violations of vague or ambiguous regulations that they have relied upon and attempted to meet in good faith.

C.        D.C., First, and Fifth Circuits Endorse Liberal Application of the First-to-File Bar, and the Supreme Court Decides to Weigh in on the Issue as well as on the Statute of Limitations

The first-to-file bar is the source of one of the most important defenses for defendants sued under the FCA.  That statutory bar states, “[w]hen a person brings an action under [the qui tam provisions of the FCA], no person other than the Government may intervene or bring a related action based on the facts underlying the pending action.”  31 U.S.C. § 3730(b)(5).  In essence, the first-to-file bar provides that once a qui tam lawsuit has been filed, all qui tam lawsuits that are filed in that action afterward are barred.  The idea behind this rule is simple:  after the government has been notified of allegations by one qui tam action, no further actions are needed to protect the government’s interests and alert the government to the fraud or related frauds.  As with the application of Rule 9(b), however, the exact application of the first-to-file bar has been contested.

One of the key questions that has developed–and one that has gained attention recently–is whether an earlier-filed qui tam action can have preclusive effect even if it had been dismissed before the latter case was filed.  Relators who have filed latter cases, in an attempt to avoid dismissal, often rely on the phrase “pending action” in the statute.  To relators, this language means that the earlier action must be “active” or “pending” at the time the latter action is filed to have preclusive effect.  Defendants, on the other hand, have asserted that “pending action” merely refers to the first-filed action and that only giving preclusive effect to active cases would be inconsistent with the purposes of the first-to-file bar.

Earlier this year, the D.C. Circuit addressed this issue and decided in defendants’ favor.  United States ex rel. Shea v. Cellco P’ship, 748 F.3d 338 (D.C. Cir. 2014).  The Shea court squarely held that the first-to-file rule bars new suits “even if the initial action is no longer pending.”  Id. at 343–44.  To reach this conclusion, the court determined that, in context, the phrase “pending action” is “shorthand for first filed action,” not something akin to “still active action.”  Id. at 343.  This places the D.C. Circuit in arguable conflict with courts from the Fourth, Seventh, and Tenth Circuits, which have arguably indicated in dicta that the earlier-filed action must be active at the time the latter action is filed for it to have preclusive effect.  United States ex rel. Carter v. Halliburton Co., 710 F.3d 171, 183 (4th Cir. 2013) (“[O]nce a case is no longer pending the first-to-file bar does not stop a relator from filing a related case.”); United States ex rel. Chovanec v. Apria Healthcare Grp., Inc., 606 F.3d 361, 365 (7th Cir. 2010) (“As we explained . . . , § 3730(b)(5) applies only while the initial complaint is ‘pending'”); In re Natural Gas Royalties Qui Tam Litig., 566 F.3d 956, 964 (10th Cir. 2009) (“[Section] 3730(b)(5) applies only when another qui tam action is ‘pending’ . . . .”).

On July 1, 2014, the Supreme Court announced that it would take up this very issue, when it granted the petition for writ of certiorari in the Fourth Circuit’s Carter case.  Specifically, there, the Court certified the question (as framed by the petitioner) of “Whether . . . the False Claims Act’s so-called ‘first-to-file’ bar . . . functions as a ‘one-case-at-a time’ rule allowing an infinite series of duplicative claims so long as no prior claim is pending at the time of filing.”  See Brief for Petitioner at I, Carter, 82 U.S.L.W. 3010 (June 24, 2013) (No. 12-1497).  The Court likewise agreed to consider the other, very important issue raised in Carter:  “Whether the Wartime Suspension of Limitations Act–a criminal code provision that tolls the statute of limitations for ‘any offense’ involving fraud against the government ‘[w]hen the United States is at war’ . . . applies to claims of civil fraud brought by private relators [under the FCA], and is triggered without a formal declaration of war, in a manner that leads to indefinite tolling.”  Id.  This will be a closely watched issue for government contractors and many other recipients of federal funds because, as we highlighted in our 2013 Year-End Update, some courts have begun to apply the WSLA expansively to civil FCA cases having nothing to do with the government’s military engagements.  The Court’s review of this issue hopefully will provide clarity for those who face the uncertainty of a potentially indefinite suspension of the statute of limitations.  We will, of course, keep an eye on the Supreme Court’s review of Carter.

Finally, in addition to Shea, other courts of appeals also have issued important decisions on the first-to-file bar and, particularly, how much detail must be included in an earlier case to bar a latter case.  In United States ex rel. Johnson v. Planned Parenthood of Houston and Southeast Texas, Inc., No. 13-20206, 2014 U.S. App. LEXIS 10604 (5th Cir. June 4, 2014), for instance, the Fifth Circuit was faced with a claim by a relator who alleged that her former employer falsely billed the Texas Women’s Health Program (“TWHP”), a Medicaid waiver program, for unperformed laboratory tests and non-reimbursable services and procedures.  Id. at *1–3.  The defendant argued that the relator’s suit was barred by an earlier qui tam case, even though the earlier relator had not mentioned the TWHP at all (or any other specific Medicaid programs) and had instead focused on improperly coded billing (not billing for unperformed tests).  Id. at *3–4.  The Fifth Circuit nevertheless concluded that the second relator’s case was barred under the first-to-file rule:  “The focus is on whether an investigation into the first claim would uncover the same fraudulent activity alleged in the second claim.”  Id. at *6.  According to the Fifth Circuit, the first-to-file rule should be construed broadly enough to ensure that the second relator supplies the government with “genuinely valuable information”; if the second relator does not, the case should be dismissed.  Id. at *5–6.

Similarly, in United States ex rel. Wilson v. Bristol-Myers Squibb, Inc., 750 F. 3d 111 (1st Cir. 2014), a former pharmaceutical sales representative accused his former company of off-label promotion of two medications.  Id. at 113.  An earlier relator had filed a case alleging improper promotion of those drugs, but did not allege the same off-label uses.  Id. at 114.  Nonetheless, the First Circuit ruled that the first-to-file bar applied:  “Under the essential facts standard . . . the first-to-file rule still bars a later claim even if that claim incorporates somewhat different details.”  Id. at 118.  The First Circuit reasoned that after the government learns the “the essential facts of a fraudulent scheme, it has enough information to discover related frauds.”  Id. (internal quotation marks omitted) (citations omitted).

The recent decisions in Shea, Johnson, and Wilson (and potentially the Supreme Court’s review in Carter) present important clarification for defendants with potential first-to-file arguments in FCA cases.  As these cases show, the first-to-file bar is concerned primarily with putting the government on notice of allegations of fraud so those allegations can be investigated, and courts are taking an increasingly expansive view of what satisfies that goal and triggers the statutory bar.  We hope the Supreme Court does the same.

D.        Administrative Time Periods Do Not Trump the FCA

As indicated above, FCA lawsuits increasingly arise out of transactions in highly regulated industries, each with their own complicated rules and procedures.  The question then is, if those rules or procedures conflict with general FCA litigation rules, what wins?  On February 5, 2014, the Second Circuit found that at least when it comes to specific time periods for contesting claims, the administrative rules do not trump general FCA rules.

In United States ex rel. Grupp v. DHL Express (USA), Inc., 742 F.3d 51 (2nd Cir. 2014), the relator accused DHL of inflating its remuneration under contracts with federal agencies by including a standard fuel surcharge on all of its deliveries, even if fuel was not spent.  Id. at 52–53.  DHL claimed that the lawsuit should not be allowed to proceed because Title 49 states that “[a] shipper must contest the original bill . . . within 180 days of receipt of the bill in order to have the right to contest [improper] charges.”  Id. at 53 (quoting 49 U.S.C. § 13710(a)(3)(B)).  Because the lawsuit was filed more than 180 days after receipt of the bill, DHL argued that relator’s claims were barred.

The Second Circuit disagreed, concluding that the requirement to contest charges within 180 days is inapplicable to complaints under the FCA, as such a restriction “would undermine both the FCA’s seal provisions and statute of limitations.”  Id. at 54.  Emphasizing the importance of the tolling provisions under the FCA, the court quoted the legislative history of the 1986 FCA amendments:  “[F]raud is, by nature, deceptive [and] such tolling . . . is necessary to ensure the Government’s rights are not lost through a wrongdoer’s successful deception.”  Id. (quoting S. Rep. No. 99-345, at 15 (1986), reprinted in 1986 U.S.C.C.A.N. 5266, 5280).

This case is yet another example of courts finding that FCA claims are immune from many arguments that might otherwise counter administrative or other claims.

V.        CONCLUSION

The first half of 2014 was very active, and we anticipate that the second half of 2014 will be even more so when it comes to legislative, enforcement, and case law developments relating to the FCA.  We will of course continue to monitor these developments, and you can look forward to a comprehensive summary in our 2014 Year-End FCA Alert, which we will publish early in January 2015.

[1]   Erica Teichert, DOJ Placing ‘Renewed Emphasis’ On FCA Compliance Fixes, Law360 (June 5, 2014), last accessed at http://www.law360.com/governmentcontracts/articles/545244?nl_pk=f39d1d7e-5067-4377-909c-58b0fd672114&utm_source=newsletter&utm_medium=email&utm_campaign=governmentcontracts (quoting Assistant General Stuart Delery’s comments at the American Bar Association’s 10th National Institute on the Civil False Claims Act and Qui Tam Enforcement).

[2]   Id.

[3]   Id.

[4]   Medicare Program; Contract Year 2015 Policy and Technical Changes to the Medicare Advantage and the Medicare Prescription Drug Benefit Programs, 79 Fed. Reg. 1918 (proposed Jan. 10, 2014), available at http://www.gpo.gov/fdsys/pkg/FR-2014-01-10/pdf/2013-31497.pdf.

[5]   Id. at 79 Fed. Reg. 29,844, at 29,958, 29,963 (May 23, 2014) (to be codified at 42 C.F.R. pts. 422 and 423), available at http://www.gpo.gov/fdsys/pkg/FR-2014-01-10/pdf/2013-31497.pdf.

[6]   Id. (emphasis added).

[7]   Medicaid Physician Self-Referral Act of 2014, H.R. 4676, 113th Cong. (2014).

[8]   See, e.g., U.S. ex rel. Baklid-Kunz v. Halifax Hospital Med. Center and Halifax Staffing, Inc., No. 6:09-cv-1002-Orl-31DAB, 2012 WL 921147, at *3­­–4 (M.D. Fla. Mar. 19, 2012).

[9]   See Joe Carlson, Stark Threat on Medicaid, Modern Healthcare, Aug. 12, 2013, at 10, available at http://www.modernhealthcare.com/article/20130810/MAGAZINE/308109971.

[10] See Press Release, Office of Sen. Charles Grassley, Grassley Announces Plan to Create Senate Whistleblower Caucus (Apr. 10, 2014), available at http://www.grassley.senate.gov/news/news-releases/grassley-announces-plan-create-senate-whistleblower-caucus.

[11] 2014 Ga. Laws Act 482, amending the Georgia False Medicaid Claims Act, Ga. Code Ann. §§ 49-4-168.1 to -168.2 (West, Westlaw through 2014 Reg. Sess.).

[12] See Letter from Daniel R. Levinson, Inspector Gen., U.S. Dep’t of Health & Human Servs., to Samuel S. Olens, Att’y Gen. of Ga. (May 22, 2014), available at http://oig.hhs.gov/fraud/docs/falseclaimsact/Georgia.pdf.

[13] H.B. 335, 2014 Gen. Assemb., Reg. Sess. (Ky. 2014).

[14] H.B. 867, 2014 Gen. Assemb., Reg. Sess. (Md. 2014).

[15] See Steve Lash, Expanded Whistleblower Law Dies in Senate, Maryland Daily Record, April 7, 2014, http://thedailyrecord.com/2014/04/07/expanded-whistleblower-law-dies-in-senate.

[16] H.B. 196, 2014 Leg., Reg. Sess. (Miss. 2014); H.B. 58, 2014 Leg., Reg. Sess. (Miss. 2014).

[17] 2013 Nev. Laws Ch. 245, amending the Nevada False Claims Act, Nev. Rev. Stat. Ann. §§ 357.010–.250 (West, Westlaw through 2013 Reg. Sess. and 27th Spec. Sess.).

[18] See Letter from Daniel R. Levinson, Inspector Gen., U.S. Dep’t of Health & Human Servs., to Catherine Cortez Masto, Att’y Gen. of Nev. (Mar. 12, 2014), http://oig.hhs.gov/fraud/docs/falseclaimsact/Nevada.pdf.

[19] 2013 N.Y. Laws Ch. 56, pt. A, §§ 8 to 9-b, amending the New York False Claims Act, N.Y. Fin. Law §§ 187–194 (McKinney 2013).

[20] N.Y. State Office of the Att’y Gen., Text of Proposed Regulations, here (last visited June 4, 2014).

[21] See N.Y. Comp. Codes R. & Regs. tit. 13, §§ 400.1–.8 (2014), available at http://www.ag.ny.gov/whistleblowers/procedural-regulations-false-claims-act.

[22] See Letter from Daniel R. Levinson, Inspector Gen., U.S. Dep’t of Health & Human Servs., to Monica J. Hickey-Martin, Special Deputy Att’y Gen. for N.Y. (Feb. 19, 2014), http://oig.hhs.gov/fraud/docs/falseclaimsact/NewYork.pdf.

[23] H.B. 4001, 2014 Leg., Reg. Sess. (W. Va. 2014).

[24] 2013 Wyo. Laws Ch. 118, creating the Wyoming Medicaid False Claims Act, Wyo. Stat. Ann. §§ 42-4-301 to -306 (West 2013).

[25] S. Con. Res. 4007, 63rd Legis. Assemb., Reg. Sess. (N.D. 2013).

[26] See N.D. Legislative Council, Study Directives Considered and Assignments Made by the Legislative Management for the 2013-14 Interim, 12­­–13 (Jan. 21, 2014), available at http://www.legis.nd.gov/files/resource/63-2013/study-directives/study-directives-considered-2013-14-interim.pdf.

[27] See Erica Teichert, DOJ Placing ‘Renewed Emphasis’ On FCA Compliance Fixes, Law360 (June 5, 2014), http://www.law360.com/health/articles/545244/doj-placing-renewed-emphasis-on-fca-compliance-fixes.

[28] See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Genzyme Corp. to Pay $22.28 Million to Resolve False Claims Allegations Related to “Slurry” Used in Patients (Dec. 20, 2013), http://www.justice.gov/opa/pr/2013/December/13-civ-1358.html.

[29] See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Abbott Laboratories Pays U.S. $5.475 Million to Settle Claims That Company Paid Kickbacks to Physicians (Dec. 27, 2013), http://www.justice.gov/opa/pr/2013/December/13-civ-1367.html.

[30] See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, CareFusion to Pay the Government $40.1 Million to Resolve Allegations That Include More Than $11 Million in Kickbacks to One Doctor (Jan. 9, 2014), http://www.justice.gov/opa/pr/2014/January/14-civ-021.html.

[31] See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Nationwide Contract Therapy Providers to Pay $30 Million to Resolve False Claims Act Allegations (Jan. 17, 2014), http://www.justice.gov/opa/pr/2014/January/14-civ-060.html.

[32] See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Kentucky Hospital Agrees to Pay Government $16.5 Million to Settle Allegations of Unnecessary Cardiac Procedures (Jan. 29, 2014), http://www.justice.gov/opa/pr/2014/January/14-civ-095.html.

[33] See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Government Settles False Claims Act Allegations Against Kentucky Addiction Clinic, Clinical Lab and Two Doctors for $15.75 Million (Feb. 10, 2014), http://www.justice.gov/opa/pr/2014/February/14-civ-138.html.

[34] See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Washington-Based Medical Device Manufacturer to Pay up to $5.25 Million to Settle Allegations of Causing False Billing of Federal Health Care Programs (Feb. 19, 2014), http://www.justice.gov/opa/pr/2014/February/14-civ-173.html.

[35] See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Endo Pharmaceuticals and Endo Health Solutions to Pay $192.7 Million to Resolve Criminal and Civil Liability Relating to Marketing of Prescription Drug Lidoderm for Unapproved Uses (Feb. 21, 2014), http://www.justice.gov/opa/pr/2014/February/14-civ-187.html.

[36] See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Diagnostic Imaging Group to Pay $15.5 Million for Allegedly Submitting False Claims to Federal and State Health Care Programs (Feb. 25, 2014), http://www.justice.gov/opa/pr/2014/February/14-civ-200.html.

[37] See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Florida Hospital System Agrees to Pay the Government $85 Million to Settle Allegations of Improper Financial Relationships with Referring Physicians (Mar. 11, 2014), http://www.justice.gov/opa/pr/2014/March/14-civ-252.html.

[38] See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Pharmaceutical Company to Pay $27.6 Million to Settle Allegations Involving False Billings to Federal Health Care Programs (Mar. 11, 2014), http://www.justice.gov/opa/pr/2014/March/14-civ-251.html.

[39] See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Memorial Hospital in Ohio Pays Government $8.5 Million to Settle False Claims Act Allegations (Mar. 13, 2014), http://www.justice.gov/opa/pr/2014/March/14-civ-270.html.

[40] See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Astellas Pharma US Inc. to Pay $7.3 Million to Resolve False Claims Act Allegations Relating to Marketing of Drug Mycamine (Apr. 16, 2014), http://www.justice.gov/opa/pr/2014/April/14-civ-391.html.

[41] See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Tennessee Substance Abuse Treatment Facility Agrees to Resolve False Claims Act Allegations for $9.25 Million (Apr. 16, 2014), http://www.justice.gov/opa/pr/2014/April/14-civ-395.html.

[42] See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Amedisys Home Health Companies Agree to Pay $150 Million to Resolve False Claims Act Allegations (Apr. 23, 2014), http://www.justice.gov/opa/pr/2014/April/14-civ-422.html.

[43] See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, King’s Daughters Medical Center to Pay Nearly $41 Million to Resolve Allegations of False Billings for Unnecessary Cardiac Procedures and Kickbacks (May 28, 2014), http://www.justice.gov/opa/pr/2014/May/14-civ-567.html.

[44] See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Minnesota-Based Medtronic Inc. to Pay $9.9 Million to Resolve Claims That Company Paid Kickbacks to Physicians (May 28, 2014), http://www.justice.gov/opa/pr/2014/May/14-civ-571.html.

[45] See Erica Teichert, Shands Settles Remainder of $26M FCA Suit (June 12, 2014), http://www.law360.com/health/articles/547263?nl_pk=e74caebe-c678-4136-8e21-d6fb0277f050&utm_source=newsletter&utm_medium=email&utm_campaign=health.

[46]                 See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Nation’s Largest Nursing Home Pharmacy Company to Pay $124 Million to Settle Allegations Involving False Billings to Federal Health Care Programs (June 25, 2014), http://www.justice.gov/opa/pr/2014/June/14-civ-670.html.

[47] See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Michigan Companies to Pay $3.8 Million to Resolve Allegations of Falsely Claiming Disadvantaged Business Credits (Jan. 9, 2014), http://www.justice.gov/opa/pr/2014/January/14-civ-022.html.

[48] See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, General Electric Hitachi Nuclear Energy Americas Agrees to Pay $2.7 Million for Alleged False Claims Related to Design of Advanced Nuclear Reactor (Jan. 23, 2014), http://www.justice.gov/opa/pr/2014/January/14-civ-069.html.

[49] See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Sanborn Map Co. Pays $2.1 Million to Resolve Allegations of False Claims for Map Work Related to United States Military Convoy Routes in Iraq and Marine Corps Bases in United States (Feb. 7, 2014), http://www.justice.gov/opa/pr/2014/February/14-civ-135.html.

[50] See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, MPRI Inc. Agrees to Pay $3.2 Million for False Labor Charges on Contract to Support Army in Afghanistan (Feb. 12, 2014), http://www.justice.gov/opa/pr/2014/February/14-civ-155.html.

[51] See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Virginia-Based Contractor to Pay $6.5 Million to Settle Allegations of False Claims on Navy Contracts (Feb. 18, 2014), http://www.justice.gov/opa/pr/2014/February/14-civ-167.html.

[52] See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Two Ocean Shipping Companies to Pay $3.4 Million to Settle Claims of Price Fixing Government Cargo Transportation Contracts (Mar. 7, 2014), http://www.justice.gov/opa/pr/2014/March/14-civ-242.html.

[53] See Press Release, Illinois Attorney General, Madigan, U.S. Attorney Strike $12 Million Whistleblower Settlement With McHugh for Illegally Securing Federal, State Construction Funds (May 1, 2014), http://illinoisattorneygeneral.gov/pressroom/2014_05/20140501.html.

[54] See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, JPMorgan Chase to Pay $614 Million for Submitting False Claims for FHA-insured and VA-guaranteed Mortgage Loans (Feb. 4, 2014), http://www.justice.gov/opa/pr/2014/February/14-civ-120.html.

[55] See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Federal Government and State Attorneys General Reach Nearly $1 Billion Agreement with SunTrust to Address Mortgage Loan Origination as Well as Servicing and Foreclosure Abuses (June 17, 2014), http://www.justice.gov/opa/pr/2014/June/14-civ-638.html.

[56]   See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, U.S. Bank to Pay $200 Million to Resolve Alleged FHA Mortgage Lending Violations (June 30, 2014), http://www.justice.gov/opa/pr/2014/June/14-civ-684.html.

[57] See Press Release, Attorney General of Texas, Texas Attorney General’s Office Secures $25 Million Agreement with Drug Manufacturer over Medicaid Fraud Allegations (Jan 7, 2014), https://www.texasattorneygeneral.gov/oagnews/release.php?id=4622.

[58] See Press Release, Attorney General of Massachusetts, Shell to Pay $4 Million over Allegations of False Reimbursement Claims for Environmental Cleanup Projects (Feb. 27, 2014), http://www.mass.gov/ago/news-and-updates/press-releases/2014/2014-02-27-shell-settlement.html.

[59] See Press Release, New York State Office of the Attorney General, A.G. Schneiderman Announces $6.2 Million Settlement With Lantheus Medical Imaging & Bristol-Myers Squibb for Failing to Pay New York Corporate Income Taxes (Mar. 14, 2014), http://www.ag.ny.gov/press-release/ag-schneiderman-announces-62-million-settlementwith-lantheus-medical-imaging-bristol.

[60] See Whistleblower Practice Group, Texas Grocery Chain Pays $12 Million in Settlement of Medicaid Fraud Case (Mar. 21, 2014), http://www.natlawreview.com/article/texas-grocery-chain-pays-12-million-settlement-medicaid-fraud-case.

[61] See Robert M. Wolff, Hospital Settles Whistleblower Stark Act Case for $7 Million (Apr. 29, 2014), here.

[62] See Press Release, New York State Office of the Attorney General, A.G. Schneiderman Announces $475,000 Settlement With Office Depot for Overcharging New York State and Local Entities (May 7, 2014), http://www.ag.ny.gov/press-release/ag-schneiderman-announces-475000-settlement-office-depot-overcharging-new-york-state.

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