After years of defrauding the U.S. government and taxpayers, Mylan, the maker of EpiPen, last week resolved allegations that it profited at the expense of Medicaid.

On August 17, Mylan and its subsidiaries agreed to pay $465 million to resolve claims they violated the False Claims Act (“FCA”) for knowingly misclassifying its lifesaving EpiPen product

In early July, and with little fanfare, Attorney General Jeff Sessions and the Department of Justice (DOJ) all but gutted the Health Care Corporate Fraud Strike Force – stripping it of several key personnel.  Nevertheless, the investigation and prosecution of health care fraud will likely continue, and the Department will remain vigorous in its pursuit

In a February blog post, we detailed the summary judgment rulings in a False Claims Act case involving Lance Armstrong: United States ex rel. Landis v. Tailwind Sports Corporation, et al.  The federal government alleges that Lance Armstrong, his Tailwind Sports team, and its manager, Johan Bruyneel, submitted false claims to the United States Postal Service (“USPS”) and violated sponsorship agreements by using and then denying the use of banned performance enhancing drugs.

In June 2017, in anticipation of a November 2017 trial, the government and Armstrong filed Motions in Limine (“MIL”) to exclude evidence from being introduced before the court.  The parties’ MIL, specifically those motions aimed at barring expert economic testimony via Daubert challenges, could have a significant impact on the government’s ability to meet its burden of proof with respect to damages.  Likewise, Armstrong could suffer a similar misfortune on the MIL as his expert testimony may be critical to combat the government’s claims.  In addition, two  of the MIL, which essentially argue that “everybody does it” and that the “first to come clean benefits,” could have far-reaching implications for FCA cases in the future.  Regardless of the outcome of the MIL, such posturing suggests that this matter is almost certainly headed for trial.
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cheatsheetIn February, to little fanfare, the Department of Justice (DOJ) Criminal Division Fraud Section issued detailed criteria for evaluating corporate compliance programs.  The guidance, entitled Evaluation of Corporate Compliance Programs (“Evaluation Guidance” or “Guidance”) comes two years after DOJ hired Hui Chen as Compliance Counsel in the Fraud Section.  When her position was announced, the DOJ said that Chen would “help prosecutors develop appropriate benchmarks for evaluating corporate compliance and remediation measures” and would “communicat(e) with stakeholders in setting those benchmarks.”  The Evaluation Guidance provides those benchmarks used by the DOJ to evaluate the effectiveness of corporate compliance programs. It covers 11 key compliance program evaluation topics, along with a list of specific questions that DOJ considers important in evaluating compliance programs as part of a criminal investigation.
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USDCSDNYEarlier this month, the Southern District of New York dismissed the remaining claim in United States ex rel. Kolchinsky v. Moody’s Corp., ruling that Moody’s alleged “false claim” was not material under the standards set in Universal Health Services, Inc. v. United States ex rel. Escobar. The analysis of this case is instructive for other FCA cases, including health care fraud, for the court’s analysis on dismissal of FCA claims on materiality grounds. The court had previously dismissed the Relator’s claims in February but gave leave for him to amend his complaint with respect to claims about certain inaccuracies in Moody’s Ratings Delivery Service. The Relator filed an amended and somewhat more specific complaint thereafter, alleging that Moody’s provided ratings it knew to be inaccurate directly to its subscribers, which included the federal government.
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bikersIn a case with important considerations for False Claims Act cases, Lance Armstrong will face claims at trial that he fraudulently obtained funds from the United States Postal Service because of alleged violations of his sponsorship contract. On February 13, 2017, a D.C. federal judge ruled on competing motions for summary judgment setting the stage for a trial on the issues of implied certification and potential damages.

Armstrong argued that because the invoices sent to the Postal Service did not contain representations about the services rendered, the implied certification theory outlined in the Supreme Court case Universal Health Services, Inc. v. United States, ex rel. Julio Escobar and Carmen Correa (“Escobar”) was inapplicable.  Specifically, Armstrong argued that the Escobar implied certification test was inapplicable because Armstrong’s invoices did not make “specific representations about the goods or services provided . . . ” The D.C. district court agreed that the invoices merely requested payment and made no other representations, but held that the lack of a representation of the services in Armstrong’s invoices was not dispositive of the implied certification issue at summary judgment. Whereas the Supreme Court limited the holding in Escobar to its facts and expressly declined to “resolve whether all claims for payment implicitly represent that the billing party is legally entitled to payment,” the  D.C. Circuit had already explicitly addressed such omissions in United States v. Scientific Applications International Corp. In that case, the D.C. Circuit said that a claim for payment “need not include ‘express contractual language specifically linking compliance to eligibility for payment,’ . . . [but] ‘[r]ather, all the government must show is ‘that the [claimant] withheld information about its noncompliance with material contractual requirements.’”  In other words, Armstrong’s material omission that he was using performance enhancing drugs when he signed the sponsorship agreements was sufficient to allege implied certification, even though the invoices or demands for payment themselves did not make any representations.
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