Government Program Fraud, False Claims Act & Qui Tam Litigation Playbook

The annual False Claims Act (FCA) recovery statistics issued by the U.S. Department of Justice for Fiscal Year 2024, coupled with the Trump administration’s focus on the elimination of waste, fraud, and abuse in government spending and apparent intentions to rely on the FCA to pursue other administration priorities, signal a likely increase in FCA investigations and actions throughout 2025 and beyond.

The U.S. District Court for the Eastern District of Virginia is the latest court to weigh in on the continuing debate surrounding the scope of the Federal Anti-Kickback Statute (AKS) as it applies to patient assistance programs (PAPs). In a lengthy opinion issued in January 2024, the court endorsed the broad interpretation advanced by the government, expressing little sympathy for the legal or policy arguments advanced by the plaintiffs, a coalition of pharmaceutical manufacturers. The coalition has indicated it will appeal the case to the Fourth Circuit.

The U.S. Department of Justice (DOJ) continued its health care fraud enforcement activity in June 2023, announcing two convictions and a national enforcement action involving charges against 78 individuals and over $2.5 billion in alleged fraud. This enforcement activity relates to efforts to defraud Medicare by billing for supplies that were not medically necessary, compounding drugs to maximize reimbursement from TRICARE, and other allegations of alleged health care fraud, telemedicine fraud, and opioid abuse-related schemes.

The U.S. Department of Justice (“DOJ”) announced several settlements related to False Claims Act (“FCA”) allegations this June. The settlements involved various types of health care entities, which shows the DOJ’s continued interest in pursuing FCA allegations across the health care industry.

On June 1, 2023, the Supreme Court of the United States issued its decision in the most-watched False Claims Act (FCA) case of the year. In United States ex rel. Schutte v. SuperValu Inc. (consolidated with United States ex rel. Proctor v. Safeway, Inc.),[1] a unanimous Court held that the question of scienter under the FCA turns on a person’s subjective beliefs, not what an objectively reasonable person may have believed—rejecting a standard that had been set by the Seventh Circuit and embraced by the Third, Eighth, Ninth and D.C. Circuits.

On April 6, 2022, the Department of Justice (“DOJ”) announced that Florida-based BayCare Health Systems Inc. and four affiliated hospitals (collectively, “BayCare”) entered into a $20 million settlement with the United States to resolve civil claims that BayCare had violated the False Claims Act (“FCA”) by engaging in Medicare fraud.

On September 8, 2021, the U.S. Department of Justice (DOJ) announced that it reached a $17 million settlement with BAYADA, a Moorestown, New Jersey-based home-health company, and certain of its affiliates (collectively referred to as BAYADA) for alleged violations of the False Claims Act (FCA) and Anti-Kickback Statute (AKS). The settlement resolves claims arising out of a qui tam complaint filed against BAYADA by the company’s former director of strategic growth alleging that the company billed federal payors for services tainted by alleged kickbacks.

Recently, the U.S. Department of Justice issued a memorandum and interim final rule, which effectively revoked elements of the “Brand Memorandum” and reinstated the use of federal guidance documents in False Claims Act cases.

On May 10, 2021, the U.S. Department of Justice (DOJ) announced that the University of Miami (UM) agreed to pay a $22 million settlement concerning alleged violations of the False Claims Act (FCA).

The U.S. Department of Justice (DOJ) released its annual False Claims Act (FCA) recovery statistics and announced that it obtained over $2.88 billion in settlements and judgments in fiscal year 2018 from civil cases involving fraud and false claims against the government.