July 29, 2025 • 42 mins
Adrienne Frazior, Shareholder, Polsinelli, and Jody Rudman, Office Managing Partner, Husch Blackwell, discuss recent legal developments related to the False Claims Act (FCA) and how the FCA is changing. They cover significant cases (SuperValu, Loper Bright, Polansky, Zafirov), circuit splits involving the FCA and the Anti-Kickback Statute, the overall health of the FCA, DOJ’s Civil Rights Fraud Initiative, the renewal of DOJ and HHS’ FCA Working Group, and future areas of increased enforcement.
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SPEAKER_00 (00:00):
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SPEAKER_01 (00:17):
Hello, everyone.
Today, we're talking a littlebit about the False Claims Act.
Jody Rudman and I, AdrianFrazier, will be discussing
refining the legal framework ofthe False Claims Act.
We're just going to have aconversation about some of the
recent legal developments andnuances in the law that have
come about over the last coupleof years, and then maybe do a
little bit of forward lookingand thinking about what we might
(00:38):
be seeing in the future.
With that, my name is AdrianFrazier.
As I mentioned, I'm ashareholder in the Dallas office
of Polsonelli.
I've been in this role for aboutthree years.
And prior to that, I was withthe U.S.
Department of Justiceprosecuting healthcare fraud for
10 years, always in thehealthcare space.
And now my practice ingovernment investigations also
(01:00):
specializes in healthcare.
With that, I'll get over to you,Jodi.
SPEAKER_02 (01:04):
Hi, good morning, and it's great to see you,
Adrienne.
I'm Jody Rudman.
I am a partner at HushBlackwell.
I'm the managing partner of HushBlackwell's Austin office and
the practice group leader of ourgovernment investigations and
white-collar practicenationwide.
And I'm also the leader of thefirm's False Claims Act working
(01:26):
group.
And it's never a dull day in theFalse Claims Act, but we've
certainly seen quite a bit ofit.
interesting litigation over thelast couple of years.
So that working group within thefirm has really blossomed quite
a bit in the last couple ofyears and I'm proud to chair it.
And with that said, I think it'sprobably great just to have a
(01:49):
super quick disclaimer thatwould apply to both of us here,
which is that the views we'resharing and the conversation
we're having are not meant to betaken as legal advice, nor the
views of the firm or certainlythe views of the administration.
These are just our personaltakeaways from what we've seen,
studied, read, and been involvedin over the last couple of
(02:11):
years.
A quick note, which is that Ialso was an AUSA in the Northern
District District of Texas.
We did not cross paths ascolleagues, Adrienne.
But anyway, I did spend sometime with Department of Justice
as well.
So that's it.
SPEAKER_01 (02:30):
Yeah, go ahead.
Let's start talking about someof the recent cases that we've
seen.
I imagine your working group hasbeen very busy over the last
couple of years as we are reallyseeing the False Claims Act
changing in ways that we hadn'tanticipated.
And then also seeing somecircuit splits that might
dictate what the future lookslike.
Yeah, you're so right.
SPEAKER_02 (02:50):
You really don't have to go back very far to find
interesting Supreme Court andcircuit court cases that are
interpreting various fascinatingaspects of the False Claims Act.
So it's almost hard to choosefrom among them.
But I thought we might talktoday about Schutte or Super
(03:10):
Value, Loper Bright, andPolanski.
And then more perhapsinteresting about Polanski is
the dissent that was authored inPolanski and the aftermath of
that.
Because I think all three ofthose have really given us not
only a resolution of somepresent dispute, but really an
(03:32):
eye toward prognosticating thefuture of litigation in the
False Claims Act.
SPEAKER_01 (03:38):
Do you agree?
Oh, absolutely.
I mean, I think that we'rereally seeing the False Claims
Act change in certain ways, andthat based on some of the
decisions, even ones like Loebor Bright have dictated a little
bit about what we might see inthe future.
And so it's just been such aninteresting couple of years.
SPEAKER_02 (03:55):
Agreed.
So, yeah, let's start withSchuette or Super Value.
And apologies to Schuette if I'msaying that wrong.
I have heard it said severaldifferent ways.
So maybe I should say SuperValue just to keep it clean.
But in any event, this case wasdecided by the Supreme Court in
2023.
And the takeaway of this casehas to do with the scienter
(04:21):
aspect or the mental stateaspect requisite to establish a
False Claims Act claim.
And the debate in circuit splitthat ultimately led to the
Supreme Court's decision insuper value was whether we look
at the mental state of a FalseClaims Act defendant from the
(04:42):
standpoint of an objectiveinterpretation of the
administrative regulation orstatute or whatever is being
alleged to have been violated,as opposed to a subjective view
of that state of mind.
And the import of super value orshooty is that we look at the
(05:06):
defendant's mental state from asubjective standpoint.
What was the defendant reallythinking, acting on,
interpreting, basing itsdecisions on and doing as
opposed to what might anobjective analysis look like?
(05:26):
And that's really important forso many reasons.
I mean, number one, it resolvesthat circuit split and those who
are relying on the objectiveinterpretation analysis
obviously need to go a differentdirection, but It creates,
Adrienne, in my assessment, youknow, some significant fact
(05:46):
issues that not only take us outof the world of, you know,
early, in some instances,resolution of cases because
subjective intent, knowledge,mental state is a fact-driven
inquiry.
But also, and I think thisimpacts perhaps, you know, the
going forward work or goingforward behavior of, you know,
(06:08):
folks.
but really what what do thoseemails say?
What did the advice say?
What meetings were had in whichdiscussions of this statute or
regulation were had anddecisions made?
So all of those facts, I think,become far more woven into the
(06:32):
narrative of the False ClaimsAct case, the investigation, and
ultimately its outcome thanperhaps in those circuits where
the objective standard was beingapplied.
what do you think about that?
Well,
SPEAKER_01 (06:44):
this makes me think about, you know, we, you and I
were both prosecutors and thismakes me really think about jury
selection, how we would alwayscover intent with juries and
say, you know, it's not possiblefor us to look inside someone's
mind, but we can tell intentthrough a variety of factors.
We could tell, you know, wealways use a handshake example.
You reach the hand out, theother person reaches their hand
back out.
You can tell that they wereintending to shake your hand, to
(07:05):
greet you in some way, right?
So we always use all these typesof examples to get to intent.
I'm curious as to what you'reseeing, you either in this case
or any that have come from it interms of how the government or
the relators are now provingintent, subjective intent,
because it is so much harderthan like an objective standard.
SPEAKER_02 (07:23):
Right, right.
Not sure I'm seeing, you know,proof positive yet, but I
certainly believe that an evenstronger focus on those, you
know, then current, you know,emails or, you know, meeting
(07:44):
notes, meeting minutes, emails,other communications that have
to do with decisions that weremade, why they were made,
interpretations.
One, you know, one issue, Ican't say I've seen this, you
know, brought to bear, but Isort of you know, looking in a
crystal ball, think there may besome focus in a going forward
(08:07):
way on when it becomesstrategically wise to consider
even waiving privilege so as to,you know, address, you know,
maybe the advice of counseldefense because subjective
intent now is so important andthat may be part and parcel of
(08:28):
advice that counsel
SPEAKER_01 (08:29):
rendered.
What do you think?
I think that's an excellentpoint.
I mean, really what you seek outcounsel on really can dictate
what your intent is in thatsituation.
And if you receive legal counselon a certain issue and it
changes the course of youractions, obviously that's going
to go back to what yoursubjective intent was at the
(08:49):
time.
I also think you're completelyright.
Emails are always, right?
Emails, text messages,conversations with individuals
that can be recollected arereally where we see the focus on
proving intent in a variety ofcases.
And I definitely anticipatewe'll see that here too.
SPEAKER_02 (09:09):
Well, let's move to Loeberbreit.
This is the Supreme Court'smajor decision in 2024 as it
relates to Chevron deference,because Loeberbreit, of course,
overruled the four decades ofChevron deference jurisprudence
that preceded it.
And the takeaway, of course,from overturning Chevron is that
(09:35):
we are back to a system, apre-Chevron system of not giving
agencies what some might callsort of carte blanche deference
and standing back and saying,well, this is how they've
interpreted an otherwiseambiguous statute.
And so we'll defer to that asthe court and let that guide the
(10:00):
the case going forward.
Instead, under Loeb or Bright,courts are now to interpret
statutes of their own accord,ambiguous statutes, that is.
And deference to the agency'slegal interpretation is no
longer dispositive.
(10:20):
I think that is going to, for along time, create some really
interesting litigation in theFalse Claims Act space, which is
so heavily dependent at times onagency regulation or agency
interpretation of statute oreven rulemaking or
sub-regulatory guidance.
(10:42):
And now there is opportunityanew for litigants to come back
to the text of the statute andsay, you know, this regulation
or this guidance or thissub-regulatory guidance or
rulemaking should not bear anypart in an analysis of our
(11:02):
conduct and And instead, we needto go right back to the four
corners of this statute and makea decision under that.
And I just believe that createsjust a myriad of opportunities
for those in the False ClaimsAct space to be returning to the
text of the statute and makingarguments about and in defense
(11:27):
of conduct alleged to haveviolated the False Claims Act in
their favor.
What do you think
SPEAKER_01 (11:33):
about that?
Well, I think that's right.
I think that the things that aregoing to stick around even after
Loper Bride are still agencyfact-finding and discretionary
actions.
And so that might be a littlebit nuanced to it.
But yes, and I also am thinkingabout this in terms of intent
again, as we were just talkingabout.
If agency action is no longergiven the deference that it once
(11:55):
was, how might that affect anindividual's intent as they go
forward trying to navigate someof these issues, realizing that
the agency may have found thingsto be one way or may have had a
decision on one issue, and howwould that affect it if looking
forward you know that the courtsno longer give deference to
that?
I mean, I'm just thinking kindof as we're talking about some
(12:16):
of this and the cases as they'rewoven together and they affect
one, you know, each other kindof as we go forward.
But low per bride, I mean, thishas been a huge area in my
practice.
I mean, in the False Claims Actcases that I've worked on, it
has always come up.
It just seems like it'sconstantly something that we're
saying, okay, the law haschanged on this.
How do things look going forwardnow that we know that the agency
(12:38):
is not going to be given thesame deference?
SPEAKER_02 (12:41):
Right.
And there are plenty of nuancesin where deference, as you
pointed out, where deference isstill appropriate or, you know,
to what extent does the statutegive the agency authority to
interpret?
To what extent is what's atissue the agency's own
interpretation of its ownregulation?
(13:02):
There are a lot of sort of underthe surface, really important
nuances that will be fleshed outin the post-Loper-Bright,
particularly as it relates tothe FCA, post-Loper Bright FCA
world.
But I think we're going to see alot of litigation involving
those nuances and involving theimport of Loper Bright in the
(13:23):
FCA space going forward.
Well, it's probably a good timeto turn to Polanski.
And what's interesting aboutPolanski is what it...
facially stands for, right, this2023 decision out of the U.S.
Supreme Court, but also thedissent in Polanski and what's
(13:46):
happened since then.
So let's just start withPolanski and what the decision
was in Polanski.
Do you want to take that one?
SPEAKER_01 (13:55):
You know, I think that the issue that is so
interesting in Polanski is that,you know, the government's case
was based on the fact that thediscovery, part of the arguments
was that the discovery beingrequested of the government in
Polanski, a case that thegovernment had not intervened in
during the seal period, wasburdensome.
And I think we're going to seethat in some progression through
(14:16):
DOJ policy a little bit later onhow Polanski is being applied.
But yeah, essentially theholding in Polanski was that the
government follows federal ruleof procedure 41A and can
intervene in a case solely forthe purpose of dismissing.
As you mentioned, the moreinteresting part of this is
Thomas's dissent and also theconcurrences with the dissent.
(14:38):
So I'll let you talk a littlebit about those.
SPEAKER_02 (14:41):
Yeah.
So Justice Thomas dissented inPolanski and was joined by, as
you pointed out, JusticesBarrett and Kavanaugh.
And the nature of JusticeThomas's dissent for our
purposes is really a discussionand questioning of the whole
(15:03):
constitutionality of the QTMdevice to begin with.
And when I say QTM device, justso we're all on the same page,
what I mean is therelator-driven aspect of the
False Claims Act or False ClaimsAct litigation.
In other words, when thegovernment doesn't intervene and
the relator under this QTAMdevice, you know, maintains,
(15:24):
possesses, and still has theopportunity to litigate the
case, standing in the shoes,proverbially, of the government.
So that's what I mean.
And Justice Thomas' dissentwrites extensively about the
constitutionality of thisdevice.
And And...
Really, the analysis triggers onArticle 2 of the Constitution
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and the powers that are vestedin the executive branch and
whether the relator shouldreally properly be permitted to
stand in the shoes of thegovernment, so to speak, when
the relator hasn't been someonewho is appointed by the
executive with all of thevetting and so on that takes
(16:11):
place under the AppointmentsClause of the Constitution.
Constitution.
So it's an important dissent.
As mentioned, Justice Thomas isjoined in that by two other
justices.
Justice Thomas actuallyreiterated those thoughts and
comments in an opinion in theWisconsin Bell case, which was
(16:34):
handed down by the Supreme Courtin just this most recent term.
So this is an analysis and athought process and a concern
that Justice Thomas continues tohave.
And in Wisconsin Bell, he wasagain joined by Justice
Kavanaugh in that decision.
So the import of that is, youknow, what does it mean for
(16:57):
those who are litigating againstrelators in non-intervened False
Claims Act cases?
And is there an argument or aplace for an argument that this
device is indeedunconstitutional?
There are so who have alreadydecided that issue and come out
(17:19):
on the side of saying, no, thisKetam device is not
unconstitutional under Article2.
However, there was a recent casein the Middle District of
Florida in which the judgegranted the defendant in a False
Claims Act case a motion forjudgment on the pleadings based
(17:42):
on the analysis articulated byJustice Thomas in the Polanski
dissent.
I believe and word is that thisparticular judge in the Middle
District of Florida hadpreviously clerked for Justice
Thomas, so that's kind of aninteresting connection.
But she did grant a motion forjudgment on the pleadings and
(18:04):
and analyzed her decision underthe Appointments Clause of
Article 2 of the U.S.
Constitution.
So that decision is now onappeal before the 11th Circuit,
which is, of course, the appealscourt that hears cases that
(18:26):
arise out of the federal courtsin Florida, among other states.
I believe that the case is fullybriefed.
I don't believe, when last Ichecked, there was an oral
argument date yet set in the11th Circuit.
There are plenty of amicusbriefs that have been filed on
both sides of the equation umbut litigants are now bringing
(18:48):
um those arguments in othercases even in and including
circuits in which thosedecisions are foreclosed by
circuit precedent um and andadrian i think um You might
agree with me that at leastpreserving those arguments in
the post-Zafarov, the name ofthe Middle District of Florida
(19:12):
case is Zafarov.
And again, I'm going toapologize to the relator in case
I'm mispronouncing the relator'slast name.
But anyway, most people arecalling it Zafarov for whatever
that's worth.
But I think there is benefit topreserving Zafarov arguments,
even in circuits where precedentforecloses it because if the
(19:36):
tide, you know, shifts in othercircuits or eventually if this
percolates to the Supreme Court,you know, you will have wanted
those arguments preserved from alegal standpoint.
Do you agree with that?
SPEAKER_01 (19:47):
Yeah, I mean, I think it's such an interesting
case and such an interestingtwist, really based off of the
dissent in Polanski.
And it's definitely worthwhileto preserve those arguments,
right?
Because we are seeing a shiftand we don't know exactly how
this is going to go.
I mean, the dissent sometimes isthe first inkling that the case,
that the law may change, right?
(20:08):
I mean, and even though theFalse Claims Act has been around
since, you know, the mid-1800sand it's been, and these relator
provisions are just so wellestablished, we are seeing a
change here.
The Zafirov case, and I hope I'msaying it correctly too, I think
it's a bit like Daubert, youknow, there's always a little
bit of a debate about it.
But that case really caused kindof an earthquake through the
(20:30):
relators bar, right?
As everyone was thinking, whatdoes this mean for the cases
that we're bringing?
How is this going to shake out?
And it's going to be a littlebit of time before we know
because it will go the 11thCircuit and it may go all the
way to the Supreme Court.
It is such just an interesting,nuanced decision.
So yes, it'll be interesting tosee.
Those of us who do defense work,of course, we're also, you know,
(20:52):
extremely curious to see whatthis is going to turn out to be
because it could have a huge onour clients who have False
Claims Act work occurring andalso just on whistleblower
protections and whistleblowerconsiderations that we're always
advising our clients on in termsof making sure that you are
paying attention to complianceand paying attention to
(21:13):
individuals who are raisingconcerns in your company.
If the I'm not saying that thoseshould go away.
Obviously, we're concerned aboutcompliance.
We want to make sure thatcompanies are doing what they
need to do to listen to peoplewho have issues.
But it just changes theirdynamics so much.
SPEAKER_02 (21:29):
Yeah.
No, that's a really good point.
I mean, whistleblowerretaliation will be around
regardless of how Zafirov isultimately decided at the
highest levels.
But Yeah, but the impact of apost-Zaparov world, if that
gains traction in ways thatultimately reach the Supreme
(21:54):
Court and find favor in amajority opinion, really will, I
think, require some post-Zaparovanalysis of, you know, what do
we do now?
Yeah.
So, yeah.
Well, let's move then into kindof what may be percolating.
I think you and I both haveidentified an interesting space
(22:20):
in where we think there might bea circuit split that sees its
way to the court.
Kind of depends, I think, on howsome other circuits come out on
this question.
But it's the interplay betweentwo statutes that we both have
quite a bit of experience inwith our clients or at the
(22:41):
government.
And that's the interplay betweenthe anti-kickback statute and
the False Claims Act.
There has been some questionssince the 2010 AKS amendment
about exactly what type ofcausation is required to Turn an
(23:01):
AKS violation or an alleged AKSviolation into a False Claims
Act liability.
And maybe you can put a finerpoint on that before we talk
about the courts on either sideof the
SPEAKER_01 (23:14):
split.
Sure.
So the issue percolating rightnow is the circuit split
regarding causation.
The First Circuit and a coupleof other circuits, the 6th and
the 8th, have taken oneposition.
I'll let you delve into that ina little bit.
The Third Circuit has taken adifferent approach.
And when we talk causation,we're talking about the specific
language in the 2010 AKSAmendment that deals
(23:38):
specifically with claims thatresult from an AKS violation and
whether or not those are false.
And the different circuits havebeen looking at this in a
different way, really trying tointerpret what resulting from
means.
What kind of causation does thatactually address?
And, you know, we are 15 yearsfrom the 2010 amendment, but
(24:01):
here we're still dealing withsome of the details and how that
should be interpreted.
And I know when I was looking atthe AKS in the context of
healthcare fraud in a criminalcontext, really, it seemed to
be, these amendments seem to bebroad authority to bring a lot
of cases under the anti-kickbackstatute.
(24:21):
And then to also look at kind ofthe loss amount attributed to
the anti-kickback violations ina certain way.
It was a very expansive view.
And now we're seeing it underthe False Claims Act really
being limited in certain ways.
So I'll go into the ThirdCircuit's position.
They have determined that thegovernment must only prove a
causal connection between akickback and a claim.
(24:43):
And they are relyingspecifically on Congress's
intent to strengthen thewhistleblower kickback cases in
bringing about the 2010amendments.
that is, you know, a little bitdifferent than what we're seeing
elsewhere.
And so some of the othercircuits that we think, you
know, we've got one on one side,the third circuit, and I think
(25:05):
there's what three on the otherside.
Um, we've got the first circuit,the sixth circuit and the eighth
circuit.
So it's really a shift.
It seems towards more of the,um, the first circuits position.
So let me have you go into thata little bit.
SPEAKER_02 (25:20):
Yeah, the, um, First, six and eight have thus
far taken a more tailored viewof the connection between the in
a kickback violation, in akickback statute violation, and
then the false claim.
And have stated that in order totrigger liability under the
(25:44):
False Claims Act based on analleged AKS violation, there has
to be but for causation.
In other words, there has to beproof that the claim submitted
to the government payor or thegovernment payment, however it
occurred, would not haveoccurred at all, but for the
fact that it was driven by thisalleged in a kickback statute
(26:07):
violation.
That's a tough one.
for inquiry, that's a much morenarrow inquiry.
And I think for purposes of therelator trying to make this
False Claims Act argumentrequires, you know, a much
higher burden to try to provethat but for causation.
So, you know, it's helpful,obviously, for the, you know,
(26:32):
for the defense bar to be ableto argue in those circuits that,
you know, but for causation.
causation can't be establishedand that there were myriad other
reasons why these claims weresubmitted and why these claims
were paid but I guess we haveyet to see.
I mean, that's four of thecircuits.
(26:54):
So, you know, yet to see whatelse may come out and whether,
you know, there is a sufficientgroundswell in this circuit
split to percolate that up.
What are you doing?
You know, what are you kind ofprognosticating there about
whether, you know, you thinkthat'll percolate up?
SPEAKER_01 (27:10):
Yeah, well, I think what we're going to be seeing
and I've just been hearing alittle bit of discussion about
this from, you know, a lot ofpeople who are really heavily
involved in this space.
I think the projection is thatwe're going to be seeing but for
causation, along with falsecertification of compliance with
the anti kickback statute.
to be alleged in complaintsgoing forward.
(27:32):
That way we're covering allbasis, right?
So there's kind of two ways toget at it.
You've got the but-for causationthat the claims would not have
been would not have beensubmitted but for the the
kickback and then also falsecertification with the of
compliance with theanti-kickback statute kind of
two ways to to move those casesforward that's what i think
(27:52):
we're going to see in terms ofpleading um with respect to you
know how this is going toactually shake out is a little
hard to say just because on theone hand we've got the third
circuit that has a more lenientstandard in just the causal link
And then we've got several othercircuits taking a tougher view
of it.
It'll really just have to haveto bear out at the Supreme Court
and we'll have to see how thatends up going.
(28:15):
But I think for the time being,it's wise to plead as much as
you can in terms of twodifferent avenues for
allegations.
SPEAKER_02 (28:25):
I think you're so right about covering both bases
from the relator's standpoint.
And what you say is like agreat, perfect segue into what I
think we should maybe move tonext in this conversation.
And that is, you know, is theFalse Claims Act alive and well?
(28:46):
And if so, you know, where arewe going to likely see False
Claims Act enforcement activityhere in the next few years?
And I think the goal maybe ofthis part of the conversation is
to kind of of give folkseyeballs on what we think we're
seeing.
(29:06):
And in addition to that, perhapsthey might have some takeaways
about preparing you know, theirown businesses or, you know,
their own advice to theirclients or if they are on the
client side, you know, their owninternal advice to to minimize
risk in this area.
(29:27):
So let's just start with, youknow, is the False Claims Act
alive and well?
I personally would say yes.
Absolutely.
I think there can be no doubtabout that.
I mean, the 2024 statistics,which were published in January
of 2025, indicated recoveriesand settlements and judgments of
(29:50):
almost$3 billion and the highestnumber of FCA lawsuits ever.
A little bit of shifting in thenumbers about where those play
out in the world of healthcareversus other universes, but I
think we would be remiss if wesaid that the False Claims Act
is not alive and well.
(30:10):
And indeed, some of thememoranda issued within the
Department of Justice that arepublicly available do indicate a
desire or even instruction andadmonition to folks to be using
the False Claims Act in certainmatters moving forward.
(30:33):
So do you agree with that?
And then where do you thinkwe're going to see enforcement
activity that we maybe might nothave seen as much of
SPEAKER_01 (30:43):
here to date?
Well, I agree with you that itis alive and well, even though
we are seeing like in thisAPAROP decision being chipped
away at a little bit, I will saywith respect to the Department
of Justice, the False Claims Actis having a moment.
It is definitely an enforcementtool that the government is
using in more ways than theypreviously have in new and
(31:05):
different ways, I think, waysthat we haven't really seen
before.
And while this discussion reallyis focused on health care, some
of this veers a bit away fromhealthcare, but also encompasses
like, I think about this interms of like academic
institutions, you know, wherehealthcare is a focus for
(31:26):
certain, you know, academicinstitutions that really are in
that space, because that is partand parcel with what the
Department of Justice is reallylooking at.
So let me just back up a littlebit and say, First thing is that
the DOJ has created a civilrights fraud initiative, and
this is going to be led by DOJ'scivil fraud section and then
(31:47):
also the civil rights division.
So combining the fraud aspectand then civil rights together
in order to pursue cases with alittle bit of different topics
than we have seen the FalseClaims Act used in the past, but
using that as its enforcementtool.
And as part of that initiative,all the U.S.
Attorney's Offices, of whichthere are 93 in the United
(32:07):
States, must identify an AUSAfrom each office to work on the
initiative, along with the CivilFraud Section and the Civil
Rights Division.
So the first part of this, as wehave seen recently, is in the
DEI space.
The government is seeking to usethe False Claims Act in order to
pursue companies andinstitutions that may be
(32:32):
violating certain provisions ofthe Civil Rights Act.
And so this is going to targetknowing violations of civil
rights laws, including but notlimited to Title IV, Title VI,
and Title IX of the Civil RightsAct of 1964, where companies,
the allegation is that theyfalsely certify compliance with
(32:53):
those laws.
That typically is going to be inan implied certification theory
versus a false certificationtheory or more of an overt kind
of demonstration of a falseclaims act.
What do you think about that interms of using the implied
certification with theanti-discrimination laws?
SPEAKER_02 (33:12):
Yeah, well, I think that's exactly where enforcement
activity will be grounded isright there in implied or
expressed false certification.
I mean, we know from Escobar,the 2016 Supreme Court decision
that implied false certificationas a theory is alive and well.
(33:33):
I'm not sure that in this newspace of enforcement activity in
the civil rights context that itwill necessary because I think
there may be expresscertifications that will need to
be made about compliance, whichwill then, if alleged to have
been violated, lead toinvestigative and enforcement
(33:57):
activity.
But either way, I think you'reright that it is the
certification aspect that willultimately create the pathway to
enforcement activity if there isgoing to be any.
SPEAKER_01 (34:12):
Yes, and those DEI provisions and the
anti-discrimination, the focusof the Department of Justice in
the memos that have beenreleased is to target
universities and federalcontractors that they believe
are not complying with thoselaws.
So that's the focus there.
With respect to federalcontractors, though, there is a
push to have federal contractorscertify compliance with the
(34:32):
anti-discrimination laws, whichcould create more of that
express issue and creating aFalse Claims Act risk that maybe
previously wasn't eitheranticipated or maybe wasn't
there.
So that's going to be a shiftthat we're going to be seeing.
Stepping away from the broaderscheme and looking a little more
specifically in healthcare,there's also a focus on gender
(34:56):
transition care and a targetingof pharmaceutical companies that
manufacture drugs used inconnection with gender
transitioning care and using theFalse Claims Act in those
contexts too.
So We were talking the other dayabout as these things develop,
we haven't seen any just yetbecause it's just so new.
(35:16):
These priorities are so new thatwe just haven't seen yet them
play out.
But it is interesting to thinkthat there may, one of the
things that may have to comeabout from this is proving an
actual violation of a civilrights law.
If you're certifying that youare in compliance with it, then
we need to now prove that thatlaw has actually been violated
(35:37):
in order to get to the FalseClaims Act legislation.
And so that might just be kindof something that's interesting
coming up.
The other thing, too, is just Ialways consider it kind of a
notice issue, but themateriality provision of the
False Claims Act, whether thegovernment would have paid these
claims, had it known that thecertification was incorrect.
As we discuss in kind of justpreparing for our conversation
(35:58):
today, this has been all overthe news.
So there have been so muchspeculation.
so much executive orders comingout and DOJ policies being
written on this, that it wouldbe hard to say that companies
wouldn't know that this is thegovernment's priority right now
and that the government intendsnot to pay claims that have some
(36:19):
sort of violation of ananti-discrimination law.
So it'll just be interesting, Ithink, as we see the case law
develop on that to see how thatreally plays out in the future
if those cases do come about.
SPEAKER_02 (36:31):
And then...
Sorry, Adrienne, go ahead.
UNKNOWN (36:33):
Sure.
SPEAKER_01 (36:34):
I was just going to say, just going to move to the
working group.
Did you have a comment on that?
SPEAKER_02 (36:40):
Well, I thought maybe you might add sort of to
the, you know, kind of the bowlof things that may happen.
engender quite a bit ofenforcement activity moving
forward, especially for thehealthcare folks.
Cybersecurity, I think we arelikely to see False Claims Act
(37:01):
enforcement against those whosecybersecurity measures are not
up to snuff where they have madecertifications or implicit
certifications that theircybersecurity protocols and
measures were significant enoughto avoid, you know, data
(37:21):
breaches and other risks.
I just sort of wanted to putthat out there for you.
Yeah.
What do you think about that?
SPEAKER_01 (37:28):
Well, I think that's likely as well, particularly,
you know, with our HIPAAprovisions that we have in the
healthcare space that are just,you know, such a core facet of
data privacy and security anddefinitely complying or
certifying that the program issecure and that it is in place
and that it complies with alllaws.
(37:48):
And then, you know, you know,turning out that it maybe
doesn't in some capacity, maybebecause there's a data breach or
something along those lines.
I definitely think we could seethe False Claims Act used in
those contexts.
The interesting thing is thatthe DOJ and HHS have also
created, it's not necessarily anew working group.
It is a renewal of a workinggroup put together in the prior
(38:12):
Trump administration.
It is an FCA working group forcollaboration, more hearty
collaboration, I think, betweenDOJ and HHS.
And it's got a list ofpriorities squarely within the
healthcare space becauseobviously health and human
services, that's their priority.
So I'm just going to run throughthese real quickly.
One would be Medicare Advantage,which we have seen be a big area
(38:35):
of enforcement, both civilly andcriminally.
Drug device biologics pricing,excuse me, drug device and
biologics pricing.
Barriers to patient access care,looking at network adequacy
violations.
Kickbacks related to drugs,medical devices, and DME.
That'll be so interesting giventhe circus book that we've been
talking about, seeing thosecases come about.
(38:55):
materially defective medicaldevices that impact patient
safety, manipulation ofelectronic health record systems
to drive inappropriateutilization of Medicare covered
products will be an interestingpriority.
And then the working group has acouple of ways that they're
trying to achieve some of thesepriorities and these goals.
And one is through leveragingdata mining across agencies to
(39:19):
make referrals to DOJ.
And that means Coordinating withdifferent agencies, mining the
data as DOJ has really developedan expertise, both civilly and
criminally, in data mining overrecent years.
And using that data to make surethat referrals are coming about
and that they're timely.
You know, looking at the datathat is recent to be able to see
(39:41):
what recent schemes arehappening rather than looking
back years before in a morereactive type state.
So that's something that we canexpect to see.
And then coordination on paymentsuspensions with CMS.
So HHS, DOJ, and CMS all gettingtogether and discussing this
concept of should a paymentsuspension be put in place while
an FCA investigation isunfolding?
(40:04):
Of course, we know that's a hugeissue for our clients because it
deprives the providers ofpayment while the investigation
is ongoing, which can be a verylong-term proposition.
And then kind of coming fullcircle back to Polanski, there's
also a focus on coordinatingdismissals of key TAMs when the
(40:25):
government doesn't intervene.
And as we mentioned, the issuein Polanski was this kind of
burdensome discovery that thegovernment was undertaking or
that was being imposed upon thegovernment, even though they
hadn't intervened in the case.
And so that is part of the goalin this situation is to make
sure that DOJ and HHS arelooking at which cases they
(40:45):
should move proactively todismiss that they haven't
intervened in either because ofthe discovery burdens, because
the case is not as concrete asthey would like to see for a
variety of reasons.
But I definitely think in thisera of government efficiency and
really trying to reduce the costspend of the government, that's
(41:06):
something that we can expect tosee in the future.
That's an excellent
SPEAKER_02 (41:09):
point.
Yeah, that's an excellent point.
I always love having theseconversations with you.
I think we are probably out oftime on this particular one, but
I...
certainly welcome theopportunity to do this again.
And I want to thank those of youwho tuned in and are listening.
(41:32):
And thanks to the AHLA forletting Adrienne and I get back
together to chat about the FalseClaims Act.
We sure do appreciate theopportunity and hope that this
provided some good andinteresting takeaways.
SPEAKER_01 (41:46):
Yeah, thank you very much.
I always enjoy speaking with youtwo and always enjoy being a
part of AHLA.
Thank you.
SPEAKER_00 (41:56):
To subscribe and add this private podcast feed to
your podcast app, go toAmericanHealthLaw.org
(42:25):
dailypodcast.
you
For more information, visit
AmericanHealthLaw.org.
SPEAKER_01 (00:17):
Hello, everyone.
Today, we're talking a littlebit about the False Claims Act.
Jody Rudman and I, AdrianFrazier, will be discussing
refining the legal framework ofthe False Claims Act.
We're just going to have aconversation about some of the
recent legal developments andnuances in the law that have
come about over the last coupleof years, and then maybe do a
little bit of forward lookingand thinking about what we might
(00:38):
be seeing in the future.
With that, my name is AdrianFrazier.
As I mentioned, I'm ashareholder in the Dallas office
of Polsonelli.
I've been in this role for aboutthree years.
And prior to that, I was withthe U.S.
Department of Justiceprosecuting healthcare fraud for
10 years, always in thehealthcare space.
And now my practice ingovernment investigations also
(01:00):
specializes in healthcare.
With that, I'll get over to you,Jodi.
SPEAKER_02 (01:04):
Hi, good morning, and it's great to see you,
Adrienne.
I'm Jody Rudman.
I am a partner at HushBlackwell.
I'm the managing partner of HushBlackwell's Austin office and
the practice group leader of ourgovernment investigations and
white-collar practicenationwide.
And I'm also the leader of thefirm's False Claims Act working
(01:26):
group.
And it's never a dull day in theFalse Claims Act, but we've
certainly seen quite a bit ofit.
interesting litigation over thelast couple of years.
So that working group within thefirm has really blossomed quite
a bit in the last couple ofyears and I'm proud to chair it.
And with that said, I think it'sprobably great just to have a
(01:49):
super quick disclaimer thatwould apply to both of us here,
which is that the views we'resharing and the conversation
we're having are not meant to betaken as legal advice, nor the
views of the firm or certainlythe views of the administration.
These are just our personaltakeaways from what we've seen,
studied, read, and been involvedin over the last couple of
(02:11):
years.
A quick note, which is that Ialso was an AUSA in the Northern
District District of Texas.
We did not cross paths ascolleagues, Adrienne.
But anyway, I did spend sometime with Department of Justice
as well.
So that's it.
SPEAKER_01 (02:30):
Yeah, go ahead.
Let's start talking about someof the recent cases that we've
seen.
I imagine your working group hasbeen very busy over the last
couple of years as we are reallyseeing the False Claims Act
changing in ways that we hadn'tanticipated.
And then also seeing somecircuit splits that might
dictate what the future lookslike.
Yeah, you're so right.
SPEAKER_02 (02:50):
You really don't have to go back very far to find
interesting Supreme Court andcircuit court cases that are
interpreting various fascinatingaspects of the False Claims Act.
So it's almost hard to choosefrom among them.
But I thought we might talktoday about Schutte or Super
(03:10):
Value, Loper Bright, andPolanski.
And then more perhapsinteresting about Polanski is
the dissent that was authored inPolanski and the aftermath of
that.
Because I think all three ofthose have really given us not
only a resolution of somepresent dispute, but really an
(03:32):
eye toward prognosticating thefuture of litigation in the
False Claims Act.
SPEAKER_01 (03:38):
Do you agree?
Oh, absolutely.
I mean, I think that we'rereally seeing the False Claims
Act change in certain ways, andthat based on some of the
decisions, even ones like Loebor Bright have dictated a little
bit about what we might see inthe future.
And so it's just been such aninteresting couple of years.
SPEAKER_02 (03:55):
Agreed.
So, yeah, let's start withSchuette or Super Value.
And apologies to Schuette if I'msaying that wrong.
I have heard it said severaldifferent ways.
So maybe I should say SuperValue just to keep it clean.
But in any event, this case wasdecided by the Supreme Court in
2023.
And the takeaway of this casehas to do with the scienter
(04:21):
aspect or the mental stateaspect requisite to establish a
False Claims Act claim.
And the debate in circuit splitthat ultimately led to the
Supreme Court's decision insuper value was whether we look
at the mental state of a FalseClaims Act defendant from the
(04:42):
standpoint of an objectiveinterpretation of the
administrative regulation orstatute or whatever is being
alleged to have been violated,as opposed to a subjective view
of that state of mind.
And the import of super value orshooty is that we look at the
(05:06):
defendant's mental state from asubjective standpoint.
What was the defendant reallythinking, acting on,
interpreting, basing itsdecisions on and doing as
opposed to what might anobjective analysis look like?
(05:26):
And that's really important forso many reasons.
I mean, number one, it resolvesthat circuit split and those who
are relying on the objectiveinterpretation analysis
obviously need to go a differentdirection, but It creates,
Adrienne, in my assessment, youknow, some significant fact
(05:46):
issues that not only take us outof the world of, you know,
early, in some instances,resolution of cases because
subjective intent, knowledge,mental state is a fact-driven
inquiry.
But also, and I think thisimpacts perhaps, you know, the
going forward work or goingforward behavior of, you know,
(06:08):
folks.
but really what what do thoseemails say?
What did the advice say?
What meetings were had in whichdiscussions of this statute or
regulation were had anddecisions made?
So all of those facts, I think,become far more woven into the
(06:32):
narrative of the False ClaimsAct case, the investigation, and
ultimately its outcome thanperhaps in those circuits where
the objective standard was beingapplied.
what do you think about that?
Well,
SPEAKER_01 (06:44):
this makes me think about, you know, we, you and I
were both prosecutors and thismakes me really think about jury
selection, how we would alwayscover intent with juries and
say, you know, it's not possiblefor us to look inside someone's
mind, but we can tell intentthrough a variety of factors.
We could tell, you know, wealways use a handshake example.
You reach the hand out, theother person reaches their hand
back out.
You can tell that they wereintending to shake your hand, to
(07:05):
greet you in some way, right?
So we always use all these typesof examples to get to intent.
I'm curious as to what you'reseeing, you either in this case
or any that have come from it interms of how the government or
the relators are now provingintent, subjective intent,
because it is so much harderthan like an objective standard.
SPEAKER_02 (07:23):
Right, right.
Not sure I'm seeing, you know,proof positive yet, but I
certainly believe that an evenstronger focus on those, you
know, then current, you know,emails or, you know, meeting
(07:44):
notes, meeting minutes, emails,other communications that have
to do with decisions that weremade, why they were made,
interpretations.
One, you know, one issue, Ican't say I've seen this, you
know, brought to bear, but Isort of you know, looking in a
crystal ball, think there may besome focus in a going forward
(08:07):
way on when it becomesstrategically wise to consider
even waiving privilege so as to,you know, address, you know,
maybe the advice of counseldefense because subjective
intent now is so important andthat may be part and parcel of
(08:28):
advice that counsel
SPEAKER_01 (08:29):
rendered.
What do you think?
I think that's an excellentpoint.
I mean, really what you seek outcounsel on really can dictate
what your intent is in thatsituation.
And if you receive legal counselon a certain issue and it
changes the course of youractions, obviously that's going
to go back to what yoursubjective intent was at the
(08:49):
time.
I also think you're completelyright.
Emails are always, right?
Emails, text messages,conversations with individuals
that can be recollected arereally where we see the focus on
proving intent in a variety ofcases.
And I definitely anticipatewe'll see that here too.
SPEAKER_02 (09:09):
Well, let's move to Loeberbreit.
This is the Supreme Court'smajor decision in 2024 as it
relates to Chevron deference,because Loeberbreit, of course,
overruled the four decades ofChevron deference jurisprudence
that preceded it.
And the takeaway, of course,from overturning Chevron is that
(09:35):
we are back to a system, apre-Chevron system of not giving
agencies what some might callsort of carte blanche deference
and standing back and saying,well, this is how they've
interpreted an otherwiseambiguous statute.
And so we'll defer to that asthe court and let that guide the
(10:00):
the case going forward.
Instead, under Loeb or Bright,courts are now to interpret
statutes of their own accord,ambiguous statutes, that is.
And deference to the agency'slegal interpretation is no
longer dispositive.
(10:20):
I think that is going to, for along time, create some really
interesting litigation in theFalse Claims Act space, which is
so heavily dependent at times onagency regulation or agency
interpretation of statute oreven rulemaking or
sub-regulatory guidance.
(10:42):
And now there is opportunityanew for litigants to come back
to the text of the statute andsay, you know, this regulation
or this guidance or thissub-regulatory guidance or
rulemaking should not bear anypart in an analysis of our
(11:02):
conduct and And instead, we needto go right back to the four
corners of this statute and makea decision under that.
And I just believe that createsjust a myriad of opportunities
for those in the False ClaimsAct space to be returning to the
text of the statute and makingarguments about and in defense
(11:27):
of conduct alleged to haveviolated the False Claims Act in
their favor.
What do you think
SPEAKER_01 (11:33):
about that?
Well, I think that's right.
I think that the things that aregoing to stick around even after
Loper Bride are still agencyfact-finding and discretionary
actions.
And so that might be a littlebit nuanced to it.
But yes, and I also am thinkingabout this in terms of intent
again, as we were just talkingabout.
If agency action is no longergiven the deference that it once
(11:55):
was, how might that affect anindividual's intent as they go
forward trying to navigate someof these issues, realizing that
the agency may have found thingsto be one way or may have had a
decision on one issue, and howwould that affect it if looking
forward you know that the courtsno longer give deference to
that?
I mean, I'm just thinking kindof as we're talking about some
(12:16):
of this and the cases as they'rewoven together and they affect
one, you know, each other kindof as we go forward.
But low per bride, I mean, thishas been a huge area in my
practice.
I mean, in the False Claims Actcases that I've worked on, it
has always come up.
It just seems like it'sconstantly something that we're
saying, okay, the law haschanged on this.
How do things look going forwardnow that we know that the agency
(12:38):
is not going to be given thesame deference?
SPEAKER_02 (12:41):
Right.
And there are plenty of nuancesin where deference, as you
pointed out, where deference isstill appropriate or, you know,
to what extent does the statutegive the agency authority to
interpret?
To what extent is what's atissue the agency's own
interpretation of its ownregulation?
(13:02):
There are a lot of sort of underthe surface, really important
nuances that will be fleshed outin the post-Loper-Bright,
particularly as it relates tothe FCA, post-Loper Bright FCA
world.
But I think we're going to see alot of litigation involving
those nuances and involving theimport of Loper Bright in the
(13:23):
FCA space going forward.
Well, it's probably a good timeto turn to Polanski.
And what's interesting aboutPolanski is what it...
facially stands for, right, this2023 decision out of the U.S.
Supreme Court, but also thedissent in Polanski and what's
(13:46):
happened since then.
So let's just start withPolanski and what the decision
was in Polanski.
Do you want to take that one?
SPEAKER_01 (13:55):
You know, I think that the issue that is so
interesting in Polanski is that,you know, the government's case
was based on the fact that thediscovery, part of the arguments
was that the discovery beingrequested of the government in
Polanski, a case that thegovernment had not intervened in
during the seal period, wasburdensome.
And I think we're going to seethat in some progression through
(14:16):
DOJ policy a little bit later onhow Polanski is being applied.
But yeah, essentially theholding in Polanski was that the
government follows federal ruleof procedure 41A and can
intervene in a case solely forthe purpose of dismissing.
As you mentioned, the moreinteresting part of this is
Thomas's dissent and also theconcurrences with the dissent.
(14:38):
So I'll let you talk a littlebit about those.
SPEAKER_02 (14:41):
Yeah.
So Justice Thomas dissented inPolanski and was joined by, as
you pointed out, JusticesBarrett and Kavanaugh.
And the nature of JusticeThomas's dissent for our
purposes is really a discussionand questioning of the whole
(15:03):
constitutionality of the QTMdevice to begin with.
And when I say QTM device, justso we're all on the same page,
what I mean is therelator-driven aspect of the
False Claims Act or False ClaimsAct litigation.
In other words, when thegovernment doesn't intervene and
the relator under this QTAMdevice, you know, maintains,
(15:24):
possesses, and still has theopportunity to litigate the
case, standing in the shoes,proverbially, of the government.
So that's what I mean.
And Justice Thomas' dissentwrites extensively about the
constitutionality of thisdevice.
And And...
Really, the analysis triggers onArticle 2 of the Constitution
(15:50):
and the powers that are vestedin the executive branch and
whether the relator shouldreally properly be permitted to
stand in the shoes of thegovernment, so to speak, when
the relator hasn't been someonewho is appointed by the
executive with all of thevetting and so on that takes
(16:11):
place under the AppointmentsClause of the Constitution.
Constitution.
So it's an important dissent.
As mentioned, Justice Thomas isjoined in that by two other
justices.
Justice Thomas actuallyreiterated those thoughts and
comments in an opinion in theWisconsin Bell case, which was
(16:34):
handed down by the Supreme Courtin just this most recent term.
So this is an analysis and athought process and a concern
that Justice Thomas continues tohave.
And in Wisconsin Bell, he wasagain joined by Justice
Kavanaugh in that decision.
So the import of that is, youknow, what does it mean for
(16:57):
those who are litigating againstrelators in non-intervened False
Claims Act cases?
And is there an argument or aplace for an argument that this
device is indeedunconstitutional?
There are so who have alreadydecided that issue and come out
(17:19):
on the side of saying, no, thisKetam device is not
unconstitutional under Article2.
However, there was a recent casein the Middle District of
Florida in which the judgegranted the defendant in a False
Claims Act case a motion forjudgment on the pleadings based
(17:42):
on the analysis articulated byJustice Thomas in the Polanski
dissent.
I believe and word is that thisparticular judge in the Middle
District of Florida hadpreviously clerked for Justice
Thomas, so that's kind of aninteresting connection.
But she did grant a motion forjudgment on the pleadings and
(18:04):
and analyzed her decision underthe Appointments Clause of
Article 2 of the U.S.
Constitution.
So that decision is now onappeal before the 11th Circuit,
which is, of course, the appealscourt that hears cases that
(18:26):
arise out of the federal courtsin Florida, among other states.
I believe that the case is fullybriefed.
I don't believe, when last Ichecked, there was an oral
argument date yet set in the11th Circuit.
There are plenty of amicusbriefs that have been filed on
both sides of the equation umbut litigants are now bringing
(18:48):
um those arguments in othercases even in and including
circuits in which thosedecisions are foreclosed by
circuit precedent um and andadrian i think um You might
agree with me that at leastpreserving those arguments in
the post-Zafarov, the name ofthe Middle District of Florida
(19:12):
case is Zafarov.
And again, I'm going toapologize to the relator in case
I'm mispronouncing the relator'slast name.
But anyway, most people arecalling it Zafarov for whatever
that's worth.
But I think there is benefit topreserving Zafarov arguments,
even in circuits where precedentforecloses it because if the
(19:36):
tide, you know, shifts in othercircuits or eventually if this
percolates to the Supreme Court,you know, you will have wanted
those arguments preserved from alegal standpoint.
Do you agree with that?
SPEAKER_01 (19:47):
Yeah, I mean, I think it's such an interesting
case and such an interestingtwist, really based off of the
dissent in Polanski.
And it's definitely worthwhileto preserve those arguments,
right?
Because we are seeing a shiftand we don't know exactly how
this is going to go.
I mean, the dissent sometimes isthe first inkling that the case,
that the law may change, right?
(20:08):
I mean, and even though theFalse Claims Act has been around
since, you know, the mid-1800sand it's been, and these relator
provisions are just so wellestablished, we are seeing a
change here.
The Zafirov case, and I hope I'msaying it correctly too, I think
it's a bit like Daubert, youknow, there's always a little
bit of a debate about it.
But that case really caused kindof an earthquake through the
(20:30):
relators bar, right?
As everyone was thinking, whatdoes this mean for the cases
that we're bringing?
How is this going to shake out?
And it's going to be a littlebit of time before we know
because it will go the 11thCircuit and it may go all the
way to the Supreme Court.
It is such just an interesting,nuanced decision.
So yes, it'll be interesting tosee.
Those of us who do defense work,of course, we're also, you know,
(20:52):
extremely curious to see whatthis is going to turn out to be
because it could have a huge onour clients who have False
Claims Act work occurring andalso just on whistleblower
protections and whistleblowerconsiderations that we're always
advising our clients on in termsof making sure that you are
paying attention to complianceand paying attention to
(21:13):
individuals who are raisingconcerns in your company.
If the I'm not saying that thoseshould go away.
Obviously, we're concerned aboutcompliance.
We want to make sure thatcompanies are doing what they
need to do to listen to peoplewho have issues.
But it just changes theirdynamics so much.
SPEAKER_02 (21:29):
Yeah.
No, that's a really good point.
I mean, whistleblowerretaliation will be around
regardless of how Zafirov isultimately decided at the
highest levels.
But Yeah, but the impact of apost-Zaparov world, if that
gains traction in ways thatultimately reach the Supreme
(21:54):
Court and find favor in amajority opinion, really will, I
think, require some post-Zaparovanalysis of, you know, what do
we do now?
Yeah.
So, yeah.
Well, let's move then into kindof what may be percolating.
I think you and I both haveidentified an interesting space
(22:20):
in where we think there might bea circuit split that sees its
way to the court.
Kind of depends, I think, on howsome other circuits come out on
this question.
But it's the interplay betweentwo statutes that we both have
quite a bit of experience inwith our clients or at the
(22:41):
government.
And that's the interplay betweenthe anti-kickback statute and
the False Claims Act.
There has been some questionssince the 2010 AKS amendment
about exactly what type ofcausation is required to Turn an
(23:01):
AKS violation or an alleged AKSviolation into a False Claims
Act liability.
And maybe you can put a finerpoint on that before we talk
about the courts on either sideof the
SPEAKER_01 (23:14):
split.
Sure.
So the issue percolating rightnow is the circuit split
regarding causation.
The First Circuit and a coupleof other circuits, the 6th and
the 8th, have taken oneposition.
I'll let you delve into that ina little bit.
The Third Circuit has taken adifferent approach.
And when we talk causation,we're talking about the specific
language in the 2010 AKSAmendment that deals
(23:38):
specifically with claims thatresult from an AKS violation and
whether or not those are false.
And the different circuits havebeen looking at this in a
different way, really trying tointerpret what resulting from
means.
What kind of causation does thatactually address?
And, you know, we are 15 yearsfrom the 2010 amendment, but
(24:01):
here we're still dealing withsome of the details and how that
should be interpreted.
And I know when I was looking atthe AKS in the context of
healthcare fraud in a criminalcontext, really, it seemed to
be, these amendments seem to bebroad authority to bring a lot
of cases under the anti-kickbackstatute.
(24:21):
And then to also look at kind ofthe loss amount attributed to
the anti-kickback violations ina certain way.
It was a very expansive view.
And now we're seeing it underthe False Claims Act really
being limited in certain ways.
So I'll go into the ThirdCircuit's position.
They have determined that thegovernment must only prove a
causal connection between akickback and a claim.
(24:43):
And they are relyingspecifically on Congress's
intent to strengthen thewhistleblower kickback cases in
bringing about the 2010amendments.
that is, you know, a little bitdifferent than what we're seeing
elsewhere.
And so some of the othercircuits that we think, you
know, we've got one on one side,the third circuit, and I think
(25:05):
there's what three on the otherside.
Um, we've got the first circuit,the sixth circuit and the eighth
circuit.
So it's really a shift.
It seems towards more of the,um, the first circuits position.
So let me have you go into thata little bit.
SPEAKER_02 (25:20):
Yeah, the, um, First, six and eight have thus
far taken a more tailored viewof the connection between the in
a kickback violation, in akickback statute violation, and
then the false claim.
And have stated that in order totrigger liability under the
(25:44):
False Claims Act based on analleged AKS violation, there has
to be but for causation.
In other words, there has to beproof that the claim submitted
to the government payor or thegovernment payment, however it
occurred, would not haveoccurred at all, but for the
fact that it was driven by thisalleged in a kickback statute
(26:07):
violation.
That's a tough one.
for inquiry, that's a much morenarrow inquiry.
And I think for purposes of therelator trying to make this
False Claims Act argumentrequires, you know, a much
higher burden to try to provethat but for causation.
So, you know, it's helpful,obviously, for the, you know,
(26:32):
for the defense bar to be ableto argue in those circuits that,
you know, but for causation.
causation can't be establishedand that there were myriad other
reasons why these claims weresubmitted and why these claims
were paid but I guess we haveyet to see.
I mean, that's four of thecircuits.
(26:54):
So, you know, yet to see whatelse may come out and whether,
you know, there is a sufficientgroundswell in this circuit
split to percolate that up.
What are you doing?
You know, what are you kind ofprognosticating there about
whether, you know, you thinkthat'll percolate up?
SPEAKER_01 (27:10):
Yeah, well, I think what we're going to be seeing
and I've just been hearing alittle bit of discussion about
this from, you know, a lot ofpeople who are really heavily
involved in this space.
I think the projection is thatwe're going to be seeing but for
causation, along with falsecertification of compliance with
the anti kickback statute.
to be alleged in complaintsgoing forward.
(27:32):
That way we're covering allbasis, right?
So there's kind of two ways toget at it.
You've got the but-for causationthat the claims would not have
been would not have beensubmitted but for the the
kickback and then also falsecertification with the of
compliance with theanti-kickback statute kind of
two ways to to move those casesforward that's what i think
(27:52):
we're going to see in terms ofpleading um with respect to you
know how this is going toactually shake out is a little
hard to say just because on theone hand we've got the third
circuit that has a more lenientstandard in just the causal link
And then we've got several othercircuits taking a tougher view
of it.
It'll really just have to haveto bear out at the Supreme Court
and we'll have to see how thatends up going.
(28:15):
But I think for the time being,it's wise to plead as much as
you can in terms of twodifferent avenues for
allegations.
SPEAKER_02 (28:25):
I think you're so right about covering both bases
from the relator's standpoint.
And what you say is like agreat, perfect segue into what I
think we should maybe move tonext in this conversation.
And that is, you know, is theFalse Claims Act alive and well?
(28:46):
And if so, you know, where arewe going to likely see False
Claims Act enforcement activityhere in the next few years?
And I think the goal maybe ofthis part of the conversation is
to kind of of give folkseyeballs on what we think we're
seeing.
(29:06):
And in addition to that, perhapsthey might have some takeaways
about preparing you know, theirown businesses or, you know,
their own advice to theirclients or if they are on the
client side, you know, their owninternal advice to to minimize
risk in this area.
(29:27):
So let's just start with, youknow, is the False Claims Act
alive and well?
I personally would say yes.
Absolutely.
I think there can be no doubtabout that.
I mean, the 2024 statistics,which were published in January
of 2025, indicated recoveriesand settlements and judgments of
(29:50):
almost$3 billion and the highestnumber of FCA lawsuits ever.
A little bit of shifting in thenumbers about where those play
out in the world of healthcareversus other universes, but I
think we would be remiss if wesaid that the False Claims Act
is not alive and well.
(30:10):
And indeed, some of thememoranda issued within the
Department of Justice that arepublicly available do indicate a
desire or even instruction andadmonition to folks to be using
the False Claims Act in certainmatters moving forward.
(30:33):
So do you agree with that?
And then where do you thinkwe're going to see enforcement
activity that we maybe might nothave seen as much of
SPEAKER_01 (30:43):
here to date?
Well, I agree with you that itis alive and well, even though
we are seeing like in thisAPAROP decision being chipped
away at a little bit, I will saywith respect to the Department
of Justice, the False Claims Actis having a moment.
It is definitely an enforcementtool that the government is
using in more ways than theypreviously have in new and
(31:05):
different ways, I think, waysthat we haven't really seen
before.
And while this discussion reallyis focused on health care, some
of this veers a bit away fromhealthcare, but also encompasses
like, I think about this interms of like academic
institutions, you know, wherehealthcare is a focus for
(31:26):
certain, you know, academicinstitutions that really are in
that space, because that is partand parcel with what the
Department of Justice is reallylooking at.
So let me just back up a littlebit and say, First thing is that
the DOJ has created a civilrights fraud initiative, and
this is going to be led by DOJ'scivil fraud section and then
(31:47):
also the civil rights division.
So combining the fraud aspectand then civil rights together
in order to pursue cases with alittle bit of different topics
than we have seen the FalseClaims Act used in the past, but
using that as its enforcementtool.
And as part of that initiative,all the U.S.
Attorney's Offices, of whichthere are 93 in the United
(32:07):
States, must identify an AUSAfrom each office to work on the
initiative, along with the CivilFraud Section and the Civil
Rights Division.
So the first part of this, as wehave seen recently, is in the
DEI space.
The government is seeking to usethe False Claims Act in order to
pursue companies andinstitutions that may be
(32:32):
violating certain provisions ofthe Civil Rights Act.
And so this is going to targetknowing violations of civil
rights laws, including but notlimited to Title IV, Title VI,
and Title IX of the Civil RightsAct of 1964, where companies,
the allegation is that theyfalsely certify compliance with
(32:53):
those laws.
That typically is going to be inan implied certification theory
versus a false certificationtheory or more of an overt kind
of demonstration of a falseclaims act.
What do you think about that interms of using the implied
certification with theanti-discrimination laws?
SPEAKER_02 (33:12):
Yeah, well, I think that's exactly where enforcement
activity will be grounded isright there in implied or
expressed false certification.
I mean, we know from Escobar,the 2016 Supreme Court decision
that implied false certificationas a theory is alive and well.
(33:33):
I'm not sure that in this newspace of enforcement activity in
the civil rights context that itwill necessary because I think
there may be expresscertifications that will need to
be made about compliance, whichwill then, if alleged to have
been violated, lead toinvestigative and enforcement
(33:57):
activity.
But either way, I think you'reright that it is the
certification aspect that willultimately create the pathway to
enforcement activity if there isgoing to be any.
SPEAKER_01 (34:12):
Yes, and those DEI provisions and the
anti-discrimination, the focusof the Department of Justice in
the memos that have beenreleased is to target
universities and federalcontractors that they believe
are not complying with thoselaws.
So that's the focus there.
With respect to federalcontractors, though, there is a
push to have federal contractorscertify compliance with the
(34:32):
anti-discrimination laws, whichcould create more of that
express issue and creating aFalse Claims Act risk that maybe
previously wasn't eitheranticipated or maybe wasn't
there.
So that's going to be a shiftthat we're going to be seeing.
Stepping away from the broaderscheme and looking a little more
specifically in healthcare,there's also a focus on gender
(34:56):
transition care and a targetingof pharmaceutical companies that
manufacture drugs used inconnection with gender
transitioning care and using theFalse Claims Act in those
contexts too.
So We were talking the other dayabout as these things develop,
we haven't seen any just yetbecause it's just so new.
(35:16):
These priorities are so new thatwe just haven't seen yet them
play out.
But it is interesting to thinkthat there may, one of the
things that may have to comeabout from this is proving an
actual violation of a civilrights law.
If you're certifying that youare in compliance with it, then
we need to now prove that thatlaw has actually been violated
(35:37):
in order to get to the FalseClaims Act legislation.
And so that might just be kindof something that's interesting
coming up.
The other thing, too, is just Ialways consider it kind of a
notice issue, but themateriality provision of the
False Claims Act, whether thegovernment would have paid these
claims, had it known that thecertification was incorrect.
As we discuss in kind of justpreparing for our conversation
(35:58):
today, this has been all overthe news.
So there have been so muchspeculation.
so much executive orders comingout and DOJ policies being
written on this, that it wouldbe hard to say that companies
wouldn't know that this is thegovernment's priority right now
and that the government intendsnot to pay claims that have some
(36:19):
sort of violation of ananti-discrimination law.
So it'll just be interesting, Ithink, as we see the case law
develop on that to see how thatreally plays out in the future
if those cases do come about.
SPEAKER_02 (36:31):
And then...
Sorry, Adrienne, go ahead.
UNKNOWN (36:33):
Sure.
SPEAKER_01 (36:34):
I was just going to say, just going to move to the
working group.
Did you have a comment on that?
SPEAKER_02 (36:40):
Well, I thought maybe you might add sort of to
the, you know, kind of the bowlof things that may happen.
engender quite a bit ofenforcement activity moving
forward, especially for thehealthcare folks.
Cybersecurity, I think we arelikely to see False Claims Act
(37:01):
enforcement against those whosecybersecurity measures are not
up to snuff where they have madecertifications or implicit
certifications that theircybersecurity protocols and
measures were significant enoughto avoid, you know, data
(37:21):
breaches and other risks.
I just sort of wanted to putthat out there for you.
Yeah.
What do you think about that?
SPEAKER_01 (37:28):
Well, I think that's likely as well, particularly,
you know, with our HIPAAprovisions that we have in the
healthcare space that are just,you know, such a core facet of
data privacy and security anddefinitely complying or
certifying that the program issecure and that it is in place
and that it complies with alllaws.
(37:48):
And then, you know, you know,turning out that it maybe
doesn't in some capacity, maybebecause there's a data breach or
something along those lines.
I definitely think we could seethe False Claims Act used in
those contexts.
The interesting thing is thatthe DOJ and HHS have also
created, it's not necessarily anew working group.
It is a renewal of a workinggroup put together in the prior
(38:12):
Trump administration.
It is an FCA working group forcollaboration, more hearty
collaboration, I think, betweenDOJ and HHS.
And it's got a list ofpriorities squarely within the
healthcare space becauseobviously health and human
services, that's their priority.
So I'm just going to run throughthese real quickly.
One would be Medicare Advantage,which we have seen be a big area
(38:35):
of enforcement, both civilly andcriminally.
Drug device biologics pricing,excuse me, drug device and
biologics pricing.
Barriers to patient access care,looking at network adequacy
violations.
Kickbacks related to drugs,medical devices, and DME.
That'll be so interesting giventhe circus book that we've been
talking about, seeing thosecases come about.
(38:55):
materially defective medicaldevices that impact patient
safety, manipulation ofelectronic health record systems
to drive inappropriateutilization of Medicare covered
products will be an interestingpriority.
And then the working group has acouple of ways that they're
trying to achieve some of thesepriorities and these goals.
And one is through leveragingdata mining across agencies to
(39:19):
make referrals to DOJ.
And that means Coordinating withdifferent agencies, mining the
data as DOJ has really developedan expertise, both civilly and
criminally, in data mining overrecent years.
And using that data to make surethat referrals are coming about
and that they're timely.
You know, looking at the datathat is recent to be able to see
(39:41):
what recent schemes arehappening rather than looking
back years before in a morereactive type state.
So that's something that we canexpect to see.
And then coordination on paymentsuspensions with CMS.
So HHS, DOJ, and CMS all gettingtogether and discussing this
concept of should a paymentsuspension be put in place while
an FCA investigation isunfolding?
(40:04):
Of course, we know that's a hugeissue for our clients because it
deprives the providers ofpayment while the investigation
is ongoing, which can be a verylong-term proposition.
And then kind of coming fullcircle back to Polanski, there's
also a focus on coordinatingdismissals of key TAMs when the
(40:25):
government doesn't intervene.
And as we mentioned, the issuein Polanski was this kind of
burdensome discovery that thegovernment was undertaking or
that was being imposed upon thegovernment, even though they
hadn't intervened in the case.
And so that is part of the goalin this situation is to make
sure that DOJ and HHS arelooking at which cases they
(40:45):
should move proactively todismiss that they haven't
intervened in either because ofthe discovery burdens, because
the case is not as concrete asthey would like to see for a
variety of reasons.
But I definitely think in thisera of government efficiency and
really trying to reduce the costspend of the government, that's
(41:06):
something that we can expect tosee in the future.
That's an excellent
SPEAKER_02 (41:09):
point.
Yeah, that's an excellent point.
I always love having theseconversations with you.
I think we are probably out oftime on this particular one, but
I...
certainly welcome theopportunity to do this again.
And I want to thank those of youwho tuned in and are listening.
(41:32):
And thanks to the AHLA forletting Adrienne and I get back
together to chat about the FalseClaims Act.
We sure do appreciate theopportunity and hope that this
provided some good andinteresting takeaways.
SPEAKER_01 (41:46):
Yeah, thank you very much.
I always enjoy speaking with youtwo and always enjoy being a
part of AHLA.
Thank you.
SPEAKER_00 (41:56):
To subscribe and add this private podcast feed to
your podcast app, go toAmericanHealthLaw.org
(42:25):
dailypodcast.
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