In the recent election, the Democrats captured a majority in the House of Representatives and Representative Maxine Waters (D-Calif) is now in line to lead the House Financial Services Committee. As such, it is expected that a significant shift in legislative efforts relating to the financial services industry will occur. During the first Financial Services Committee hearing since the election, Waters announced that deregulation efforts are finished.
In July 2018 the Office of the Comptroller of the Currency (OCC) announced its decision to begin accepting applications from fintech companies for special purpose national bank charters (the Fintech Charter Decision). The New York State Department of Financial Services recently filed a federal court complaint seeking to enjoin further actions by the OCC to implement the Fintech Charter Decision and related actions, arguing that such acts are lawless, ill-conceived and destabilising for financial markets.
The Office of the Comptroller of the Currency (OCC) recently announced – to much anticipation – that it will begin accepting applications from fintech companies for special purpose national bank charters (commonly referred to as 'fintech charters'). However, state banking regulators are likely to once again challenge the OCC's authority to grant fintech charters, which could create some uncertainty for early applicants.
The Financial Crimes Enforcement Network recently issued new frequently asked questions regarding its customer due diligence (CDD) rule. The CDD rule applies to banks, among others, and includes four core elements of CDD, each of which should be included in anti-money laundering programmes.
The Board of Governors of the Federal Reserve System has announced revisions to the Annual Report of Foreign Banking Organisations (FR Y-7) which will enable foreign banking organisations (FBOs) to certify their compliance with US risk committee and home country capital stress testing requirements under Regulation YY. The FR Y-7 is an annual report submitted by qualifying FBOs to provide financial, organisational, shareholder and managerial information to the board.
Former Bayada Home Health Care employees recently alleged that the company had falsely billed Medicare for patients that it had known were not "homebound". Bayada moved to dismiss the suit on the ground that each employee had signed a separation agreement releasing Bayada from "any and all claims" prior to filing the False Claims Act lawsuit. With no binding Third Circuit precedent, the district court looked for guidance among other circuits that pre-filing releases can bar False Claims Act claims.
Evidence is mounting that the Department of Justice (DOJ) is willing to pursue private equity funds in False Claims Act cases, particularly ones based on alleged violations of healthcare fraud and abuse laws. Earlier in 2018, the DOJ intervened for the first time in one such False Claims Act case against a private equity sponsor, the fund's portfolio pharmacy and two pharmacy employees.
The US District Court for the District of Columbia recently vacated CMS's 2014 final overpayment rule, applicable to the Medicare Advantage programme, granting summary judgment to UnitedHealthcare that the final rule violated the Medicare statute, was inconsistent with the Affordable Care Act and the False Claims Act and violated the Administrative Procedures Act. Because the decision vacates the overpayment rule entirely, further rulemaking may be necessary.
The Sixth Circuit recently resurrected the relator's case in United States ex rel Prather v Brookdale Senior Living Communities, Inc. In a two-to-one decision, the majority held that the relator's materiality and scienter allegations sufficed under Universal Health Services, Inc v United States ex rel Escobar. The gulf between the majority and the vigorous dissent by the judge reflects persistent questions about how Escobar applies at the pleading stage.
The Department of Justice has stepped in to defend a relator's attempt to use statistical sampling to prove False Claims Act liability, contending that if the government cannot utilise sampling in False Claims Act cases, "then defendants would be incentivized to commit fraud on a large scale". The resolution of this issue will have significant implications on the scope of False Claims Act claims going forward, particularly those based on lack of medical necessity.