Sidley Austin LLP updates

Eighth Circuit tightens False Claims Act pleading requirements
Sidley Austin LLP
  • Healthcare & Life Sciences
  • USA
  • 20 March 2019

A recent US Court of Appeals for the Eighth Circuit decision follows a growing trend among courts in tightening False Claims Act pleading requirements. The court affirmed the dismissal of a qui tam action brought against a non-profit hospital because the relators had failed to meet the particularity standard set out under Rule 9(b) of the Federal Rules of Civil Procedure.

DOJ announces more than $2.5 billion in FY 2018 False Claims Act recoveries from healthcare industry
Sidley Austin LLP
  • Healthcare & Life Sciences
  • USA
  • 20 February 2019

The Department of Justice (DOJ) recently announced that it had recovered more than $2.8 billion from False Claims Act (FCA) cases in the 2018 fiscal year. Although this number continues a multi-year downtrend in overall FCA recoveries, healthcare fraud remains a major DOJ focus. Of the $2.8 billion, $2.5 billion was extracted from various segments of the healthcare industry, including through major settlements with pharmaceutical and medical device manufacturers.

Preliminary considerations for healthcare industry for 116th Congress
Sidley Austin LLP
  • Healthcare & Life Sciences
  • USA
  • 13 February 2019

Health policy issues are high on the agenda of the new Congress. The stated priorities for the new House majority include reducing drug prices, defending the Affordable Care Act, addressing the opioid abuse crisis and investigating the pharmaceutical industry. Given the potential for at least some bipartisan cooperation on each of these priorities, stakeholders in the healthcare industry should be prepared for legislative and regulatory opportunities and challenges.

Flexing its Granston muscle: DOJ seeks dismissal of patient support services in False Claims Act litigation
Sidley Austin LLP
  • Healthcare & Life Sciences
  • USA
  • 06 February 2019

The Department of Justice (DOJ) recently stepped in to seek the dismissal of high-profile False Claims Act litigation being pursued by relators after the government initially declined to intervene. The DOJ's recent action, which pertains to approximately a dozen lawsuits involving pharmaceutical manufacturers and third-party service providers, is further evidence that the Granston Memo, in which the DOJ articulated clearer standards for seeking dismissal of non-intervened cases, has real teeth.

DOJ intervenes in Medicare Advantage False Claims Act suit against provider
Sidley Austin LLP
  • Healthcare & Life Sciences
  • USA
  • 30 January 2019

The Department of Justice (DOJ) recently announced that it had intervened in a False Claims Act suit against Sutter Health and its affiliate Palo Alto Medical Foundation. This intervention is the latest example of the DOJ's aggressive enforcement under the False Claims Act in the Medicare Advantage space.

Volcker Rule: agencies propose to implement community bank exemption and revise name-sharing rule
Sidley Austin LLP
  • Banking
  • USA
  • 18 January 2019

The five US federal agencies responsible for implementing the Volcker Rule have individually released a related notice of proposed rulemaking. The notice proposes amendments to the Volcker Rule regulations that would implement two statutory changes required by the Economic Growth, Regulatory Relief and Consumer Protection Act. Comments in response to the notice must be received by the agencies within 60 days of its publication in the Federal Register.

Court provides insight into when funds may be held responsible for portfolio company conduct
Sidley Austin LLP
  • Healthcare & Life Sciences
  • USA
  • 19 December 2018

The government has intervened in a qui tam suit against a compounding pharmacy and its private equity fund owner in which it is alleged that the pharmacy filed claims with Tricare that were rendered false by kickbacks. The opinion provides further guidance as to the circumstances under which a private equity fund investor may incur False Claims Act liability as a result of its active involvement in a portfolio healthcare company that submits allegedly false claims.

US election results: five key matters for financial services industry
Sidley Austin LLP
  • Banking
  • USA
  • 07 December 2018

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.

District court invalidates relators' pre-filing releases on public policy grounds
Sidley Austin LLP
  • Healthcare & Life Sciences
  • USA
  • 21 November 2018

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.

Private equity funds face increasing risk of False Claims Act liability
Sidley Austin LLP
  • Healthcare & Life Sciences
  • USA
  • 14 November 2018

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.

New York State Department of Financial Services challenges OCC authority on fintech charters
Sidley Austin LLP
  • Banking
  • USA
  • 12 October 2018

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.

Court vacates Medicare Advantage overpayment rule and curtails DOJ's pursuit of False Claims Act damages
Sidley Austin LLP
  • Healthcare & Life Sciences
  • USA
  • 03 October 2018

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.

OCC to issue fintech charters
Sidley Austin LLP
  • Banking
  • USA
  • 24 August 2018

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.

Sixth Circuit's split decision highlights questions about pleading standard for materiality after Escobar
Sidley Austin LLP
  • Healthcare & Life Sciences
  • USA
  • 04 July 2018

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.

DOJ defends use of statistical sampling to prove False Claims Act liability
Sidley Austin LLP
  • Healthcare & Life Sciences
  • USA
  • 30 May 2018

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.

New FAQs on customer due diligence requirement
Sidley Austin LLP
  • Banking
  • USA
  • 04 May 2018

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.

Department of Justice pursues private equity firm for portfolio company False Claims Act violations
Sidley Austin LLP
  • Healthcare & Life Sciences
  • USA
  • 21 March 2018

The US Department of Justice (DOJ) recently filed a complaint in intervention against a compounding pharmacy, alleging that it had violated the False Claims Act by paying illegal kickbacks to induce prescriptions for drugs reimbursed by TRICARE, the federal healthcare programme for active duty military personnel, retirees and their families. Notably, the DOJ was also pursuing claims against a private equity firm that had a substantial ownership stake in the pharmacy.

Federal Reserve revises FR Y-7 and responds to questions on enhanced prudential standards for FBOs
Sidley Austin LLP
  • Banking
  • USA
  • 16 February 2018

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.

Second Circuit finds government's continued payment in face of fraud allegations undercuts materiality
Sidley Austin LLP
  • Healthcare & Life Sciences
  • USA
  • 31 January 2018

In its recent decision, the Second Circuit held that the relator's failure to plead sufficiently that the allegedly defrauded agency had changed its reimbursement practices after becoming aware of information supposedly withheld by the defendant doomed the complaint on materiality grounds. The decision underscores the significance of the materiality requirement at the motion to dismiss stage.

California credit card surcharge prohibition found unconstitutional on First Amendment grounds
Sidley Austin LLP
  • Banking
  • USA
  • 26 January 2018

The US Court of Appeals for the Ninth Circuit recently held that California's statute prohibiting credit card surcharges violated the First Amendment as applied to the proposed surcharge practices of the merchant-plaintiffs. The Ninth Circuit used the same reasoning as a recent Supreme Court case to hold that California's surcharge ban regulated speech rather than conduct, therefore posing First Amendment concerns.

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