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.
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 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 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 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.
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 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.
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.
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.
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.
Clinical laboratories are in a difficult position: although laboratory tests must be medically necessary to be reimbursable by federal healthcare programmes, laboratories often do not directly engage with patients in a way that would permit them to assess medical necessity. A district court recently corrected its ruling regarding the extent to which laboratories can be held liable under the False Claims Act when the tests for which they submit claims are not medically necessary.
The Consumer Financial Protection Bureau recently released a set of consumer protection principles designed to protect consumer interests in the market for services built around consumer-approved use of financial information. The principles are targeted at so-called 'data aggregation' or 'screen scraping' services that collect customer information in order to provide financial planning or other services.
California recently passed two bills with significant implications for pharmaceutical manufacturers: one imposing prescription drug price transparency requirements and another prohibiting certain types of co-pay coupon and other prescription drug discounting programmes that lower patient cost-sharing amounts for prescription drugs.
The Fifth Circuit recently affirmed summary judgment for a pharmaceuticals manufacturer on allegations that the company had violated the False Claims Act as a result of off-label marketing efforts and kickbacks to physicians. In its decision, the court emphasised the relators' failure to demonstrate a causal link between the alleged improper conduct and any false claims.
The US Office of the Comptroller of the Currency (OCC) recently released a notice seeking public input regarding how to revise the Volcker Rule. The notice cites a report released by the US Treasury Department, which included recommendations for significant changes to the rule. Although the OCC did not propose specific changes to the rule in its notice, it stated that the information that it is soliciting could support the revisions to the final rule advanced in the Treasury report and elsewhere.
The US District Court for the Northern District of Illinois recently dismissed the False Claims Act claims brought by the federal government and two state governments based on allegations that Par Pharmaceuticals had orchestrated an unlawful prescription-switching scheme. While the judge acknowledged that Par may have conspired to increase its own profits, it rejected the federal and state governments' claims due to their failure to allege the submission of any claims that actually were false.
The Consumer Financial Protection Bureau recently issued proposed amendments to its final rule to expand existing consumer protections for electronic fund transfers to pre-paid accounts. Among other things, the proposal would modify the final rule to exempt pre-paid account issuers from the error resolution and limitation of liability provisions with respect to unregistered cardholders and provide more flexibility to issuers of digital wallet accounts that are covered by the final rule.
The Treasury Department recently released its long-awaited report to reform the US financial system. The report includes dozens of recommendations to reform laws, treaties, regulations, guidance, reporting and recordkeeping requirements and other government policies that inhibit federal regulation of the financial system in a manner consistent with the set of core principles enunciated by President Trump in Executive Order 13772.
The Office of the Comptroller of the Currency recently issued a set of frequently asked questions (FAQs) to supplement its 2013 bulletin on third-party relationship risk management. The FAQs affirm the bulletin's broad applicability, while re-emphasising the need for third-party relationship oversight to be risk based and tailored to individual institutions' needs and delving into several more detailed compliance questions.