Supreme Court Gives Health-Care Fraud the Cold Shoulder


The Supreme Court seems to have reduced its appetite for health-care fraud and False Claims Act cases in the new 2016 term after issuing a string of petition denials Oct. 3.

Two petitions challenging appellate wins by drugmakers Bayer AG and Sanofi-Aventis U.S. LLP in fraud cases were denied (United States ex rel. Walterspiel v. Bayer AG, U.S., No. 16-8, review denied 10/3/16; Sergeants Benevolent Ass’n Health and Welfare Fund v. Sanofi-Aventis U.S. LLP, U.S., No. 15-1525, review denied 10/3/16).

The high court actions, leaving intact two federal appeals court decisions, didn't address two issues of importance to health-care organizations. There is still hope, however, that the Supreme Court could rule in a fraud case with health-care implications during its current term.

In the case of Bayer AG, the petition addressed a challenge to the adequacy of pleadings in a False Claims Act case alleging the drugmaker submitted false drug trial data on its Cipro (ciprofloxacin) antibiotic. The whistle-blower argued to the Supreme Court that a relaxed pleading standard should have been applied.

In the case of Sanofi, the appeals court upheld the dismissal of racketeering charges brought by health insurers. Their petition hoped to reverse the dismissal of allegations that Sanofi made misrepresentations about the antibiotic Ketek (telithromycin) that caused the insurers to pay for prescriptions that otherwise wouldn’t have been written.

The high court also declined to review whether the FCA's public disclosure bar applied to require dismissal of a relator's claims (United States ex rel. Cause of Action v. Chicago Transit Auth., U.S., No. 16-131, review denied 10/3/16). There, a government watchdog group asked the court to review whether the FCA's public disclosure bar is triggered when the government is already in possession of information forming the basis of FCA allegations; in this instance, inaccurate reports relating to requested federal funding.

Glimmer of Hope?

The Supreme Court could still put the FCA on its docket this year, however, because it invited the U.S. solicitor general to submit a brief on behalf of the government in United States ex rel. Advocates for Basic Legal Equal., Inc. v. U.S. Bank, N.A. (U.S., No. 16-130, order 10/3/16). Although the U.S. Bank litigation also doesn't involve a health-care company, a ruling on the public disclosure bar would apply to whistle-blowers and providers involved in health-care false claims litigation as well.

In that case, a legal advocacy group alleging mortgage fraud against U.S. Bank petitioned the court to resurrect its FCA action after lower courts found allegations that were previously disclosed triggered the FCA's public disclosure bar.

A Supreme Court ruling in U.S. Bank could further define the boundaries of what types of disclosures to the government trigger the FCA's public disclosure bar. More FCA whistle-blower cases could proceed to trial if the appeals court is reversed, while a Supreme Court ruling affirming the appeals court decision would provide another defense to health-care providers accused of submitting false claims.

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