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Happy Fourth of July from Boston

The patriots who signed the Declaration of Independence over 235 years ago, concluded the Declaration with these words:

And for the support of this Declaration, with a firm reliance on the protection of divine Providence, we mutually pledge to each other our Lives, our Fortunes and our sacred Honor“.

Had their bold experiment failed, they would have lost everything, including their lives.


As the long 4th of July holiday weekend is unfolding, let us remember the vision, sacrifice, faith, and hard work that have preserved our democracy, and appreciate the many acts, large and small, that contribute to the common good.


Among these are the courageous whistleblowers who at great personal cost come forward to tell “the government”, our government, that it is being cheated, by a defense contractor, a health care company, a bank, or others.   Sometimes they succeed, sometimes they fail, but regardless they are doing their part as citizens in a democracy.

In just the past month, we have already seen the largest settlement involving alleged violations of the Anti-Kickback Statute by skilling nursing facilities in the United States, Trinity Industries was ordered to pay 463.4 for defrauding the Federal Highway Administration, and UPS agreed to pay for False Claims Act violations.  All due to the contributions of whistleblowers.  Their bravery, and the dedication of the public servants who work the cases, inspire us.

We wish everyone a safe and happy Fourth of July from Boston!

“Ambiguous” Government Reg Not Automatic Defense

A common defense in a False Claims Act case is to argue that the defendant cannot be liable because the applicable government regulation was “ambiguous” and the defendant’s interpretation of the regulation is “reasonable” therefore the defendant could not have “knowingly” submitted a “false” claim (two key elements of FCA liability). Indeed, this defense is central to a declined qui tam case pending in U.S. District Court in Missouri against Anesthesia Associates of Kansas City (“AAKC”). Last week the Justice Department supported the whistleblower by filing a Statement of Interest debunking this defense.


The U.S. first addressed the argument that the defendant could not have acted “knowingly” or in other words with the requisite scienter to have violated the FCA. The FCA defines “knowingly” to mean having actual knowledge, reckless disregard, or deliberate ignorance of the falsity of the claim, and no proof of specific intent to defraud is required. 31 U.S.C. § 3729(b)(1). Defendant AAKC argued that CMS’ regulation was ambiguous and that AAKC could now advance a reasonable interpretation of the regulation. The U.S. rebutted this argument stating:


“An FCA defendant’s scienter, or lack thereof, depends on the surrounding facts as they existed at the time, not on whether its lawyers can point to ambiguities in regulatory language and advance plausible post hoc interpretations… To hold otherwise would mistakenly absolve of liability any defendant who can later advance a plausible regulatory basis for the submission of false claims. It would allow a defendant who fully intended to submit false claims to escape liability. It would eliminate liability, across the board and regardless of circumstances, for those who recognized an ambiguity and made the decision not to inquire.”


Brief at 2-3 (emphasis added).


As part of the court’s fact finding exercise, it may look at the defendant’s state of mind at the time the claims were being submitted; the U.S. acknowledged that “evidence of whether or not the defendant reasonably interpreted the governing regulation and submitted claims it, in good faith, believed to be truthful at the time of submission is important to consider.” Brief at 4. However, the U.S. reminded the court that the defendant cannot engage in “ostrich-like conduct” by effectively sticking its head in the sand. Brief at 6.


The U.S. then turned its fire on the argument that the claim could not have been “false” because of defendant’s purported reasonable interpretation. The U.S. rejected this argument out of hand, characterizing it as a “misstatement of the law.” Brief at 8. Explaining that “knowledge” and “falsity” are separate elements of FCA liability, the U.S. went on to note that it is up to the court to determine “falsity” by using “normal tools of statutory construction to determine whether statements or claims are ‘objectively’ false.” Id. (emphasis added).


This case is worth keeping an eye on to see how the district court rules. Anyone litigating a FCA case should consult the U.S. Brief for an excellent summary of the law of “knowledge” and the meaning of “falsity” under the FCA.

Medical Device Manufacturer Settles False Claims Act Lawsuit

A whistleblower False Claims Act lawsuit accusing Medtronic, Inc. of promoting off label unapproved uses of its “SubQ” spinal stimulation device has been settled by the Department of Justice for $2.8 million.


The suit, brought by a former Medtronic sales representative, alleged that “from 2007 through 2011, Medtronic knowingly caused dozens of physicians located throughout more than 20 states to submit claims to Medicare and TRICARE for investigational medical procedures known as SubQ stimulation that were not reimbursable.” While the safety and efficacy of SubQ stimulation had not been proved to the FDA, Medtronic nevertheless persuaded doctors to implant Medtronic’s spinal cord stimulation devices just beneath the patient’s skin near an area of pain, most often in the lower back, where the devices would purportedly provide electrical impulses intended to alleviate chronic pain.


Devices or drugs prescribed for purposes that are not FDA approved and thus are “off label” are unfortunately all too common. Indeed, the successful, but unlawful, promotion of prescription drugs for off label purposes has led to multiple large FCA recoveries in the last several years.  On Sunday night John Oliver did a hilarious, sad but true, piece on these drug company tactics on his show Last Week With John Oliver.


Patients should not be treated like guinea pigs for profit. Ask your doctor…or ask John Oliver..or ask a lawyer who represents FCA whistleblowers.