Fraud and Abuse

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On July 28, 2025, the U.S. District Court for the Southern District of Ohio certified for interlocutory appeal to the U.S. Court of Appeals for the Sixth Circuit the question of whether the False Claims Act’s qui tam provisions violate Article II of the Constitution. The twin orders were issued in two separate but strikingly…

The U.S. Department of Health and Human Services (HHS) has announced a new general policy on what factors the agency will take into account when considering whether to make a criminal referral to the Department of Justice (DOJ) for individuals and entities who violate HHS regulations.

The notice, published on June 24, is in response to Executive Order 14294, which was issued by President Trump on May 9, 2025 and is designed to fight “overcriminalization in federal regulations.” That executive order pointed to the Code of Federal Regulations and its reams of pages in which lurk regulations that could result in criminal liability.

Under the executive order, agencies were required to issue guidance in the Federal Register (so, more pages to read) to identify their plan to address criminal regulatory offenses. In addition to this policy guidance, the agencies are required to submit a report within a year to the Office of Management and Budget (OMB) detailing all potentially criminal regulatory offenses as well as the potential punishment for violation of those regulations.Continue Reading HHS Announces Policy on Criminal Referrals for Regulatory Violations

On July 2, 2024, the Department of Justice (DOJ) and the Department of Health and Human Services (HHS) announced the formation of a new False Claims Act (FCA) Working Group.  The creation of the group, especially in the wake of record-breaking FCA recoveries in 2024, underscores the government’s ongoing commitment to combating health care fraud and makes clear that FCA enforcement is here to stay.Continue Reading DOJ and HHS Launch Joint False Claims Act Working Group

Judge Kathryn Kimball Mizelle in the Middle District of Florida has once again ruled that the qui tam relator provisions of the False Claims Act (FCA) violated the Appointments Clause of the U.S. Constitution. In a May 29, 2025 order in United States ex rel. Gose v. Native American Services Corp., Judge Mizelle followed the same logic that led to her ruling last fall in United States ex rel. Zafirov v. Florida Medical Associates, LLC.   

In Zafirov, Judge Mizelle ruled that the FCA’s provisions that permit a private citizen to bring a claim in the absence of intervention by the federal government are unconstitutional because they established a mechanism whereby “unaccountable, unsworn, private actors” are permitted “to exercise core executive power with substantial consequences to members of the public.”  In reaching this conclusion, Judge Mizelle, who clerked for Justice Thomas, followed reasoning in a dissent by Justice Thomas in the decision United States ex rel. Polansky v. Executive Health Resources, Inc. (599 U.S. 419).

Zafirov has been appealed to the U.S. Court of Appeals for the Eleventh Circuit. The parties have completed briefing in the case, but the court has not yet scheduled oral argument. In the absence of an appellate ruling to the contrary, Judge Mizelle continues to apply her analysis to FCA cases before her.Continue Reading Florida judge once again rules against constitutionality of False Claims Act relators

At the Federal Bar Association’s (FBA) Annual Qui Tam Conference on February 20, 2025, Department of Justice (DOJ) representatives Michael Granston (Deputy Assistant Attorney General for Commercial Litigation) and Jamie Yavelberg (Director of the Fraud Section in the Civil Division) discussed enforcement priorities for the False Claims Act (FCA), including Medicare Advantage, cybersecurity, and pandemic…

On January 15, the Department of Justice (DOJ) reported that False Claims Act (FCA) recoveries for civil cases in fiscal year 2024 totaled approximately $2.9 billion, representing about a $200 million increase from 2023. And these numbers do not account for two major settlements that were reached shortly after the close of the fiscal year that would have added an additional $830 million to the total. Of the total recovered by DOJ in 2024, approximately $1.67 billion (58%) related to matters involving the health care sector. Although a lower percentage of these recoveries related to health care than prior years, the health care sector remains the primary industry under scrutiny.  

For the second year in a row, the total number of qui tam lawsuits increased, demonstrating continued fraud enforcement by the agency and an active environment for private whistleblowers. The 979 qui tam cases filed in 2024 is a new record, blowing past the prior record of 757 cases in 2013 and far exceeding last year’s total of 713. And while the number of government-initiated cases dropped from last year’s record pace, the 423 non qui tam cases filed in 2024 is an order of magnitude higher than any other year since 1986.

This increase in FCA activity comes at a time of uncertainty for the law. As Reed Smith covered last fall, a federal judge in Florida ruled that the qui tam provisions of the FCA violated the Appointments Clause of the Constitution by investing core executive powers into unappointed whistleblowers. That decision followed reasoning in a Supreme Court dissent and is on appeal to the U.S. Court of Appeals for the Eleventh Circuit. Incoming Attorney General Pam Bondi assured senators during her confirmation hearing that she would defend the constitutionality of the provisions.Continue Reading DOJ exceeds $2.9 billion in FCA recoveries in 2024 and reports a record number of qui tams

The Department of Health and Human Services Office of Inspector General (OIG) recently issued an advisory opinion related to a proposed arrangement offering discounts to dental providers. This favorable advisory opinion, issued on December 9, 2024, offers fresh guidance and reminders to dental professionals and dental services organizations (DSOs) about how to structure discount programs.

The request for the advisory opinion was submitted by a dental supplies distributor that owns a separate entity (the “Dental Division”) which provides supplies, equipment, and business support services to customers, including dentists, dental specialists, dental laboratories, and DSOs. The requestor currently maintains a customer loyalty program whereby customers earn points on purchases of Dental Division items and services. Customers are eligible for benefits that are established through various tiers, with benefits increasing in value as the customer purchases more items or services.Continue Reading OIG Issues Favorable Opinion on Dental Equipment Supplier’s Loyalty Program

A year after issuing its General Compliance Program Guidance, the Department of Health and Human Services Office of Inspector General (“OIG”) has published the first industry-specific compliance guidance with  “Industry Segment-Specific Compliance Guidance for Skilled Nursing Facilities and Nursing Facilities” (the “Nursing Facility ICPG”). 

Notably, it has been more than 16 years since the OIG last offered a comprehensive update in this space as the last major update was in 2008. This new update is intended to address the significant changes in the nursing facility industry since 2008, including changes in business practices and the way that nursing facilities receive reimbursement for services.

Overview of OIG’s Guidance

Unlike the broader General Compliance Program Guidance (“GCPG”), which applies to all individuals and entities in the health care industry, the Nursing Facility ICPG is specifically tailored to nursing facilities. The OIG has emphasized that both the Nursing Facility ICPG and the GCPG are voluntary and nonbinding andare separate from and meant to complement the Centers for Medicare & Medicaid Services (CMS) Compliance Program Requirements of Participation, which are mandatory for any facilities participating in those federal health care programs.

The Nursing Facility ICPG identifies and provides risk mitigation recommendations for four potential compliance risk areas for skilled nursing facilities (“SNFs”) and nursing facilities (“NFs”): (1) quality of care and quality of life; (2) Medicare and Medicaid billing requirements; (3) federal Anti-Kickback Statute (“AKS”) considerations; and (4) other risk areas, such as related-party transactions, the physician self-referral law, and Health Insurance Portability and Accountability Act of 1996 (“HIPAA”).  We discuss each area below.Continue Reading OIG Issues Voluntary Compliance Guidance for Nursing Facilities

In the final 2025 Medicare Physician Fee Schedule, which is set to be published in the Federal Register on December 9, the Centers for Medicare and Medicaid Services (CMS) included substantive changes to the regulations governing when a provider must report and return a Medicare overpayment in order to avoid liability under the False Claims…

Are the qui tam provisions of the False Claims Act an unconstitutional delegation of authority to private citizens? One federal court, accepting an invitation from a Supreme Court dissent, ruled the answer is yes.

In an opinion issued yesterday dismissing a False Claims Act case, Judge Kathryn Kimball Mizelle of the U.S. District Court for the Middle District of Florida ruled that the statute’s provisions that permit a private citizen to bring a claim for a violation of the False Claims Act in the absence of intervention by the Federal Government are an unconstitutional delegation of executive authority that violated the Appointments Clause of Article II of the Constitution.

According to the court, the qui tam provisions, as strengthened by the False Claims Act Amendments Act of 1986 (Pub. L. No. 99-562), established a mechanism whereby “unaccountable, unsworn, private actors” are permitted “to exercise core executive power with substantial consequences to members of the public.” The court ruled that such a provision was unconstitutional as it permitted a private citizen to stand in as the “avatar in litigation” in which the interest of the United States is in issue.Continue Reading Are False Claims Act Whistleblower Cases Unconstitutional?

The Department of Health and Human Services Office of Inspector General (“OIG”) recently issued a favorable advisory opinion regarding whether a proposed patient assistance program (“PAP”) would run afoul of Federal antifraud statutes.

Under the proposed PAP, a nonprofit organization would subsidize certain cost-sharing obligations for low-income Medicare enrollees who have diabetes and reside in a specified rural area. Although the PAP displayed the potential for the generation of prohibited remuneration and did not fall under a safe harbor for either the Federal Anti-kickback Statute (AKS) or the beneficiary inducement provisions of the Civil Monetary Penalties statute (CMP), OIG stated that it would not impose administrative sanctions on the requesting entity.

While this advisory opinion is only applicable to the specific program at issue and can only be relied upon by the requestor, there are some potential considerations that could be applied more broadly to other arrangements.Continue Reading HHS OIG won’t enforce antifraud statutes against patient assistance program

In its recently released 2025 proposed Medicare Physician Fee Schedule (“MPFS”), the Centers for Medicare & Medicaid Services (“CMS”) proposed two important modifications to the Medicare 60-day overpayment refund rule—a new “identified overpayment” standard and codification of a 6-month timeframe to investigate and quantify an overpayment.

A product of the Affordable Care Act, the 60-day rule requires a person to report and return Part A and B overpayments within 60 days of identification. In 2016, CMS clarified that an overpayment is “identified” when a person, “through the exercise of reasonable diligence,” should have identified and quantified an overpayment. In the preamble to the 2016 rule, CMS established that “reasonable diligence” is demonstrated through a timely, good faith investigation, which is, at most, 6 months from the receipt of credible information of a potential overpayment.Continue Reading CMS Revisits Medicare Overpayment Standards in 2025 Physician Fee Schedule

The Department of Health and Human Services Office of Inspector General (“OIG”) recently issued a favorable advisory opinion that relates to whether two drug assistance programs would run afoul of the Federal anti-kickback statute (“AKS”).

In good news for the entity that requested the opinion, a United States corporate affiliate of a pharmaceutical manufacturer of the drug at issue (the “Requestor”), the OIG stated that it would not impose administrative sanctions for either program, despite the potential to generate prohibited remuneration under the AKS.  Although the advisory opinion is only applicable to the specific programs at issue and can be relied upon only by the Requestor, there are some potential considerations that could be applied more broadly to other arrangements.Continue Reading OIG Issues Favorable Opinion on Drug Assistance Programs

On April 8, 2024, the Department of Health and Human Services Office of Inspector General (OIG) issued Advisory Opinion No. 24-02, involving independent charity patient assistance programs (PAPs) associated with 12 specific diseases (the Disease Funds) operated by the Requestor. Each Disease Fund has a single donor–a pharmaceutical manufacturer that manufactures or markets a drug to treat the disease state associated with the fund.

Although the arrangement generates remuneration prohibited under the federal Anti-Kickback Statute (AKS) if the requisite intent were present, the OIG determined it would not impose sanctions on the Requestor. In exercising its enforcement discretion, the OIG acknowledged the public policy benefits of independent charity PAPs while highlighting the importance of a charity’s independence from pharmaceutical manufacturer influence. Additionally, the arrangement does not implicate the federal Beneficiary Inducements Civil Monetary Penalties (CMP) law.

The OIG set an effective period for the opinion that expires January 1, 2027 due to upcoming reductions in Medicare Part D cost sharing associated with the Inflation Reduction Act. The reduction in beneficiary out-of-pocket expenses could ease demand for PAP subsidies and alter the OIG’s assessment of the benefits and risks of the arrangement.Continue Reading OIG Exercises Discretion in Independent Charity Patient Assistance Program

The Federal Trade Commission (FTC), the Department of Justice’s Antitrust Division, and the U.S. Department of Health and Human Services jointly announced a cross-government inquiry into the impact of private equity investment and other forms of “corporate greed” in the health care sector. As part of the announcement of this effort, the agencies produced a…

The Department of Justice (DOJ) reported that its False Claims Act (FCA) recoveries for civil cases raked in approximately $2.7 billion for fiscal year 2023, representing a $450 million jump from 2022 recoveries.  Of the $2.7 billion recovered by the DOJ for 2023, approximately $1.8 billion (67%) came from the health care sector.

The real headline, however, may be the record-setting number of new FCA cases initiated in 2023 ­–– 500 initiated by the government and 712 initiated by private relators, for a total 1,212 new cases, over 250 more than the next-highest year (2022). Previous trends aside, this signals busy times ahead for the FCA.Continue Reading DOJ Announces $2.7 Billion in FCA Recoveries and Enforcement Priorities

On October 26, 2023, the Department of Justice (“DOJ”) announced that a Miami federal grand jury returned an indictment charging a Medicare Advantage Organization’s (“MAO”) former director of Medicare risk adjustment analytics with six counts of criminal fraud. DOJ alleged that the MAO received more than $53 million in overpayments from the Centers for Medicare & Medicaid Services (“CMS”) due to false diagnoses submitted on reimbursement claims for beneficiaries enrolled in the MAO’s plans.

What’s perhaps most notable about this matter is that DOJ declined to prosecute the MAO because of the MAO’s significant and timely self-disclosure, cooperation, and remediation efforts, in addition to the MAO’s agreement to repay CMS the full amount of the estimated overpayments.Continue Reading No Criminal Charges for Cooperative Medicare Advantage Organization

As promised back in April in an announcement of its plans to modernize compliance program guidance, the Department of Health and Human Services Office of Inspector General (OIG) issued the first of its new guidance documents for the health care industry on November 6, 2023. The first release is a general compliance program guidance (GCPG) designed to serve as a resource to all segments of the health care industry, regardless of the particular items or services offered.

In its newest release, OIG reiterates its view that the GCPG is by its very nature a voluntary guidebook that can act as a roadmap for a compliance program to follow, but that it is not binding on any individual or entity in the health care industry. This updated GCPG includes the following information for health care compliance programs, which we summarize further below: (1) key Federal authorities for entities engaged in health care business; (2) the seven elements of a compliance program; (3) adaptations for small and large entities; (4) other compliance considerations; and (6) OIG processes and resources.

Additional industry specific compliance guidance documents will be forthcoming, according to OIG, with its first updated guidance setting the stage for those to follow.Continue Reading HHS OIG Issues General Guidance as First Step in Effort to Modernize Compliance Guidance

The Department of Health and Human Services’ Office of Inspector General (“OIG”) issued an unfavorable advisory opinion (the “Opinion”) last Friday in which it refused to bless a proposed arrangement involving an intraoperative neuromonitoring (“IONM”) company (the “Requestor”) and various surgeons who perform procedures for which IONM is used, desiring to form a physician-owned entity (“Newco”) that would arrange to provide both the technical and professional components of IONM services (the “Proposed Arrangement”).

The Proposed Arrangement would essentially create a “turn-key” entity owned by the surgeons (the “Surgeon Owners”) that would subcontract to the Requestor and its affiliated physician practice (the “Practice”) “virtually all of the day-to-day requirements of an IONM business.” The Surgeon Owners would be responsible for forming Newco, preparing Newco’s internal governance documents, and determining the methodology for distribution of Newco’s profits amongst themselves. However, the Surgeon Owners would be passive investors, with limited involvement in Newco’s day-to-day operations.Continue Reading OIG Issues Unfavorable Advisory Opinion, Upholding Longstanding Contractual Joint Venture Concerns