Life Science Compliance Update

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September 20, 2017

False Claims Act Mid-Year Review: Significant Life Science Settlements, Post-Escobar Developments & Industry Round Up

False-Claims-Act-Atlanta-Medical-Clinic-“AMC”-And-Dr.-Timothy-Dembowski-Have-aAreed-to-Pay-For-Violated-Medicare-Rules-And-The-False-Claims-Act

Several significant False Claims Act settlements and judgments in the first six months of 2017 suggest this year will result in the eighth year of over $3 billion in FCA recoveries. Additionally, recent judicial decisions in FCA suits have further refined the test outlined in the Supreme Court’s 2016 Escobar decision, statistical sampling has resulted in significant FCA judgments, and the government continues to explore new frontiers for FCA liability.

The False Claims Act (“FCA”) continues to be a powerful tool for the government (and relators) to curb fraudulent conduct. FCA settlements and judgments to date in 2017 have surpassed $1.5 billion in recoveries. This rate suggests that for an eighth consecutive year the government is on track to collect more than $3 billion total from FCA cases.

As in the past, several significant FCA settlements and judgments this year have targeted the life science industry. Additionally, several decisions in the first half of 2017 helped refine the Supreme Court’s consequential Escobar decision, demonstrated willingness by the government to apply statistical sampling to calculate recoveries, and further refined the heightened pleading standards required for FCA suits. Finally, government scrutiny of pharmaceutical manufacturers related to donations to charitable patient assistance programs (“PAPs”) signals the possibility of burgeoning FCA risk and underscores the importance of compliance.

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