Healthcare / False Claims Act · Anti-Kickback Statute · Manufacturer Practice Support · Scienter

Introduction

Manufacturers of physician-administered drugs have long supported the practices that administer them, with reimbursement hotlines, coding guides, nurse training, and advice on operating an infusion suite. Relators have argued that some of that support is really free business consulting, and that free consulting given in conjunction with prescriptions is illegal remuneration under the Anti-Kickback Statute (AKS). Manufacturers have responded that support tied to their own products is part of what providers purchase along with the infusion drugs. Courts have analyzed those claims using a “substantial independent value” test drawn from guidance of the Office of Inspector General (OIG) of the U.S. Department of Health and Human Services: support that has value to the practice apart from the manufacturer’s product can be remuneration, while support whose value depends on the product generally is not.

In United States ex rel. Hart v. McKesson Corp., 602 F. Supp. 3d 575, 589–90 (S.D.N.Y. 2022), aff’d in relevant part, 96 F.4th 145 (2d Cir. 2024), allegations about a free “Margin Analyzer” survived dismissal under the “substantial independent value” test. On September 30, 2026, after nearly ten years of litigation, the U.S. District Court for the District of Massachusetts granted summary judgment for Janssen Biotech in a qui tam case the government declined to join, over Janssen’s programs supporting practices that infuse Remicade and Simponi ARIA in their own offices. The court made two rulings. First, the relator had not produced evidence that the services had value independent of Janssen’s drugs. Second, and in the alternative, she had not produced evidence that Janssen acted knowingly and willfully in violation of the AKS, and therefore of the False Claims Act (FCA).

Executive Summary

Janssen makes Remicade and Simponi ARIA, two infused biologics usually prescribed by rheumatologists and gastroenterologists. Through a team of Area Business Specialists (ABSs), it offered physician practices programming on setting up and operating in-office infusion suites, covering billing and coding, staffing, scheduling, specialty pharmacies, and suite efficiency. Julie Long, an ABS in central Pennsylvania from 2003 to early 2016, filed a qui tam action in 2016 alleging that the programming was free business consulting that amounted to AKS kickbacks and tainted the resulting claims under the FCA. The United States and the states declined to intervene. After discovery limited to her territory and to national or regional policies that applied to her work, Janssen moved for summary judgment on the whole case, and Long cross-moved on scienter.

The court granted Janssen’s motion and denied Long’s. It applied the substantial independent value framework, rejected Janssen’s First Amendment argument, and held that the evidence did not show remuneration. It then held that Long had not shown a knowing and willful violation. Because there was no triable AKS violation, the court did not reach Janssen’s FCA-specific arguments or its constitutional challenges to the qui tam provisions.

Background

The programs, and what the relator conceded

Janssen ran two field teams working with infusion centers. Immunology Specialists detailed the drugs’ clinical benefits at the sites where they were prescribed. ABSs worked at the “Site of Care,” where patients were infused. Janssen’s position was that in-office suites widen patient access and reduce “attrition” by patients who get a prescription but never complete their infusions. 2026 WL 2949353, at *2, *4. A multidisciplinary Promotional Review Committee, including in-house lawyers, approved all written programming. Janssen did not assert an advice-of-counsel defense and did not waive privilege over the lawyers’ communications, so the record showed that the committee approved the materials but not what the lawyers advised. Id. at *5 & n.3. Compliance policies told ABSs they were “not business advisors” and could not offer “consulting services that relate to the management of customers’ business practices.” Id. at *9.

Two features of the record shaped the case. First, Long expressly conceded, in a discovery dispute and again at summary judgment, that the approved slide decks and written materials were not unlawful remuneration. Her theory was that ABSs and outside consultants delivered unlawful “live” services that went beyond those materials. Id. at *2, *15–16. Second, she offered no affidavit of her own, no testimony from any other ABS, and no testimony from any physician or practice manager. The court found “no direct evidence at all of the content of any oral communication between any ABS and any physician practice.” Id. at *16.

The IOM

The court described the Infusion Optimization Modeler (IOM) as the “closest” Long came to establishing an AKS violation. Id. at *3. An ABS took a practice’s data on its Remicade patients, infusion chairs, and staff hours, ran it through a relatively simple program, and produced a printout showing which resource constrained the practice and how many more infusions per week it could deliver if that constraint were removed. Id. at *8–9, *23. In Long’s words, the practice then “had to take the bull by the horns” and make any changes itself. Id. at *23.

The procedural path

Long filed on October 28, 2016. Over the next eight years the court dismissed the state-law claims, trimmed the federal claims on limitations grounds, and denied a public-disclosure-bar motion. Id. at *10. Rather than order nationwide discovery, the court limited the first phase to Long’s territory and to national or regional policies that applied to her work, and allowed Janssen to test the case by summary judgment at the end of that phase. Id.

Legal Analysis

• The court applied the substantial independent value framework. The court reasoned that a literal reading of “remuneration” “would make virtually all pharmaceutical detailing or marketing a crime.” Id. at *11. It followed OIG Advisory Opinion No. 00-10 (Dec. 15, 2000) and the 2003 Compliance Program Guidance for Pharmaceutical Manufacturers, 68 Fed. Reg. 23,731, 23,735 (May 5, 2003), noting that “every court to have considered the issue” had done so. Id. at *12. It added that, after Loper Bright Enterprises v. Raimondo, 603 U.S. 369 (2024), OIG’s views get no deference. 2026 WL 2949353, at *12 n.9.
  • The relator’s challenge to the framework. Long argued that the framework should not apply at all. The court called the argument “perhaps not frivolous” but undeveloped, and declined “to blaze a new trail” given that the AKS is a felony statute whose terms are interpreted the same way in civil and criminal cases. Id. at *13.
  • The guideposts. Medical, clinical, and technical support, and billing and reimbursement advice for the product, are permissible. Business or management advice about the overall practice, or doing tasks that are part of a physician’s overhead, are not. Id. at *13–14. In between, “the landscape is unclear,” and the court said those cases turn on “the actual evidence,” not “conclusory labels.” Id. at *14.
• The First Amendment did not narrow “remuneration.” Janssen argued that treating truthful promotional speech as illegal remuneration would raise constitutional concerns, so the term should be read narrowly. Long responded that the First Amendment does not shield illegal inducements that happen to involve communication. The court rejected Janssen’s argument, reasoning that the AKS regulates conduct, and that “where valuable speech is offered as the quid in a quid pro quo arrangement, prohibiting such arrangements would clearly survive First Amendment scrutiny.” Id. at *14–15.
• The question was not whether the programs were valuable, but whether their value was independent of Janssen’s drugs. The court accepted that the programming had substantial value and that its ultimate purpose was to sell more Remicade and Simponi ARIA. Id. at *20. Under the framework, support lacks “independent” value if its value “would not exist if the products did not exist.” Id. Long’s arguments failed on that point.
  • Other drugs. Long argued the suites could be used for other infused drugs. The court found her evidence consisted, “in substance, of a single sentence by a single witness,” a Janssen Rule 30(b)(6) designee’s acknowledgment that the programs would interest physicians who wanted to infuse other products. Id. at *21.
  • Scale and price. Long pointed to the magnitude of the programs and to the roughly $3,000 per session Janssen paid the outside firm Xcenda to deliver them. The court held that size and cost show value and importance to Janssen, but not independence. Id. at *21–22 & n.23.
  • Tailoring. Customized advice is “relevant, but it is not controlling,” since a device representative assisting a surgeon gives tailored advice that still is not independent of the product. Id. at *22.
  • The IOM. The court assumed the IOM fell outside Long’s concession and treated it as an extension of the approved “Managing Biologics in the Physician Office” deck to a specific practice. Because it was used only with practices already infusing Janssen’s drugs, and the record held no evidence on other infusible products or their infusion times, the court held that “if Remicade and Simponi ARIA did not exist, the IOM would have no value.” Id. at *23–24 & n.25. It distinguished Hart, where the tool compared the profitability of competing drugs, employees reviewed “key areas of improvement” with practices quarterly, and another McKesson division sold the same tools. Id. at *24.
• Scienter was decided in the alternative. Having found no remuneration, the court could have ended its analysis. “Rather than stop at that point,” it also took up willfulness, which gives the ruling a second, independent basis. Id. at *24. Under United States v. Bay State Ambulance & Hospital Rental Service, Inc., 874 F.2d 20, 33 (1st Cir. 1989), and 42 U.S.C. § 1320a-7b(h), the relator must show knowledge that the conduct is unlawful and intent to violate the law, but not intent to violate the AKS specifically. 2026 WL 2949353, at *25.
  • A corporate scienter framework. Adapting United States v. Bank of New England, N.A., 821 F.2d 844, 855–56 (1st Cir. 1987), the court applied the collective knowledge doctrine to “knowingly,” so that the corporation’s knowledge includes everything its employees knew collectively. For “willfully,” it required evidence that an employee acting within the scope of employment intended to violate the law, or that the corporation was “flagrantly indifferent” to its legal obligations. 2026 WL 2949353, at *25–26. It noted that the D.C. Circuit has rejected collective knowledge for FCA scienter in United States v. Science Applications International Corp., 626 F.3d 1257, 1274 (D.C. Cir. 2010), that the First Circuit has not addressed the question, and that it was applying the doctrine to the AKS. 2026 WL 2949353, at *25 n.27.
  • Concealment. Long pointed to compliance edits, such as changing “Operational Efficiency” to “Access Support for our IV Therapies,” and a direction to talk about patient growth rather than vial growth. The court held that it would be unreasonable to read a compliance officer’s suggested changes as concealment, and that “all four instances involved cautions or reminders that ABSs should steer clear of business discussions.” Id. at *27–28.
  • Internal warnings. Compliance staff had flagged “potential risk[s]” and “compliance sensitivities,” including the risk that the programs could be seen as offsetting a practice’s start-up costs. The court held this showed “compliance officers who did their jobs,” and that treating it as willfulness would effectively punish Janssen “for having a compliance department at all.” Id. at *28–29.
  • Institutional history and policies. Prior settlements and a Corporate Integrity Agreement with OIG showed awareness of the AKS, which was not disputed. Id. at *29. Long’s syllogism—that the policies barred consulting, the programs were consulting, and so the violation was willful—failed because compliance personnel approved the programming and no witness believed it was unlawful consulting. Id. at *3, *29–30. Long herself testified that she did not believe at the time that she was providing a kickback. Id. at *31. A training slide saying there is “a lot of gray” in healthcare compliance was, in context, “perfectly accurate,” not an invitation to break the law. Id.
• Disclosure to the government carried limited weight. Janssen argued that it openly disclosed the programs to federal authorities and so could not have intended to conceal them. The court called that evidence relevant but “of limited value,” because the government may not appreciate a disclosure or have resources to follow up. Id. at *26 n.28.

Holding

Janssen’s motion for summary judgment was granted, and Long’s cross-motion on scienter was denied. The court held that, drawing all reasonable inferences in her favor, Long had not produced evidence that Janssen provided services with substantial independent value to induce purchases of Remicade or Simponi ARIA. Id. at *24. Independently, she produced “no evidence that any individual employee of Janssen had the necessary intent to violate the law,” and the evidence fell “well short” of showing corporate flagrant indifference. Id. at *31. The court rejected Janssen’s First Amendment argument. It did not reach Janssen’s FCA-specific arguments or its Appointments Clause and Take Care Clause challenges to the qui tam provisions. Id. at *11 n.8, *31. The court entered judgment on October 6, 2026. Judgment, Long, No. 1:16-cv-12182-FDS (D. Mass. Oct. 6, 2026), ECF No. 674.

What to Watch

• An appeal to the First Circuit. Because the court rested on two independent grounds, Long would need to overturn both. Judgment was entered on October 6, 2026, so a notice of appeal is due by November 5, 2026. See Fed. R. App. P. 4(a)(1)(A). As of October 18, 2026, none had been filed.
• Collective knowledge and AKS scienter. The court adapted the First Circuit’s corporate scienter standard from Bank of New England, a Currency Transaction Reporting Act case, to the AKS, and applied the collective knowledge doctrine to the AKS’s “knowingly” element. It did so even though the D.C. Circuit has held that collective knowledge is “an inappropriate basis for proof of scienter” under the FCA, reasoning that the AKS’s statutory language differs from the FCA’s. 2026 WL 2949353, at *25 n.27 (quoting Science Applications International Corp., 626 F.3d at 1274). The First Circuit has not addressed whether collective knowledge can establish FCA scienter, id., and the opinion cites no First Circuit decision applying the doctrine to the AKS, so an appeal would give the First Circuit the chance to decide whether the court’s approach is right.
• The middle of the independent-value spectrum. The court described the line between product support and practice management advice as “ill-defined” and “far from precise.” Id. at *3, *13. The court contrasted Hart and United States ex rel. Witkin v. Medtronic, Inc., No. 1:11-cv-10790-IT, 2024 WL 1892405, at *17 (D. Mass. Mar. 31, 2024), with United States ex rel. Forney v. Medtronic, Inc., No. 5:15-cv-06264-EGS, 2017 WL 2653568, at *1, *4 (E.D. Pa. June 19, 2017). 2026 WL 2949353, at *13. Because the independence test turned on whether the programs would have had value without Janssen’s drugs, evidence that the same tools served other infusible drugs was the missing piece here. The court noted that a 2013 IOM printout had lines for “other infusions” that neither party addressed. Id. at *8 n.6. That is the gap future relators are likely to try to fill.
• The constitutional challenge left unresolved. Janssen’s Article II challenge to the qui tam provisions was raised but not decided. It would remain available to Janssen if the judgment were reversed.

What This Means for Resolving FCA Disputes

A practice-support case turns on two evidentiary questions. Was the help part of the product or a freestanding benefit? And, on the knowledge and willfulness element, did anyone at the company understand that the help crossed the line into unlawful remuneration? Long shows how a manufacturer with documented compliance review can make the second question hard for a relator to answer. Compliance staff approved the programs, flagged risks, and saw their edits adopted, and the court read that record as diligence, not knowledge. A relator who cannot produce a witness saying the conduct was understood to be unlawful, or a document showing that warnings were ignored, faces a steep climb on scienter even where the remuneration question is close.

That changes how these cases are valued. Exposure in an AKS-predicated FCA case multiplies through trebling and per-claim penalties. But a scienter element that turns on specific evidence of intent discounts all of it, and the defendant’s own compliance record largely sets the amount of the discount. Relator’s counsel will want first-hand witnesses and documents showing that warnings went unheeded. Defense counsel will want to show how compliance review actually worked, which may mean deciding early whether privileged legal review becomes part of the story. Where the record is thin on both sides, an early discovery phase like the one the court used here gives the parties a shared view of the evidence before the full cost of nationwide discovery, and that tends to be when these cases are most resolvable.

John Libby is an arbitrator, mediator, and settlement counsel with LibbyADR LLC. This post contains his own summaries of the decisions discussed, prepared for general informational purposes only. The summaries are not intended to be a complete statement of any court’s reasoning, nor should they be taken to indicate how he would rule as an arbitrator in any particular case. In addition, the summaries are not legal advice, nor should they be construed as legal advice. Readers should not act on these posts, but should review the decisions themselves and consult with legal counsel.

Healthcare / False Claims Act · Medicaid Managed Care · Materiality · Government Knowledge

Introduction

In Universal Health Services, Inc. v. United States ex rel. Escobar, 579 U.S. 176, 194 (2016), the Supreme Court held that the materiality requirement of the False Claims Act (FCA) is “demanding,” and that the government’s own response to known violations is strong evidence of whether they matter. If the government “pays a particular claim in full despite its actual knowledge that certain requirements were violated, that is very strong evidence that those requirements are not material.” Id. at 195. The same is true if the government “regularly pays a particular type of claim in full despite actual knowledge that certain requirements were violated, and has signaled no change in position.” Id. Escobar did not define the government’s “actual knowledge,” and lower courts are still working out whether an agency knows of a violation when the information is in its files or in its own contractor’s reports, but the officials who decide whether to pay or recover never reviewed or understood it.

In United States ex rel. McCullough v. Anthem Insurance Companies, Inc., the U.S. District Court for the Southern District of Indiana recently faced this issue at the pleading stage. There, two former Indiana state officials alleged that four Medicaid managed care entities and six hospital systems were paid on improper claims that IBM’s algorithms had identified, even though the state had not tried to recover the overpayments. On August 20, 2026, the court denied both defense groups’ motions to dismiss the relators’ third amended complaint, after it had dismissed the second amended complaint for failure to plead materiality. On materiality, the court held that, “though it is a close call, materiality is satisfied.” The court also made two other rulings. It adhered to its earlier rulings on falsity, scienter, and causation, again held the Indiana FCA’s public disclosure bar inapplicable, and rejected the constitutional challenge to the qui tam provisions of the FCA.

Executive Summary

From 2011 to 2021, IBM Watson and its corporate predecessors served as the fraud and abuse detection contractor for Indiana’s Medicaid program. In 2016, after a Centers for Medicare & Medicaid Services (CMS) audit, Indiana Medicaid’s Program Integrity team directed IBM to expand its algorithms beyond fee-for-service claims to claims providers submitted to managed care entities (MCEs). The MCEs receive capitated payments from the state, set in part on the basis of the encounter data the MCEs report on the claims they paid. From 2017 to 2021, IBM’s analyses identified claims that, according to the relators, the MCEs paid and the hospitals submitted in violation of billing rules and Medicaid requirements. According to the relators, Indiana Medicaid then paused its efforts to recover the overpayments IBM had identified. 2026 WL 2448954, at *2–3.

John D. McCullough, a former Director of Program Integrity for Indiana Medicaid, and James R. Holden, a former Chief Deputy and General Counsel in the Office of the Indiana State Treasurer, brought a qui tam action under the federal and Indiana FCAs. Id. at *1. The defendants include both MCEs and hospital systems: the “MCE Defendants” (Anthem Insurance Companies, Inc., MDwise, Inc., CareSource Indiana, Inc., and Coordinated Care Corporation) and the “Hospital Defendants” (Indiana University Health, Inc., Health and Hospital Corporation of Marion County, Community Health Network, Inc., Ascension Health, Inc., Lutheran Health Network, Inc., and Parkview Health System, Inc.). Id.

The court had dismissed the second amended complaint for failure to plead materiality, reasoning that the relators’ own allegations showed that Indiana Medicaid knew of the violations and chose not to act; that complaint attributed the decision not to recoup to “improper political pressure.” Id. at *5. In the third amended complaint, the relators dropped that allegation and alleged instead that an understaffed Program Integrity team and a new director never fully reviewed or understood IBM’s reports. The court accepted those allegations as true, held that they removed the “very strong evidence” against materiality that actual knowledge would supply, and denied both motions. Id. at *8–10. The ruling is an unpublished district court order at the pleading stage. It does not decide whether any claim was false or what Indiana Medicaid actually knew. But it is illustrative of the way lower courts are applying Escobar to determine whether relators are adequately pleading materiality.

Background

The IBM reports and the Program Integrity team

According to the complaint, IBM’s algorithms helped Indiana Medicaid recover millions of dollars a year in fee-for-service overpayments between 2011 and 2016, including more than $8.9 million in 2016. The relators allege that IBM’s ongoing refinement of its algorithms ensured their accuracy, and that fewer than one percent of IBM-based recoupment demands were overturned on appeal from 2011 to 2020. Id. at *2. Adding MCE claims was expected to multiply the number of improper claims IBM found and the amount recovered. Id.

The relators allege the Program Integrity team could not handle that volume. It had four staff members when McCullough became director in 2014. McCullough was told it needed at least a dozen more to pursue recoveries on the MCE findings, and he hired one before he was terminated in early 2017. Program Integrity staff repeatedly told IBM they could not fully review earlier reports, let alone new ones, and McCullough’s replacement had gaps in her understanding of IBM’s analysis. Id. As a result, the team curtailed its plans to recoup based on IBM’s findings. The relators allege that the state stopped because it lacked the staff to pursue the recoveries, not because it doubted that IBM’s findings were accurate. They also allege that the pause was not a change in the law or a formal policy decision, so the defendants could not have believed they had been released from their obligations to avoid, detect, or repay overpayments. Id. Those allegations are aimed at Escobar, under which the government’s continued payment of claims counts strongly against materiality when it pays with actual knowledge that the claims violate applicable rules. The relators’ account is that the state never made an informed decision that the violations did not matter. Medicaid fraud recoveries fell from $12.84 million in 2016 to $7.24 million in 2019. Indiana Medicaid has since reintroduced algorithms targeting the same type of billing violations and obtained recoveries comparable to those in 2016, an allegation that bears on whether the state treats these violations as material. Id.

The alleged violations

Under Indiana’s managed care model, the hospitals submit claims to the MCEs, whose provider agreements require compliance with Medicaid rules, and Indiana Medicaid providers certify compliance as a condition of payment. Id. at *3. IBM’s analyses allegedly found that the MCEs paid tens to hundreds of millions of dollars in claims that broke basic hospital billing rules (such as the rule against billing two separate inpatient stays when a patient is readmitted right away for the same condition), were plainly not payable (services after a patient’s death, duplicates), or violated Medicaid requirements for chiropractic, dental, and opioid treatment. Id. The relators allege the MCEs paid those claims rather than catching them “because they knew reporting higher expenditures in the encounter data they submitted to Indiana Medicaid would allow them to obtain higher capitated payments in subsequent years.” Id. (Encounter data are the records MCEs submit to the state of the claims they paid; the state uses these data in setting future capitation rates.) IBM’s analyses also allegedly found that the Hospital Defendants obtained millions of dollars in Medicaid funds by submitting claims that broke basic hospital billing rules, were plainly not payable, or violated Medicaid requirements for injections. Id.

The relators alleged that the defendants presented false claims and made false statements under 31 U.S.C. § 3729(a)(1)(A) and (B), and under the Indiana analogs, Ind. Code § 5-11-5.7-2(b)(1) and (2). Id. at *1. The relators did not plead a reverse false claims count under § 3729(a)(1)(G), which would have targeted the defendants’ failure to repay identified overpayments. The state’s failure to recoup therefore matters here only as evidence on materiality, not as a claim in its own right.

The prior dismissal

In the second amended complaint, the relators alleged that Indiana Medicaid curtailed recoupments because of “improper political pressure.” The court read that as a conscious choice to deemphasize correct payment and, under Escobar, as strong evidence that the violations were not material. It gave the relators a “final attempt” to plead materiality. Id. at *5.

Legal Analysis

The court first disposed of the arguments it had previously decided with regard to the second amended complaint, then took up the parties’ competing accounts of what Indiana Medicaid knew, and then decided materiality.

1. The elements the court had already decided

• The court adhered to its earlier rulings on the other elements. The Hospital Defendants argued that the complaint failed to plead falsity, scienter, materiality, and causation, and failed to satisfy Rule 9(b). The MCE Defendants made the same arguments and added the public disclosure bar and the constitutionality of qui tam. Id. at *4.
  • Other elements. Because the third amended complaint largely repeated the earlier allegations, the court did not disturb its prior rulings on falsity, scienter, and causation, noting that the defendants had preserved their objections. Id.
  • Public disclosure. The court again held the Indiana FCA’s public disclosure bar inapplicable, notwithstanding Seventh Circuit precedent that “the Government’s possession of the information exposing a fraud is alone sufficient to trigger the public-disclosure bar,” Cause of Action v. Chicago Transit Authority, 815 F.3d 267, 275 (7th Cir. 2016), because it remained persuaded that the Indiana Supreme Court would follow the majority of federal circuits. 2026 WL 2448954, at *5.
  • Constitutionality. Absent binding authority, the court agreed with the district courts in the Seventh Circuit and with the other circuits that have upheld the constitutionality of qui tam actions. Id.

2. The materiality issue

• Inconsistent pleading. The defendants argued that the new allegations do not align with the prior ones. They said the relators were backtracking on their earlier actual-knowledge allegations, and that the third amended complaint undermined the argument that the excessive claims were accepted unknowingly. The defendants noted that the third amended complaint alleges that Program Integrity staff typically reviewed IBM’s findings, that IBM sent more than 1,000 audit letters a year, and that millions were recouped annually. Id. at *6. The Hospital Defendants pointed to the relators’ own July 2020 report showing that IBM’s recoupments were among their highest in 2017, 2018, and 2019, and that Indiana Medicaid chose not to pursue 22 IBM findings, which they argued shows the state reviewed the reports and made choices not to pursue overpayments. Id. at *7. The MCE Defendants argued that the complaint alleges the state always found the violations material, changed its policy, and was too worried about the expense of administrative recoupment, which cannot all be true. Id. at *8.
• The relators responded that possessing a report is not knowing what is in it. Relying on United States ex rel. Streck v. Eli Lilly & Co., 152 F.4th 816 (7th Cir. 2025), and United States v. Rogan, 517 F.3d 449, 452 (7th Cir. 2008), they argued that actual knowledge cannot be imputed to an agency whose officials fail to appreciate the significance of what they are given. 2026 WL 2448954, at *6. The MCE Defendants answered that Streck involved an undisclosed $600 million effect on pricing, while IBM’s reports identified the claims, why they were flagged, and their financial impact. Id. at *7.
• Each side read the state’s recoupment email as support. The relators relied on an email from the General Counsel of the Indiana Family and Social Services Administration (FSSA) stating that Indiana Medicaid would seek recoupment “if the claims identified in [this] qui tam action are confirmed to be claims that are not legally entitled to payment.” As noted above, Escobar treats repeated payment with actual knowledge as strong evidence against materiality only where the government “has signaled no change in position.” The relators argued that the email was such a signal: whatever the state knew before, it had now said it would recover payments on claims found to be improper. Id. at *7. The defendants read it the other way: the state would act only if a court told it to. Id. at *6. The MCE Defendants added that the statement was not news, because “presumably” Indiana Medicaid has always cared about recoupment. Id. at *8.
• The State of Indiana weighed in. In a Second Statement of Interest, the state urged a holistic approach to materiality under the Indiana FCA, arguing that “Medicaid is not an ordinary commercial arrangement” and that focusing exclusively on enforcement decisions made “with imperfect information and limited resources” undervalues the harm of false claims. Id. at *8.

3. The court’s materiality analysis

• An amended pleading supersedes the earlier admissions. The court held that, under Scott v. Chuhak & Tecson, P.C., 725 F.3d 772, 782–83 (7th Cir. 2013), “facts or admissions from an earlier complaint that are not included in a later complaint cannot be considered on a motion to dismiss.” The political-pressure allegation was gone, so the court’s earlier finding of “very strong evidence” against materiality no longer applied. 2026 WL 2448954, at *8.
• Without actual knowledge, the holistic factors favored materiality. The court held that “[a]bsent actual knowledge by Indiana Medicaid, the holistic view the Court is required to take leads to the conclusion that the alleged false claims were material.” Id. at *9. It relied on Seventh Circuit authority that noncompliance “resulting in large price differentials in how much the government owes” strongly supports materiality, on the requirement that the defendants certify their claims, and on the parallel to United States ex rel. Heath v. Wisconsin Bell, Inc., 92 F.4th 654 (7th Cir. 2024), where a misrepresentation going to a cost-control program’s purpose was material. Because the purpose of Medicaid managed care is to reduce costs, the court found it “reasonable for the Court to infer that if Indiana Medicaid had known of the actual violations, it would have sought recoupment.” 2026 WL 2448954, at *9. That inference is not a presumption in the relators’ favor. Relators must plead and prove materiality, but they do not have to prove that the government lacked actual knowledge; the government’s knowledge is evidence the defendants offer to show that the violations did not matter. Materiality asks whether a misrepresentation has “a natural tendency to influence, or be capable of influencing,” payment, 31 U.S.C. § 3729(b)(4), and looks to “the likely or actual behavior” of the government, Escobar, 579 U.S. at 193 (internal quotation marks omitted). Where, as alleged here, the government did not know of the violations, there is no actual behavior to examine, so the court asked what the government likely would have done had it known. The court also noted that a statement can be material “even if those who make the decision are negligent and fail to appreciate the statement’s significance.” 2026 WL 2448954, at *10 (quoting Streck, 152 F.4th at 848 (quoting Rogan, 517 F.3d at 452)).
• The state’s inaction counts, but it is not dispositive. The court agreed with the defendants that “Indiana Medicaid’s inaction is evidence of immateriality, but that fact alone is not dispositive,” and held that “the mere fact that Indiana Medicaid had the reports does not automatically indicate that they knew or appreciated the reports’ significance such that it defeats materiality.” Id. at *10.
• The question is whether the claims were material, not whether the reports were. The defendants pointed to the state’s assertions that the IBM reports may be doubtful or speculative. The court responded that “the issue is not whether the IBM reports themselves were material to the government’s payment decision but rather whether the allegedly false claims to the government were material to its payment decision.” Id.

Holding

Both motions to dismiss the third amended complaint were denied. The court adhered to its prior rulings on falsity, scienter, causation, public disclosure, and the constitutionality of qui tam. On materiality, it held that the third amended complaint’s allegations that Indiana Medicaid lacked actual knowledge, which it accepted as true at the pleading stage, together with the amounts alleged, the certification requirement, and the cost-control purpose of Medicaid managed care, sufficiently plead materiality under Escobar. 2026 WL 2448954, at *4–10.

What to Watch

• Discovery into what Indiana Medicaid knew. The materiality ruling rests on allegations that the Program Integrity team lacked actual knowledge of the falsity of the claims because it did not review or understand IBM’s reports. The defendants have already pointed to evidence that cuts the other way. The relators’ own July 2020 report shows that IBM-based recoupments in 2017, 2018, and 2019 were among the highest of the decade, the same period in which the relators say the state stopped reviewing IBM’s findings, and that Indiana Medicaid chose not to pursue 22 IBM findings during that period. The defendants argue that both facts show the state read the reports and decided which findings to act on. Discovery will test whose account holds.
• The FSSA’s position on recoupment. The FSSA General Counsel’s email ties recoupment to confirmation that the claims were not payable. If the state begins recouping while the case is pending, that would support the relators’ argument that it has “signaled [a] change in position” under Escobar. If it does not, the defendants will say its inaction speaks for itself.
• The defendants’ preserved arguments. The defendants preserved their objections on falsity, scienter, and causation for later stages, and the court has now twice rejected their public disclosure and qui tam challenges. The public disclosure question is whether the bar applies when the information behind a relator’s claims was in the government’s hands but was never disclosed to the public. Under Seventh Circuit precedent, the government’s possession of the information is enough to trigger the bar, Cause of Action, 815 F.3d at 275, but the Seventh Circuit has itself indicated that it needs to reconsider that rule, id. at 277. Because the bar at issue here is the Indiana FCA’s, the court predicted that the Indiana Supreme Court would follow the majority of federal circuits, which do not treat the government’s possession alone as a public disclosure. Whether the Seventh Circuit will revisit its rule remains open.

What This Means for Resolving FCA and Payor-Provider Disputes

In most FCA cases, evidence of government knowledge helps the defense. Here, a state contractor’s list of flagged claims became the relators’ evidence of falsity and the defendants’ evidence of immateriality at the same time. The court held that possession of that list is not enough at the pleading stage to establish that the government knew. That keeps the case open, but it also keeps the central fact question, what the state knew and why it did not recoup, unresolved until discovery. Parties tend to wait on a question like that, and the court’s description of materiality as “a close call” gives both sides a reason to.

The case also puts plans and hospitals on the same side of the caption with interests that do not fully line up. The relators’ theory against the MCEs depends on their paying claims that, under the same theory, the hospitals should not have submitted. The MCEs’ provider agreements require compliance with Medicaid rules, so a plan facing exposure for paying a claim may look to the provider that submitted it. The court did not address that allocation, but any global resolution will have to.

Finally, the FSSA has said Indiana Medicaid will seek recoupment if the claims are confirmed not to be payable. That gives the defendants a separate recoupment exposure, limited to the overpayments themselves, while the FCA case adds treble damages and per-claim penalties on top of that amount. An identified-overpayment list gives every party a shared starting figure, which tends to make these cases resolvable. Until the government-knowledge question is answered, though, the parties will value the gap between recoupment and treble damages very differently.

John Libby is an arbitrator, mediator, and settlement counsel with LibbyADR LLC. This post contains his own summaries of the decisions discussed, prepared for general informational purposes only. The summaries are not intended to be a complete statement of any court’s reasoning, nor should they be taken to indicate how he would rule as an arbitrator in any particular case. In addition, the summaries are not legal advice, nor should they be construed as legal advice. Readers should not act on these posts, but should review the decisions themselves and consult with legal counsel.

False Claims Act · Qui Tam Settlement Approval · Relator Share · Alternate Remedy

Introduction

When the government intervenes in a False Claims Act (FCA) case and settles it, the relator gets 15 to 25 percent of the “proceeds.” The relator will be concerned with both what counts as the “proceeds” and whether the amount is big enough. The relator can object on both grounds: that the settlement is not “fair, adequate, and reasonable under all the circumstances,” 31 U.S.C. § 3730(c)(2)(B), and that a separate deal between the government and the defendant was an “alternate remedy” in which she should share, id. § 3730(c)(5).

In United States ex rel. Ling v. City of Los Angeles, the relator did both. While the FCA litigation was pending (it concerned whether the City of Los Angeles had misrepresented its compliance with accessible-housing requirements tied to funds from the U.S. Department of Housing and Urban Development (HUD)), the City agreed with HUD to spend at least $200 million on accessible housing. It later settled the FCA claims for $38,266,989. On September 24, 2026, the Ninth Circuit rejected the relator’s objections and affirmed the district court’s approval of the settlement. First, it held that the HUD agreement, which redressed a different wrong and expressly carved out the FCA claims, was not an alternate remedy because it didn’t take the place of the FCA case. Second, it held that the district court didn’t abuse its discretion in approving a settlement the government built on a benefit-of-the-bargain damages model. Five days later, a federal court in Chicago faced the same basic question under state law (when a government recovery outside the qui tam case entitles the relator to a share) and declined to decide it, leaving it to the state courts.

Executive Summary

Mei Ling and the Fair Housing Council of the San Fernando Valley (FHC) filed a qui tam action in February 2011 alleging that the City had repeatedly misrepresented that it complied with Section 504 of the Rehabilitation Act, the Fair Housing Act and Title II of the Americans with Disabilities Act, and had received federal housing funds based on those misrepresentations. The United States intervened in July 2017. HUD investigated the same accessibility deficiencies on its own track, and in August 2019 the City entered into a Voluntary Compliance Agreement (VCA) committing it to spend at least $200 million over ten years to remediate or build accessible housing. The VCA expressly excluded the FCA claims. The FCA case went on for five more years, and in June 2024 the government, FHC and the City settled it for $38,266,989.

Ling objected to the settlement. She argued that the VCA was an alternate remedy she was entitled to share in, and that the FCA settlement was too low as measured against the government’s earlier damages calculation of more than $500 million and a $100 million offer she said the City made in 2016. The district court approved the settlement after a fairness hearing.

The Ninth Circuit affirmed. It held that a separate agreement is an alternate remedy only if it takes the place of the FCA suit, and that the VCA didn’t, chiefly because it redressed a different wrong: the City’s underlying civil rights violations, not its alleged false certifications of compliance. On the FCA settlement amount, it held that the government’s damages methodology, the litigation risk the City’s summary judgment motion exposed, and the deference owed to the government under United States ex rel. Polansky v. Executive Health Resources, Inc., 599 U.S. 419 (2023), supported approval.

In United States ex rel. Novak v. Walgreens Boots Alliance, Inc., decided five days later, a relator who had sued Walgreens on behalf of the United States and 29 States sought a share of a separate multistate opioid settlement that, according to the States, resolved some of his state Medicaid claims. He argued that the States’ settlement was an alternate remedy or, alternatively, a settlement of his own action. The district court didn’t decide either question. Because the federal claims had settled, and because his share claims arise under each State’s own false claims statute on questions no State’s courts have answered, the court declined to exercise supplemental jurisdiction and left the claims to the courts of each of the settling States.

Background

Why the HUD agreement matters: two tracks, one set of deficiencies

Ling’s alternate-remedy argument depended on how the HUD agreement related to her FCA case. The two proceedings grew out of the same accessibility deficiencies, and for a time the City tried to resolve them together.

HUD opened its own investigation into the City’s compliance with federal accessibility requirements in 2011, the same year Ling filed suit, and issued a Letter of Findings of non-compliance in January 2012. Ling, 2026 WL 2871734, at *2. By 2016, the City was trying to resolve both matters in a single deal. In a September 2016 letter to the HUD Secretary, City officials wrote that “[t]o enter into a VCA, the City must also settle the related False Claims Act” action, and that they had thought the City was “on the verge of a settlement agreement, under which DOJ, through HUD, would allow $92 million of DOJ’s calculated actual damages for the FCA claims to be used to carry out the remediation of thousands of the City’s housing units.” Id. at *3. That global deal never happened.

By then DOJ was already litigating the FCA case; it had intervened in July 2017. Two months later, in September 2017, HUD referred its separate civil rights compliance matter to DOJ “for potential further enforcement.” Id. The City asked to restart settlement negotiations with HUD, and DOJ “deferred jurisdiction,” leaving the civil rights matter with HUD. Id. In July 2019, HUD told the City it intended to withhold approximately $80 million in federal housing funds, and the VCA followed the next month. The agreement the City actually signed was not a global settlement, unlike the 2016 proposal: it resolved only the City’s civil rights violations, committing the City to a program “with a value that averages a minimum of $20 million per year” for ten years, and specifically carved out the FCA litigation, stating that it “does not, and shall not be construed to, resolve any claims that have been or could be asserted in” the qui tam action. Id.

The FCA settlement

The government and the City conducted what the court called “voluminous fact discovery” through November 2023. The City moved for summary judgment on March 1, 2024, and made a settlement offer at a mediation four days later. Multiple levels of DOJ and City officials approved the written terms, and the parties signed in June 2024. The district court approved the settlement after a fairness hearing in August 2024 and, in October 2024, dismissed the claims, recognizing that Ling and FHC would “receive at least 15 percent but not more than 25 percent” of the proceeds. Id. Ling’s entitlement to a share of the $38.3 million was not in dispute. Id. at *2. The court resolved her challenges to the denial of an evidentiary hearing and limited discovery and to the denial of her motion to alter or amend the judgment, as well as her request for sanctions, in a memorandum disposition filed the same day. Id. at *2 n.1.

The same alternate-remedy question under state law: Novak

Novak asked the same question as Ling (when does a government recovery outside the qui tam case entitle the relator to a share?), but the court ultimately left it to the state courts. A pharmacist sued Walgreens on behalf of the United States and 29 States over controlled-substance prescriptions billed to Medicare and Medicaid. While his complaint was under seal, Walgreens signed a separate opioid agreement with 46 States requiring it to pay more than $4.7 billion over fifteen years for abatement and treatment programs, none of it allocated to the States’ Medicaid programs. Novak, 2026 WL 2920869, at *1. In December 2023, the States intervened to dismiss his state Medicaid claims, telling the court that the multistate agreement “resolved certain of the claims that Relator brings in this case.” Id. at *2. With Novak’s agreement, they postponed the question of whether he was entitled to a share “pursuant to the alternate remedy provisions of each state’s respective false claims act, or other applicable law.” Id. at *2, *6. The United States later settled for $300 million, split evenly between $150 million in Controlled Substances Act penalties, in which relators do not share, and $150 million in FCA damages, of which the relator received 17.25 percent. Id. at *2; Settlement Agreement ¶¶ 1.D, 2, Novak, No. 18 C 5452 (N.D. Ill. Apr. 18, 2025), ECF No. 69.

Novak then sought a share of the multistate settlement from 28 States. He argued that the States had in substance settled his action; the States answered that the multistate agreement resolved consumer-protection and public-nuisance claims he could not have brought, in proceedings to which he was not a party. Novak, 2026 WL 2920869, at *7. Several also argued that it was not an alternate remedy: that settlements funding prospective opioid abatement are not the type of claim a false claims statute reaches, that Novak contributed nothing to a deal signed while his complaint was still sealed, and, for some States, that their statutes have no alternate-remedy provision or a narrower one than the federal statute. Id. at *8–10. Novak replied that the agreement released his claims and conditioned payment on their dismissal. Id. at *8. The court did not decide who was right. It held that whether a State “proceeds with” a relator’s action when it settles related claims outside the action, and whether such a settlement is an alternate remedy, are questions of each State’s statute that no State’s courts have answered, that the federal decisions point in different directions, and that the answers may differ from State to State. Id. at *7–8. With the federal claims gone, it declined supplemental jurisdiction and left those questions to the States’ courts. It rejected Novak’s argument that the States’ agreement to defer the question committed them to the federal forum: “An agreement to defer a question,” the court wrote, “is not an agreement on its answer, and it is not an agreement to the forum.” Id. at *6.

Legal Analysis

The Ninth Circuit decided two questions in response to the relator’s challenge to the settlement: whether the VCA was an alternate remedy in which Ling could share, and whether the $38.3 million the government accepted for the FCA claims was fair, adequate and reasonable.

1. Was the VCA an alternate remedy?

• To share in another proceeding, the relator must show that the alternate remedy took the place of the FCA remedy. Section 3730(c)(5) lets the government “pursue its claim through any alternate remedy,” and gives the relator “the same rights in such proceeding as such person would have had if the action had continued.” The court read that language, as the Fourth and Fifth Circuits have, to assume the other proceeding replaces the qui tam action. Ling, 2026 WL 2871734, at *4 (citing United States ex rel. LaCorte v. Wagner, 185 F.3d 188, 191–92 (4th Cir. 1999), and United States ex rel. Babalola v. Sharma, 746 F.3d 157, 161–62 (5th Cir. 2014)). A relator therefore shares in an outside recovery only if it substitutes for the FCA remedy. The court added that this can happen even while the FCA suit is still pending, that the question “involves a fact-intensive evaluation,” and that “collusion or bad faith” can bear on it. Id. at *5.
• The key point: the VCA and the FCA settlement redressed different wrongs. “Significantly,” the court said, “the purposes of the VCA and FCA settlement were different.” Id. at *6. The VCA addressed the City’s “failure to comply with accessible housing requirements.” The FCA settlement resolved allegations that the City “falsely certified that it had complied with those obligations.” Id. Because the “claim” in § 3730(c)(5) is the false claim, the court followed United States ex rel. Kennedy v. Novo A/S, 5 F.4th 47 (D.C. Cir. 2021), in treating the VCA as resolving “a different legal claim altogether.” Ling, 2026 WL 2871734, at *6 (quoting Kennedy, 5 F.4th at 56).
• For the same reason, the VCA’s nonmonetary value wasn’t enough. The court agreed that an alternate remedy can carry nonmonetary value under United States ex rel. Barajas v. United States, 258 F.3d 1004, 1013 (9th Cir. 2001). Ling, 2026 WL 2871734, at *6. But the VCA “redresses the City’s present violations and prevents future violations,” while the FCA settlement “redresses the City’s past fraud.” Id. at *7. The court rejected Ling’s argument that the government couldn’t recover FCA damages for a loss the VCA made good, because the City’s remedial work did “not nullify the Government’s losses due to misrepresentations, unjust enrichment, and payment by mistake.” Id.
• The court distinguished Barajas. In Barajas, an Air Force agreement with Northrop was held to be an alternate remedy. The Ling court identified two differences. Id. at *5–6.
  • Preclusion. Claim preclusion barred the Barajas relator’s second suit, and the government got its relief through the Air Force agreement instead. Here nothing in the VCA stopped the case, which went forward to “a $38 million settlement.” Id. at *5.
  • Carve-out versus credit. The Barajas agreement let Northrop use it in “any civil proceeding” to “obtain appropriate credit” for what it paid. The VCA carved the FCA claims out. Id. at *6.
• The record showed no collusion. The FCA litigation continued for five years after the VCA. The court reasoned that colluding parties would have settled “shortly after entering the VCA and for much less,” and that “[t]he active participation of an experienced mediator during the settlement process further undermines any allegation of collusion.” Id.

2. Was the $38.3 million settlement fair, adequate and reasonable?

Having held that Ling had no claim to a share of the VCA, the court turned to her second objection: that the amount the government accepted for the FCA claims was too low.

• Review was for abuse of discretion. Because § 3730(c)(2)(B)’s “fair, adequate, and reasonable” test mirrors Federal Rule of Civil Procedure 23(e)(2), the court applied the class-action standard of review, as the Seventh Circuit did in United States ex rel. Robinson v. HealthNet Inc., 124 F.4th 511, 519 (7th Cir. 2024). The parties agreed on that standard. Ling, 2026 WL 2871734, at *4 & n.3.
• Deference to the government frames the review. Because “the injury [relators] assert is exclusively to the Government,” the government is afforded deference when it settles a qui tam case. Id. at *7 (quoting Polansky, 599 U.S. at 425).
• The settlement amount was measured against the government’s method, not the offer history. Ling’s 2016 benchmark was a $100 million offer she said the City made that year. The parties disputed whether that offer was ever made, and the court found the evidence of it “limited.” The court called the question “irrelevant” because the government explained how the settlement amount was derived at the fairness hearing. Id. at *8.
  • Benefit of the bargain. The government compared the value of the City’s existing affordable housing with the value of the affordable and accessible housing the City would have built had it complied. Because most of the defects concerned mobility, it focused on the requirement that at least five percent of multifamily housing be accessible for mobility impairment. That produced $26,800,000 in damages plus “a multiplier sum of $11,466,989,” which together equal the settlement. The government “reserv[ed] its right to reconsider the calculation of damages.” Id.
  • Public policy. The City “repeatedly told the United States that each dollar it paid in settlement is a dollar that it must find in its budget.” The court held the government could weigh that, because its interests “are not confined to maximizing recovery against the defendant.” Id. (quoting United States v. Everglades College, Inc., 855 F.3d 1279, 1288 (11th Cir. 2017), abrogated on other grounds by United States v. Republic of Honduras, 75 F.4th 1288 (11th Cir. 2023)).
• The litigation risk analysis had evolved since 2016. Ling argued that the government’s position had improved since 2016, when it defeated the City’s motion to dismiss. The Ninth Circuit pointed to the arguments in the City’s March 2024 summary judgment motion, which the case settled before the court decided: that its certifications were not material to HUD and that the government could not prove scienter or causation. It also cited the district court’s assessment, in approving the settlement, that even if the government’s claims survived summary judgment, “the Government faces an onerous task to establish the FCA claims at trial.” Id. at *8. Those arguments, the court said, were not “known at the time the City made its [alleged] $100 million offer in 2016,” because the City didn’t move for summary judgment until 2024. Id. The district court also found that the number was reached “after extensive investigation and negotiation over the course of nine years and two mediations.” Id. With that, and the principle that “the very essence of a settlement is compromise, a yielding of absolutes and an abandoning of highest hopes,” Officers for Justice v. Civil Service Commission of the City and County of San Francisco, 688 F.2d 615, 624 (9th Cir. 1982), the court found no abuse of discretion. Ling, 2026 WL 2871734, at *8.

Holding

Affirmed. Under these circumstances, the HUD VCA did not take the place of the FCA suit or the FCA settlement and was not an alternate remedy under 31 U.S.C. § 3730(c)(5). The district court did not abuse its discretion in approving the $38,266,989 settlement as fair, adequate and reasonable under § 3730(c)(2)(B). In Novak, the district court declined supplemental jurisdiction under 28 U.S.C. § 1367(c)(1) and (c)(3) and dismissed the relator’s share claims without prejudice to their assertion in the courts of the respective States, without deciding whether the multistate agreement was an alternate remedy or a settlement of his action.

What to Watch

• Further review in Ling. Absent a rehearing petition, a petition for certiorari would be due 90 days after judgment, on or about December 23, 2026.
• When a parallel agreement could count as an alternate remedy. Ling lost on facts the court listed: the VCA addressed a different wrong, carved out the FCA claims, gave the City no credit against FCA liability, and was followed by five more years of FCA litigation. But the court also said a parallel agreement can take the place of the FCA remedy even while the qui tam case is still pending, and that collusion or bad faith bears on the question. A relator facing a parallel agreement that releases or credits the FCA claims, or that is followed quickly by a small FCA settlement, would have a stronger argument. Expect relators’ counsel to focus on those features.
• The fairness-hearing record. Because approval is reviewed for abuse of discretion, the government’s explanation of its damages method at the fairness hearing is likely to carry most of the weight on appeal.
• State-court share litigation after Novak. The share claims now go to state courts, under statutes that, the court noted, differ on whether they have an alternate-remedy provision at all. The first decisions will show whether federal cases like Kennedy carry over.

What This Means for Resolving False Claims Act Disputes

Ling shows how an FCA settlement number gets built and defended. The government didn’t defend $38.3 million by pointing to the history of offers. It defended it with a damages theory it could explain at a hearing (single damages plus a stated multiplier), a reservation of other methodologies, the cost of a larger number to a public defendant, and litigation risk that surfaced only in the City’s summary judgment motion. The earlier offers, the district court found, “were made in an entirely different context.” For relator’s counsel, that means an objection built on a superseded damages estimate or an old offer runs into deference to the government; the methodology itself is the better target. For defense counsel, the City’s summary judgment motion and its budget argument (a variant of the ability-to-pay argument defendants often raise) both ended up in the record that sustained the number. For the government, the lesson is to put the method, not just the figure, on the record.

The alternate-remedy holding speaks to parallel administrative resolutions. A compliance agreement that redresses the underlying regulatory violation rather than the false claim, carves out the FCA claims and gives no credit against FCA exposure stays separate from the relator’s recovery. The five-year gap between the two resolutions reinforced the point. Novak shows what happens when the relator’s share in a parallel resolution is left for later: the agreement to defer didn’t keep the question in federal court. Resolving the relator’s share at the same time as the number gives everyone a shared reference point. Leaving it open sends it to another forum, or in Novak, to many of them.

John Libby is an arbitrator, mediator, and settlement counsel with LibbyADR LLC. This post contains his own summaries of the decisions discussed, prepared for general informational purposes only. The summaries are not intended to be a complete statement of any court’s reasoning, nor should they be taken to indicate how he would rule as an arbitrator in any particular case. In addition, the summaries are not legal advice, nor should they be construed as legal advice. Readers should not act on these posts, but should review the decisions themselves and consult with legal counsel.

Introduction

For most of the 340B program’s life, a covered entity that thought it was being overcharged had exactly one place to go, and it wasn’t a courthouse. Congress wrote no private right of action into Section 340B, and in Astra USA, Inc. v. Santa Clara County, 563 U.S. 110 (2011), the Supreme Court closed the contract route as well, holding that covered entities can’t sue manufacturers as third-party beneficiaries of their pricing agreements with the government. That left administrative dispute resolution as the only forum, and it has remained a narrow channel while the program itself has grown. So covered entities have been looking for another one. Adventist Health System of West found it in the False Claims Act — not by suing for what it overpaid, but by pointing out that Medicaid and Medicare reimburse providers based on cost, which means the government overpaid right alongside it. The district court called that an end-run around the ban on a 340B private right of action decided in Astra, and dismissed with prejudice. The Ninth Circuit reversed. And while the appeal was pending, the Supreme Court set down its own question about whether covered entities can reach manufacturers at all, on the September 28 conference list. The search for a forum continues.

Executive Summary

In United States ex rel. Adventist Health System of West v. AbbVie Inc., 169 F.4th 1137 (9th Cir. 2026), the Ninth Circuit reversed the dismissal under Federal Rule of Civil Procedure 12(b)(6) of a qui tam complaint brought by a 340B covered entity against pharma manufacturers AbbVie, AstraZeneca, Novartis, and Sanofi. The Ninth Circuit held that the absence of a private right of action under Section 340B does not foreclose False Claims Act claims by covered entities, because an FCA action is independent of the statute whose violation supplies the underlying facts. Adventist wasn’t seeking to recover amounts it allegedly had been overcharged; instead, it was alleging that the manufacturers’ inflated prices caused covered entities to submit inflated reimbursement claims for those drugs to Medicare and Medicaid, and that the government paid them. The court also held that falsity was plausibly pled, and declined to affirm on the manufacturers’ alternative argument, which it treated as a merits question for discovery.

Background

The program and the price

Congress created the 340B Drug Pricing Program in 1992 to improve access to care for low-income and uninsured patients at safety-net hospitals and clinics. Veterans Health Care Act of 1992, Pub. L. No. 102-585, 106 Stat. 4943. Manufacturers opt in by signing a pharmaceutical pricing agreement, or PPA, with the Secretary of Health and Human Services, and in exchange for that agreement they may not charge covered entities more than a statutory ceiling price. 42 U.S.C. § 256b(a)(1). The Health Resources and Services Administration (HRSA), a unit of HHS, administers the program, including a dispute resolution mechanism. 42 U.S.C. § 256b(d)(3); 42 C.F.R. §§ 10.3, 10.21.

The statutory formula can produce a ceiling at or below zero. When it does, the “penny pricing” policy caps the charge at $0.01 per unit. HRSA formally adopted that position in written guidance in 2011 — Clarification of Penny Pricing Policy, Policy Release No. 2011-2 — and then issued a final rule imposing civil monetary penalties for non-compliance, 83 Fed. Reg. 61563 (Nov. 30, 2018), effective January 1, 2019. The timing matters to the falsity question below.

Adventist alleged that it only discovered the overcharges after the penny pricing guidance came into effect and the prices manufacturers were charging for many drugs precipitously dropped to a penny, suggesting that before that manufacturers were ignoring the statutory formula for calculating the ceiling price.

The allegations

Adventist Health System of West is a nonprofit that operates clinics and facilities in several states and qualifies as a 340B covered entity. It bought drugs from the defendants for its patients, and Medicaid and Medicare reimbursed it based on the prices the defendants charged. See 42 C.F.R. § 447.502; 42 U.S.C. § 1395m(g)(1).

The amended complaint alleged that the manufacturers knowingly charged “materially false, unlawfully inflated prices” that “bore no relation to the statutory formula,” for years, and changed course only when the 2019 rule attached penalties. Adventist said it discovered the scheme when prices “dropped precipitously to $0.01 per unit” shortly after January 2019 — a drop it contended market forces and formula changes could not explain. The complaint alleged the fraud “caused the federal and state governments to wrongly pay hundreds of millions of dollars.”

The dismissal

The manufacturers moved to dismiss based on Astra, arguing that there is no private right of action under 340B. Because Astra holds that a covered entity must use the administrative ADR process to challenge a manufacturer’s pricing, they argued, a covered entity cannot sue under the FCA on facts that amount to a 340B pricing violation. The district court agreed, dismissed the amended complaint with prejudice, and reasoned that allowing the claims would disrupt the administrative scheme Congress built. Adventist appealed.

How the overcharge reaches federal money

Here is what made this an FCA case, not a pricing dispute. Adventist was not asking to be paid back for what it was overcharged — that’s what the ADR process is for, and Astra held that was the only route. Adventist said the overcharge did not stop with the covered entity. It was passed through to the government, because that’s how these programs are structured. The complaint identified three channels.

• Medicaid. Covered entities are reimbursed on what they actually paid for the drug. See 42 C.F.R. § 447.502. Inflate the acquisition cost, and you inflate the reimbursement claim that follows it.
• Medicare. Critical access hospitals bill at 101% of drug cost under 42 U.S.C. § 1395m(g)(1). An inflated cost passes straight through — with another one percent riding on top of it.
• Direct federal purchase. Government-funded prisons and clinics bought the drugs themselves and paid the inflated prices directly. No intermediary at all.

Cost-based reimbursement is the mechanism converting a private overcharge into a loss for the federal fisc, thus implicating the False Claims Act. With it, every covered entity that bought a drug and billed for it became an unwitting conduit. The claims the government paid weren’t Adventist’s 340B claims. They were reimbursement claims, submitted by entities with no reason to know the price they passed along was wrong.

Why this is an FCA claim

The manufacturers never submitted a direct claim to Medicare or Medicaid. Adventist argued instead that the manufacturers were liable under § 3729(a)(1)(A), which reaches anyone who “knowingly presents, or causes to be presented,” a false or fraudulent claim for payment, and § 3729(a)(1)(B) reaches anyone who makes or uses a false record or statement material to such a claim. The alleged false claims were the covered entities’ reimbursement claims. The manufacturers’ alleged conduct — charging above the ceiling price, for years — was what made those downstream claims inflated. That was the causal architecture, and it was ordinary FCA law rather than anything peculiar to 340B.

Adventist, the Ninth Circuit stated, “seeks redress for the alleged false claims, not for the alleged violations of Section 340B’s ceiling price formula,” and the court quoted United States ex rel. Sutton v. Double Day Office Services, Inc., 121 F.3d 531 (9th Cir. 1997), for the necessary corollary: “[t]he violation of a statute does not itself create a violation of the FCA.” A 340B pricing violation is not automatically an FCA case. It becomes one when it causes a false claim to be presented — and pleading that chain is the relator’s burden, on remand as much as on appeal.

The remedy confirmed the characterization. Adventist sought civil penalties and treble damages on behalf of the government under § 3729(a)(1) and a relator’s share under § 3730(d)(2). It was not seeking the overcharges it paid out of its own pocket.

Legal Analysis

• The absence of a private right of action under Section 340B is immaterial to an FCA claim. The Ninth Circuit treated FCA claims as “free-standing and independent of Section 340B.” Because Adventist was not seeking reimbursement for overcharges or otherwise seeking relief for a 340B violation, it did not matter that Section 340B gives covered entities no mechanism to sue. The court drew on Sutton, where a relator’s FCA claim survived even though the Service Contract Act supplied no private right of action.
• Astra bars repackaged contract claims, not fraud claims. Astra held that suits to enforce Section 340B and suits to enforce the PPAs are “in substance one and the same,” and that covered entities may not sue as third-party beneficiaries of those agreements. The Ninth Circuit distinguished it on the ground that Adventist did not allege the manufacturers were liable merely for violating Section 340B. The claim was that they caused false claims to be submitted to Medicare and Medicaid — a different wrong, seeking a different remedy, on behalf of a different party.
• The remedies available under the FCA did real work. Following Sutton, the court reasoned that if the action were equivalent to a 340B action, the damages would be Adventist’s own overcharges. They were not. Adventist sought statutory damages plus penalties for the government, and a statutory share of any recovery under § 3730(d)(2). “Standing in the shoes of the government,” the Ninth Circuit wrote, Adventist sought statutory damages, not compensatory damages for its own losses.
• No implied preemption, because there is no “positive repugnancy.” Barring the claims would require holding that Section 340B impliedly preempts the FCA. Repeals by implication are disfavored, and neither statute contains language displacing the other, so the court gave effect to both. It also invoked the presumption that Congress says in a statute what it means — Congress wrote no 340B exception into the FCA, and the Ninth Circuit declined to write one in.
• Falsity was plausibly pled for the pre-2019 period. The manufacturers argued that no penny-pricing obligation existed before the 2019 final rule. The Ninth Circuit disagreed, because Adventist plausibly alleged that the plain text of the statutory formula did not authorize any price above $0.01 regardless of the guidance, and because HRSA’s 2011 written guidance had already directed manufacturers to charge $0.01 when the formula yielded a negative ceiling price. The 2019 rule added penalties; it did not create the obligation.
• The alternative ground was left for remand. The manufacturers also argued that HRSA’s price reporting and verification system rendered the allegations implausible under Ashcroft v. Iqbal, 556 U.S. 662 (2009), and Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007). The court declined to affirm on that basis, calling it a merits argument that turned on factual disputes and required discovery. It remained available below.

Who showed up

The amicus lineup is worth noting. The United States appeared in support of Adventist, through the Civil Division and the United States Attorney for the Central District of California, and the Ninth Circuit quoted the government’s brief for the proposition that the FCA is “the federal government’s primary tool to combat fraud and recover losses due to fraud in federal programs.” The Anti-Fraud Coalition and Ryan White Clinics for 340B Access also supported the relator; the Pharmaceutical Research and Manufacturers of America appeared on the other side. The government’s participation is consistent with its usual position of arguing against limitations on the False Claims Act.

Holding

Adventist asserted cognizable claims for relief under the FCA and had satisfied the applicable pleading requirements. The dismissal was reversed and the case remanded for further proceedings. The Ninth Circuit treated the FCA and its state-law analogues together, no party having argued that the differences mattered. Petitions for rehearing were denied on May 27, 2026.

What to Watch

• On remand, the merits questions that were never reached. Falsity, scienter, materiality and causation now have to be proven across three distinct payment channels, on a factual record that must be developed.
• The Supreme Court’s own 340B question, September 28, 2026. AstraZeneca Pharmaceuticals LP v. Mosaic Health, Inc., No. 25-1070, has been distributed for the long conference. It asks whether safety-net providers have antitrust standing under Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977), to sue manufacturers over the withdrawal of contract-pharmacy discounts. Different doctrine, same pressure: covered entities looking for a forum that Section 340B and the administrative ADR process did not give them.
• Whether other circuits follow. This is a published Ninth Circuit opinion on a question that has mostly been litigated in district courts. If the FCA is a durable route around Astra, manufacturer exposure under 340B stops being primarily administrative — and the exposure changes character, from ordered reimbursement of overcharges to penalties and treble damages.

What it means for resolving these disputes

For a neutral, the useful observation is that this ruling doesn’t narrow anything. It widens the field at the pleading stage. A manufacturer facing a covered-entity relator now has to litigate a multi-year pricing history across Medicaid, Medicare and direct federal purchasers, with treble damages and per-claim penalties at the end of it, and with the government watching closely enough to have filed a brief. A relator, for its part, faces a causation chain it has to prove entity by entity and claim by claim, having survived a motion to dismiss and nothing more.

That is not a narrowed range of outcomes. It is a wide one, expensive at both ends, with genuine uncertainty on both sides of the caption — which is the profile of a dispute that tends to resolve, and tends to resolve better when the parties get a neutral involved before the discovery bill arrives rather than after. Cases like this one settle on the strength of the causation chain, and that is precisely the thing neither side can price until they’ve spent a great deal of money finding out.

Cases cited in this brief: United States ex rel. Adventist Health Sys. of W. v. AbbVie Inc., 169 F.4th 1137 (9th Cir. 2026) (No. 24-2180), rev’g and remanding No. 2:21-cv-04249-DSF-SK (C.D. Cal.) | Astra USA, Inc. v. Santa Clara Cnty., 563 U.S. 110 (2011) | United States ex rel. Sutton v. Double Day Off. Servs., Inc., 121 F.3d 531 (9th Cir. 1997) | Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977) | Ashcroft v. Iqbal, 556 U.S. 662 (2009) | Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007)

John Libby is an arbitrator, mediator, and settlement counsel with LibbyADR LLC. This post contains his own summaries of the decisions discussed, prepared for general informational purposes only. The summaries are not intended to be a complete statement of any court’s reasoning, nor should they be taken to indicate how he would rule as an arbitrator in any particular case. In addition, the summaries are not legal advice, nor should they be construed as legal advice. Readers should not act on these posts, but should review the decisions themselves and consult with legal counsel.

Healthcare / False Claims Act — qui tam constitutionality (Appointments Clause)

Introduction

The Eleventh Circuit has finally spoken in a closely watched case challenging the constitutionality of the qui tam provisions of the False Claims Act. In September 2024, a district court in Tampa held that relators are officers of the United States who were never appointed by anyone and dismissed a Medicare fraud case outright. Defendants around the country promptly added the argument to their motions, the government intervened in the case, one it had already declined, in order to defend the statute, and everyone waited on the Eleventh Circuit. On September 1, the answer came, but it was narrow: relators aren’t officers, because they don’t occupy a continuing position. Two other constitutional theories go back to the same district court that ruled for the defendants the first time around.

Executive Summary

A unanimous Eleventh Circuit held that FCA relators are not “officers of the United States” within the meaning of the Appointments Clause, because they do not occupy a continuing position established by law. The court vacated the district court’s dismissal and remanded for consideration of the other constitutional issues neither court has yet addressed.

Three features of the opinion merit attention. First, the circuit court resolved only one of the two requirements the Supreme Court set out in Lucia v. SEC, 585 U.S. 237 (2018) to determine an Appointments Clause violation: it only decided that relators do not occupy a “continuing” position established by law and expressly declined to decide whether they are officers exercising “significant authority pursuant to the laws of the United States.” Second, the circuit court assumed without deciding that the Lucia framework even governs relators, who are not government employees. Third, the Take Care Clause and Vesting Clause challenges — which the district court did not consider given the Appointments Clause ruling — return below for decision in the first instance.

Background

The statute

The FCA authorizes private parties — relators — to sue “for the person and for the United States Government” in the government’s name. 31 U.S.C. § 3730(a), (b)(1). A relator’s complaint stays under seal for at least sixty days while the government decides whether to intervene. § 3730(b)(2). If it intervenes, then or later on good cause, it can dismiss over the relator’s objection. The court, applying ordinary Federal Rule of Civil Procedure 41 standards, owes the government “substantial deference,” and grants dismissal in “all but the most exceptional cases.” United States ex rel. Polansky v. Executive Health Resources, Inc., 599 U.S. 419, 425–27, 437 (2023). A successful relator takes a contingent share of up to 30% of the proceeds. § 3730(d).

The district court decision

Dr. Clarissa Zafirov sued her employer and related entities in 2019, alleging they knowingly submitted false diagnosis codes to Medicare. The government declined to intervene. After several years of litigation, the defendants moved for judgment on the pleadings, arguing the qui tam provisions violate the Appointments Clause, the Take Care Clause, and the Vesting Clause. The government then intervened solely to defend the statute’s constitutionality.

The district court ruled for the defendants on the Appointments Clause issue and did not reach the others. Applying Lucia v. SEC, 585 U.S. 237 (2018), the court held that relators exercise “significant authority” because their civil enforcement power resembles that of FEC commissioners and special prosecutors, and that they occupy a continuing position — an “office of relator” that “exists whether a person is appointed to that office or not,” and is therefore “continuous even if it is not continually filled.” 751 F. Supp. 3d at 1307–17. The district court dismissed the case, reasoning that the only litigant on the plaintiff’s side of the enforcement action lacked authority to prosecute it.

Legal Analysis

The Eleventh Circuit vacated the district court’s Appointments Clause ruling, and left the door open for the two other constitutional challenges.

• The court resolved one requirement and stopped. Lucia sets two: the person must occupy a “continuing” position established by law and must exercise significant authority pursuant to the laws of the United States. Lucia, 585 U.S. at 245. Zafirov and the government offered three arguments; the circuit court decided on the continuing-position point, found it dispositive, and wrote that it “need not reach any of their remaining arguments.” Whether relators wield executive power — the premise of the Take Care and Vesting Clause theories — remains open.
• It assumed the framework rather than settling it. A footnote records that the court “assume[s] without deciding that Lucia’s framework governs relators, who are not government employees.” That is a real reservation. Lucia distinguishes officers from employees; relators are neither, nor did the circuit court resolve whether the officer/employee taxonomy is the right lens at all.
• Tenure and duration are measured by regularity, not by length. The court cited United States v. Germaine, 99 U.S. 508 (1879), and Auffmordt v. Hedden, 137 U.S. 310 (1890) — a pension-examining surgeon who might conduct “fifty of these examinations in a year, or none,” and a merchant appraiser called in occasionally for his special knowledge. Under those cases, neither was an officer of the United States. A relator likewise may bring several cases in a year or none, and need not keep a place of business. The defendants’ point that some qui tam actions run for years drew a direct answer: the Supreme Court has not focused on the overall length of a person’s time fulfilling his duties when evaluating the duration of the position.
• A contingent share of a recovery is not a continuing emolument. The circuit court tracked Germaine point for point. A relator is paid a one-time award contingent on success, not through any regular appropriation; works intermittently; and faces no penalty for declining to perform beyond losing the fee in that case. The recovery share may or may not be an “emolument” at all — the court did not need to decide — but it plainly is not a continuing one.
• The personal nature of a relator’s duties is what distinguishes the leading case on independent counsels. The defendants’ best authority was Morrison v. Olson, 487 U.S. 654 (1988), where an independent counsel appointed “essentially to accomplish a single task” was still an officer — proof that a temporary role can be a continuing position. The circuit court accepted the premise and distinguished on two grounds: an independent counsel’s duties were not personal, and an independent counsel was on the public payroll under a permanent indefinite appropriation. Morrison herself had replaced McKay “with the same jurisdiction,” picking the work up mid-investigation. The FCA provides no mechanism for replacing a relator who abandons the claim. The defendants’ death-and-bankruptcy counterexample was turned around: in those cases, a personal representative or bankruptcy trustee carries the claim forward on the relator’s behalf — the relator cannot be replaced with an unrelated person.
• There is no “office of relator.” The circuit court rejected the district court’s finding that the qui tam provisions create an “office of relator.” This term does not appear in the FCA. More fundamentally, Lucia asks whether an individual occupies a continuing position, not whether an abstract office is continuing; no precedent has held that the mere existence of an unfilled position makes its occupant an officer. A footnote puts it bluntly: evaluating a “fictional ‘office of relator’” departs from the Supreme Court’s own method in Auffmordt and Germaine, which examined the duration of the actual customs appraiser and the actual surgeon in front of them.
• The circuit court declined the Second Circuit’s test. The district court had used the three-factor continuing-position framework from United States v. Donziger, 38 F.4th 290 (2d Cir. 2022). The Eleventh Circuit noted that the test is that circuit’s own distillation of Supreme Court caselaw, is not binding, and declined to adopt it, working from the Supreme Court’s guidance directly.

Holding

Relators do not occupy a continuing position established by law and therefore are not officers of the United States subject to the Appointments Clause. The qui tam provisions of the FCA do not violate the Appointments Clause. The district court’s order dismissing the case is vacated, and the case is remanded for that court to evaluate the defendants’ Take Care Clause and Vesting Clause arguments in the first instance. Published opinion; no concurrence or dissent.

What to Watch

• Rehearing en banc and certiorari. Defense counsel has said publicly that the defendants are assessing their options. Watch for a petition for rehearing en banc in the Eleventh Circuit, and for a cert petition after that.
• Whether the Supreme Court wants it. In Polansky, Justice Thomas dissented, partially based on the view that the qui tam provisions raise serious constitutional questions, writing that “there are substantial arguments that the qui tam device is inconsistent with Article II and that private relators may not represent the interests of the United States in litigation.” Justices Kavanaugh and Barrett, concurring, agreed with that statement and added that the Court should consider the competing arguments on the Article II issue in an appropriate case. Three Justices have effectively asked for the vehicle. Zafirov’s narrowness makes it an unlikely candidate, but at some point a more appropriate case may reach the Court, and may interest four Justices enough to grant cert.
• The remand, first and most immediately. If further appellate activity does not generate additional opinions, the Take Care and Vesting Clause theories go back to the district court, which has already held once that relators wield core executive power — a finding the Eleventh Circuit did not disturb because it did not reach it. The district court is free to decide these remaining issues.
• The Third Circuit. A parallel appeal is fully briefed and argued and is awaiting decision: United States ex rel. Penelow v. Janssen Products, LP, No. 25-1818 (3d Cir.), argued March 18, 2026. It arises from a declined qui tam that produced a jury verdict of more than $1.5 billion against a Johnson & Johnson subsidiary over off-label promotion, and the Department of Justice has again appeared to defend the statute’s constitutionality. What makes it the more consequential vehicle is its scope: the defendants raised the Appointments Clause, the Vesting Clause, and the Take Care Clause together, so the Third Circuit has before it — on a full trial record, with damages of a size that concentrates attention — the two questions Zafirov declined to reach and sent back down. A circuit court that answered all three, in either direction, would do more to shape the landscape than a remand to the Middle District of Florida. The U.S. Chamber of Commerce filed a coalition amicus brief in July 2025 urging the court to hold the qui tam provisions unconstitutional and arguing that the Article II defect contributed to a constitutionally excessive fine.

John Libby is an arbitrator, mediator, and settlement counsel with LibbyADR LLC. This post contains his own summaries of the decisions discussed, prepared for general informational purposes only. The summaries are not intended to be a complete statement of any court’s reasoning, nor should they be taken to indicate how he would rule as an arbitrator in any particular case. In addition, the summaries are not legal advice, nor should they be construed as legal advice. Readers should not act on these posts, but should review the decisions themselves and consult with legal counsel.

This document covers the second quarter of 2026 (April 1 – June 30, 2026), continuing the quarterly False Claims Act case summaries. Cases are categorized by statutory provision, with Westlaw citations, courts, and decision dates after each case name.

Coverage focuses on decisions that bear on an FCA legal question—liability elements, qui tam procedure, relator awards and fees, the public-disclosure bar, and retaliation. Purely ancillary rulings in FCA cases (routine discovery, sealing, and similar) are omitted.

2026Q2 (April 1 – June 30, 2026)

31 U.S.C. § 3729(a)(1)(A) and (B) — Liability for False Claims and Statements

United States ex rel. Lynn v. City of Detroit 2026 WL 973955 (U.S.C.A, Sixth Circuit, April 10, 2026) — Affirmed dismissal of a qui tam alleging the City falsely certified compliance in its annual federal-grant Certification, where the complaint failed to plausibly allege a knowingly false presentment or statement under § 3729(a)(1)(A)-(B).

United States ex rel. Bauer v. Republic Services of Montana (Allied Waste) 2026 WL 1283968 (U.S.D.C., D. Montana, May 11, 2026) — Granted a Rule 12(b)(6) dismissal of a qui tam alleging a waste-services contractor misrepresented the products and services it billed to the federal and state governments, ending the case.

United States ex rel. Kuriyan v. Molina Healthcare of New Mexico, Inc. 2026 WL 1470124 (U.S.D.C., D. New Mexico, May 26, 2026) — Addressed the relator’s post-judgment motion to alter or amend the judgment dismissing his federal and state FCA claims against Medicaid managed-care organizations, weighing whether intervening state-law developments warranted relief from the prior dismissal.

United States ex rel. Solano v. Barton Associates, Inc. 2026 WL 1493019 (U.S.C.A, First Circuit, May 28, 2026) — Affirmed dismissal of a qui tam against a medical-staffing agency for failure to plead the alleged scheme to induce false Medicare claims with Rule 9(b) particularity.

United States ex rel. Relator LLC v. McGlauflin (DNT Construction) 2026 WL 1508877 (U.S.D.C., W.D. Texas, May 29, 2026) — Magistrate judge recommended DENYING the defendants’ motion to dismiss a Paycheck Protection Program (PPP) loan-fraud qui tam, finding the relator adequately pleaded the alleged false certifications.

United States ex rel. Kyer v. Thomas Health System, Inc. 2026 WL 1595887 (U.S.C.A, Fourth Circuit, June 4, 2026) — Affirmed dismissal of a multi-defendant hospital qui tam premised on Stark Law/Anti-Kickback-tainted physician-compensation (wRVU) arrangements, for failure to adequately plead the FCA elements across five defendants and three statutes.

United States ex rel. Craig v. Hawthorne Machinery Co. 2026 WL 1653486 (U.S.D.C., S.D. California, June 8, 2026) — Granted the defendants summary judgment against the relator on all claims, entering judgment for the defense.

United States v. Ma (Ma Acupuncture Center, P.C.) 2026 WL 1719074 (U.S.C.A, Fifth Circuit, June 15, 2026) — Affirmed the district court’s enforcement of a settlement the government and an acupuncture provider reached at pre-trial mediation in an FCA suit over inflated Veterans Affairs billings, holding the parties bound their material terms at mediation.

United States v. New Life Center for Change, Inc. (Teen University) 2026 WL 1753972 (U.S.D.C., M.D. Alabama, June 18, 2026) — Entered the parties’ joint consent judgment resolving the government’s FCA claims against a residential group home and its principal.

United States v. Gardner, D.D.S. 2026 WL 1786348 (U.S.D.C., D. New Mexico, June 22, 2026) — In the government’s FCA action against a dentist, resolved a series of motions—denying the defendant’s motions to dismiss for improper/lack of service and under Rule 60(b)(4) and imposing a $4,000 sanction—while addressing the government’s summary-judgment motion.

United States v. Crites 2026 WL 1782154 (U.S.D.C., M.D. Alabama, June 22, 2026) — Denied the pro se defendant’s Rule 59(e)/60(b) motion to set aside a roughly $31 million FCA judgment previously entered on summary judgment.

United States ex rel. Ellis v. CVS Health Corp. 2026 WL 1791002 (U.S.D.C., E.D. Pennsylvania, June 22, 2026) — Granted CVS summary judgment, rejecting a ‘worthless services’ theory premised on temperature-excursion risk to shipped biologic medications where the relator produced no evidence that any drug’s efficacy was actually impaired.

United States ex rel. Cobb v. Charleston County School District 2026 WL 1830950 (U.S.D.C., D. South Carolina, June 25, 2026) — Granted in part and denied in part the district’s motion to dismiss—dismissing the state whistleblower claim, allowing the FCA claim to proceed, and ordering the relator to file a more definite statement of the FCA claim.

United States ex rel. White v. Gainwell Technologies LLC 2026 WL 1864033 (U.S.D.C., D. Massachusetts, June 29, 2026) — Granted dismissal, concluding on fuller briefing that the relators failed to state an FCA claim against a state Medicaid fiscal agent—reversing the court’s earlier view when it had allowed the amendment.

31 U.S.C. § 3730(b) — Actions by Private Persons (Qui Tam)

United States ex rel. Nicholson v. Clarksville Pain Institute, LLC 2026 WL 908546 (U.S.D.C., M.D. Tennessee, April 2, 2026) — Granted the United States leave to amend its complaint-in-intervention in a qui tam alleging pain-clinic billing fraud, after the government partially intervened.

United States ex rel. Duell v. State of Hawaii 2026 WL 915149 (U.S.D.C., D. Hawaii, April 3, 2026) — Ordered a pro se relator to show cause why his ‘qui tam’ complaint should not be dismissed—because a non-attorney cannot prosecute an FCA action on the government’s behalf—and directed the clerk to unseal the complaint.

United States ex rel. Buxbaum v. Legal Aid Society of Rockland County 2026 WL 926728 (U.S.D.C., S.D. New York, April 6, 2026) — Dismissed a pro se plaintiff’s attempt to reframe his suit as an FCA qui tam, for lack of subject-matter jurisdiction.

United States ex rel. Compton v. HCR ManorCare, Inc. 2026 WL 1066520 (U.S.D.C., E.D. Pennsylvania, April 17, 2026) — Granted a defendant’s motion to unseal the docket in a consolidated nursing-home ‘worthless services’ qui tam, subject to the government’s opportunity to seek limited redactions.

United States ex rel. Dow v. HC2, Inc. 2026 WL 1179712 (U.S.D.C., District of Columbia, April 30, 2026) — Dismissed a qui tam for failure to prosecute where the relator—who must be represented by counsel—went nine months without replacement counsel; also ruled in part on unsealing.

United States ex rel. v. Hospice Source, LLC 2026 WL 1189202 (U.S.D.C., E.D. California, April 30, 2026) — Dismissed a qui tam with prejudice as to the relator and without prejudice as to the United States and plaintiff States under Rule 41, consistent with the FCA’s § 3730(b)(1) requirement of court and Attorney General consent.

United States ex rel. Chao v. County of Santa Clara 2026 WL 1395940 (U.S.D.C., N.D. California, May 18, 2026) — Dismissed the pro se plaintiff’s FCA qui tam and FCA retaliation claims without leave to amend.

United States ex rel. Doe v. Trustees of Columbia University 2026 WL 1533795 (U.S.D.C., S.D. New York, May 28, 2026) — On a pro se relator’s in forma pauperis and pseudonym requests in a purported qui tam, granted 60 days to retain counsel, reiterating that a non-attorney cannot pursue an FCA action pro se.

United States ex rel. Scheffler v. Golden Shovel Agency, LLC 2026 WL 1723921 (U.S.D.C., D. Minnesota, June 15, 2026) — Granted in part a motion to dismiss a CARES Act/PPP-funding qui tam but gave the relator leave to file a second amended complaint.

31 U.S.C. § 3730(d) — Award to Qui Tam Plaintiff

United States ex rel. Thrower v. Academy Mortgage Corp. 2026 WL 923856 (U.S.C.A, Ninth Circuit, April 6, 2026) — In companion appeals arising from an FCA relator’s award of attorneys’ fees, costs, and expenses, the court addressed the fee award—including when postjudgment interest begins to accrue on it—affirming the district court (see also 2026 WL 923862).

United States ex rel. Osinek v. Permanente Medical Group, Inc. (Kaiser) 2026 WL 970482 (U.S.D.C., N.D. California, April 10, 2026) — Denied a third party’s motion for a share of the settlement proceeds in the consolidated Kaiser Medicare Advantage risk-adjustment qui tam actions.

United States ex rel. Quesenberry v. Breaks Interstate Park Commission (Rockbridge Regional Library) 2026 WL 1534496 (U.S.D.C., W.D. Virginia, June 1, 2026) — Awarded the relator $3,400 of the $12,600 sought in attorneys’ fees connected to a defendant library’s default.

31 U.S.C. § 3730(e)(4) — The Public Disclosure Bar

United States ex rel. Anderson v. Saint Elizabeth Medical Center, Inc. 2026 WL 1047118 (U.S.C.A, Sixth Circuit, April 17, 2026) — Affirmed judgment on the pleadings for the hospital, holding the relator’s allegations of medically unnecessary procedures and kickbacks were substantially the same as publicly disclosed information and that he was not an original source (also failing Rule 9(b) particularity).

31 U.S.C. § 3730(h) — Relief From Retaliatory Actions

Brandt v. Federal Reserve Bank of San Francisco 2026 WL 1224044 (U.S.D.C., W.D. Washington, May 5, 2026) — Dismissed the plaintiff’s FCA retaliation claim without prejudice and granted leave to amend, while dismissing her related ‘outrage’ tort claim with prejudice.

Evans v. Individual Advocacy Group, Inc. 2026 WL 1250650 (U.S.D.C., District of Columbia, May 7, 2026) — Denied the employer’s motion to dismiss the FCA retaliation claim, allowing the theory that the plaintiff was fired for protected activity to proceed (and denying a related discovery motion as moot).

Deedrich v. Danville Redevelopment & Housing Authority 2026 WL 1398780 (U.S.D.C., W.D. Virginia, May 19, 2026) — Granted the employer summary judgment on the plaintiff’s § 3730(h) constructive-discharge retaliation claim.

Young v. Rector & Visitors of the University of Virginia 2026 WL 1557470 (U.S.D.C., W.D. Virginia, June 2, 2026) — Granted in part motions to dismiss physician-plaintiffs’ claims arising from alleged fraudulent-billing pressure, dismissing their FCA and Virginia FATA claims (and RICO claims) without prejudice.

Akindutire v. Northrop Grumman Systems Corp. 2026 WL 1661915 (U.S.D.C., D. Minnesota, June 9, 2026) — Granted the employer’s motion to compel arbitration of the plaintiff’s claims, including his FCA retaliation claim (Count III).

John Libby is an arbitrator, mediator, and settlement counsel with LibbyADR LLC. This post contains his own summaries of the decisions discussed, prepared for general informational purposes only. The summaries are not intended to be a complete statement of any court’s reasoning, nor should they be taken to indicate how he would rule as an arbitrator in any particular case. In addition, the summaries are not legal advice, nor should they be construed as legal advice. Readers should not act on these posts, but should review the decisions themselves and consult with legal counsel.

This post collects False Claims Act decisions from three quarters — 2025Q3 through 2026Q1 — organized by the statutory provision each decision construes. Westlaw citations, courts, and decision dates follow each case name.

Coverage focuses on decisions that bear on an FCA legal question: liability elements, qui tam procedure, relator awards and fees, the public-disclosure bar, and retaliation. Purely ancillary rulings in FCA cases (routine discovery, sealing, and similar) are omitted. Quarterly updates continue with the 2026Q2 summary.

2025Q3 (July 1 – September 30, 2025)

31 U.S.C. § 3729(a)(1)(A) and (B) — Liability for False Claims and Statements

United States ex rel. Gomez v. Koman Construction, LLC 2025 WL 2437197 (U.S.D.C., W.D. Texas August 22, 2025) — The court discussed how factually false claims misrepresent the goods or services provided, while legally false claims involve an express or implied false certification of compliance with legal or contractual obligations.

United States ex rel. Streck v. Eli Lilly and Company 2025 WL 2618821 (U.S.C.A, Seventh Circuit, September 11, 2025) — The court evaluated drug pricing calculations submitted to Medicaid, determining that excluding subsequent price increases from Average Manufacturer Price calculations contradicted the plain text of statutes, rendering the claims false as a matter of law.

United States ex rel. O’Laughlin v. Radiation Therapy Services, P.S.C. 2025 WL 2417089 (U.S.C.A, Sixth Circuit, August 21, 2025) — The court analyzed the “false certification” theory of liability. The relator alleged that the defendants billed Medicare for radiation services without the required supervision of a qualified physician. The court dismissed the claims because the relator failed to prove that compliance with state-level supervision requirements was a material prerequisite to obtaining payment from Medicare.

United States ex rel. Folse v. Napper 2025 WL 2585680 (U.S.D.C., M.D. Tennessee September 5, 2025) — This case examines how violations of the Anti-Kickback Statute (AKS) predicate FCA liability. The court emphasized the “resulting from” requirement of the statute, interpreting it as a strict but-for causation standard—meaning the submitted false claims must have actually resulted from the underlying AKS violation.

31 U.S.C. § 3729(a)(1)(C) — Conspiracy

United States ex rel. Gomez v. Koman Construction, LLC 2025 WL 2437197 (U.S.D.C., W.D. Texas August 22, 2025) — The court outlined the two requirements to state a conspiracy claim: an unlawful agreement to obtain payment for a false claim, and an overt act in furtherance of it.

United States ex rel. O’Laughlin v. Radiation Therapy Services, P.S.C. 2025 WL 2417089 (U.S.C.A, Sixth Circuit, August 21, 2025) — The court noted that the only evidence pleaded in support of the conspiracy claim was that all defendants committed FCA violations. Because the relator failed to provide sufficient proof of underlying false claims, the derivative conspiracy claim was also dismissed.

United States ex rel. Leslie Carico v. Veterans Guardian VA Claim Consulting, LLC 2025 WL 2588895 (U.S.D.C., M.D. North Carolina September 8, 2025) — The court found that a relator failed to allege any circumstances constituting fraud on the part of the defendants with respect to a conspiracy to fraudulently obtain a PPP loan.

31 U.S.C. § 3729(a)(1)(G) — Reverse False Claims

Island Industries, Inc. v. Sigma Corporation 2025 WL 2422455 (U.S.C.A, Ninth Circuit, August 21, 2025) — The court confirmed that an importer becomes liable for antidumping duties as soon as goods arrive, creating an actionable “obligation” to the government under the FCA even before the exact amount is fixed. It also held that the FCA’s reverse false claims provision can coexist alongside the Tariff Act.

31 U.S.C. § 3729(b) — Definitions of “Knowing” (Scienter) and “Material”

United States ex rel. Streck v. Eli Lilly and Company 2025 WL 2618821 (U.S.C.A, Seventh Circuit, September 11, 2025) — Evaluating scienter, the court emphasized that Congress intended to reach the “ostrich” type situation where an individual buries their head in the sand. Regarding materiality, the court found that the government’s continued payment after learning of the fraud is “evidence of immateriality” but is not on its own “dispositive”.

Island Industries, Inc. v. Sigma Corporation 2025 WL 2422455 (U.S.C.A, Ninth Circuit, August 21, 2025) — The court rejected an objective reasonableness defense to scienter, reaffirming that the FCA focuses on whether the defendant acted with actual knowledge, deliberate ignorance, or reckless disregard, not what a hypothetical reasonable person might have believed.

United States ex rel. Gomez v. Koman Construction, LLC 2025 WL 2437197 (U.S.D.C., W.D. Texas August 22, 2025) — The court interpreted the scienter standard to conclude that the relators successfully alleged that the defendants acted with actual knowledge when they submitted bids knowing they would pass the work through to non-compliant entities to illegally secure set-aside contracts.

31 U.S.C. § 3730(b) — Actions by Private Persons (Qui Tam)

United States v. Gilead Sciences, Inc. 2025 WL 2627686 (U.S.D.C., E.D. Pennsylvania September 11, 2025) — The court addressed a constitutional challenge to the FCA’s qui tam provisions. It rejected the argument that relators violate the Appointments Clause of Article II, noting that relators lack the tenure, duration, and continuous duties required to be considered “Officers of the United States”.

Joel Mahl v. City of New York 2025 WL 2696441 (U.S.D.C., E.D. New York September 22, 2025) — The court noted that because a relator brings an action on behalf of the United States, a non-attorney layperson cannot proceed pro se under the FCA.

Michael Buxbaum v. Walt Disney Co. 2025 WL 2676487 (U.S.D.C., S.D. New York September 18, 2025) — Reaffirmed that because a relator brings an action on behalf of the United States, a non-attorney pro se litigant cannot prosecute a qui tam action.

United States ex rel. STF, LLC v. True Health Diagnostics, LLC 2025 WL 2600012 (U.S.D.C., E.D. Texas September 5, 2025) — The court utilized 31 U.S.C. § 3730(b)(1), which dictates that a qui tam action may only be dismissed if the court and the Attorney General give written consent to approve a joint stipulation of dismissal.

In re Webb 2025 WL 2629846 (U.S.D.C., N.D. Ohio September 12, 2025) — The court rejected a Rule 27 petition to preserve evidence for an anticipated qui tam action, noting that the petitioner failed to identify any actionable fraudulent demand for payment that injured the federal government.

31 U.S.C. § 3730(d) — Award to Qui Tam Plaintiff

United States ex rel. Scott v. Humana Inc. 2025 WL 2603057 (U.S.D.C., W.D. Kentucky September 9, 2025) — The court analyzed a prevailing relator’s petition for attorneys’ fees and expenses following a settlement, determining it was reasonable to award out-of-town specialist rates due to the highly specialized nature of the litigation.

31 U.S.C. § 3730(e)(4) — The Public Disclosure Bar

United States ex rel. Smith v. Odom 2025 WL 2424425 (U.S.C.A, Eleventh Circuit, August 22, 2025) — The court elaborated on the “original source” exception, finding that a relator does not “materially add” to public disclosures by merely supplying background information or details that contextualize the core fraud hypothesis already available in the news media.

United States ex rel. Sorgi v. Jazz Pharmaceuticals 2025 WL 2701928 (U.S.D.C., D. Massachusetts September 23, 2025) — It barred the relator’s suit, finding that the relator lacked insider knowledge, relied entirely on information in the public domain, and merely added “color” to previously disclosed facts.

31 U.S.C. § 3730(h) — Relief From Retaliatory Actions

Evans v. Individual Advocacy Group, Inc. 2025 WL 2651242 (U.S.D.C., District of Columbia September 16, 2025) — The court interpreted the elements of a retaliation claim, holding that an employee who refused to backdate training documents to prevent her employer from defrauding a government agency had plausibly engaged in protected preventative activity.

Reinhardt v. Guidehouse Inc. 2025 WL 2603688 (U.S.D.C., District of Columbia September 9, 2025) — Discussing the scope of claims subject to mandatory arbitration, the court confirmed that employment-related whistleblower retaliation claims brought under the FCA are arbitrable.

United States ex rel. Gomez v. Koman Construction, LLC 2025 WL 2437197 (U.S.D.C., W.D. Texas August 22, 2025) — The court held that to satisfy the “protected activity” element of a retaliation claim, the relator’s conduct must raise a “distinct possibility” of an FCA action or otherwise seek to stop fraud against the government.

2025Q4 (October 1 – December 31, 2025)

31 U.S.C. § 3729(a)(1)(A) and (B) — Liability for False Claims and Statements

United States ex rel. Arehart v. U.S. Medical Management, LLC 2025 WL 3677743 (U.S.D.C., E.D. Wisconsin December 18, 2025) — The court reaffirmed that an FCA presentment claim requires pleading with particularity, dismissing the complaint for providing no details on when, how many, or by whom specific false claims were actually submitted.

Jensen v. Genesis Laboratory Management, LLC 2025 WL 3763951 (U.S.D.C., D. New Jersey December 30, 2025) — The court found that while the relators adequately pled when the fraud occurred, they failed to plead how it occurred with “reliable indicia” that false claims were actually submitted to the government.

Natasha Dixon v. Volunteers of America 2025 WL 3244391 (U.S.D.C., W.D. Louisiana November 20, 2025) — The court allowed a presentment claim to survive, noting the relator identified specific supervisors who instructed employees to falsify Medicaid assessments to ensure coverage, providing reliable indicia of fraud.

Jevarien Z. Dunlap v. Bay Area Rapid Transit 2025 WL 3146412 (U.S.D.C., N.D. California November 11, 2025) — The court identified the four general elements necessary to state a claim under § 3729(a)(1)(A)-(B).

United States ex rel. Breslow v. JP Pharma, LLC 2025 WL 3640892 (U.S.D.C., W.D. Virginia December 16, 2025) — The court found the relator adequately pled falsity regarding a patient inducement scheme where claims were submitted for medically unnecessary treatments tainted by kickbacks.

United States ex rel. Souza v. Embrace Home Loans, Inc. 2025 WL 3072653 (U.S.D.C., D. Rhode Island November 4, 2025) — The court noted that FCA liability under these sections may arise where a defendant falsely certifies compliance with a material requirement of a federal statute or regulation.

United States ex rel. Devarapally v. Ferncreek Cardiology, P.A. 2025 WL 3565506 (U.S.D.C., E.D. North Carolina December 12, 2025) — The court evaluated the “implied certification theory” for medically unnecessary laboratory tests and testimony from physicians regarding their belief of medical necessity at the time they engaged in the treatment and billing.

United States ex rel. Thomas v. Premier Home Health Care Services, Inc. 2025 WL 3002967 (U.S.D.C., S.D. New York October 27, 2025) — The court evaluated the “more relaxed” Rule 9(b) pleading standard concluding that a relator without access to specific bills must still make plausible allegations that the invoices were uniquely within the defendant’s control.

United States ex rel. Relator, LLC v. iLink Employers Company 2025 WL 3066301 (U.S.C.A, Ninth Circuit, November 3, 2025) — The court reversed a dismissal, finding the relator plausibly alleged with particularity that the defendants made false statements and submitted false certifications on federal Paycheck Protection Program (PPP) loan applications.

United States ex rel. Gentry v. Encompass Health Rehabilitation Hospital 2025 WL 3063921 (U.S.C.A, Fifth Circuit, November 3, 2025) — The court dismissed false presentment and false records claims because the relator failed to accompany conclusory allegations with details of an actually submitted false claim.

31 U.S.C. § 3729(a)(1)(C) — Conspiracy

United States ex rel. Arehart v. U.S. Medical Management, LLC 2025 WL 3677743 (U.S.D.C., E.D. Wisconsin December 18, 2025) — The court dismissed a conspiracy claim because the relator failed to adequately allege an underlying FCA violation.

Jensen v. Genesis Laboratory Management, LLC 2025 WL 3763951 (U.S.D.C., D. New Jersey December 30, 2025) — The court reiterated that without an underlying violation of the FCA, there can be no derivative liability for conspiracy.

Natasha Dixon v. Volunteers of America 2025 WL 3244391 (U.S.D.C., W.D. Louisiana November 20, 2025) — The court dismissed a conspiracy claim because it requires at least two legally distinct actors, and after one defendant was dismissed for lack of jurisdiction, no second conspirator remained.

31 U.S.C. § 3729(a)(1)(G) — Reverse False Claims

Natasha Dixon v. Volunteers of America 2025 WL 3244391 (U.S.D.C., W.D. Louisiana November 20, 2025) — The court held that potential penalties falling within a discretionary range cannot serve as the basis for an “obligation” under a reverse false claim theory.

Christopher A. Feduccia v. I.C.E. Services, Inc. 2025 WL 3251221 (U.S.D.C., D. Alaska November 21, 2025) — The court dismissed a reverse false claim related to the retention of PPP loan funds because the relator failed to plead with specificity exactly how the defendant knowingly concealed or avoided its obligation to return the funds.

United States ex rel. Thomas v. Premier Home Health Care Services, Inc. 2025 WL 3002967 (U.S.D.C., S.D. New York October 27, 2025) — The court dismissed reverse false claims because they mirrored the relator’s direct false claims, noting that reverse false claims cannot be premised on the same conduct.

31 U.S.C. § 3729(b) — Definitions of “Knowing” (Scienter) and “Material”

United States ex rel. Schutte v. SuperValu Inc. 2025 WL 3048985 (U.S.D.C., C.D. Illinois October 31, 2025) — The court reaffirmed the Supreme Court’s standard that “knowingly” focuses on subjective beliefs—whether the defendant actually knew, intentionally avoided learning, or submitted claims despite a substantial and unjustifiable risk of falsity.

United States of America and State of Minnesota ex rel. Ashley Mothershed v. Mayo Clinic Ambulance 2025 WL 3043342 (U.S.D.C., D. Minnesota October 31, 2025) — The court emphasized that a relator must show the defendant acted knowingly with respect to the particular false claim at issue.

United States ex rel. Breslow v. JP Pharma, LLC 2025 WL 3640892 (U.S.D.C., W.D. Virginia December 16, 2025) — Reaffirming Schutte, the court reiterated that the scienter element refers to defendants’ subjective beliefs, not an objectively reasonable person.

United States ex rel. Souza v. Embrace Home Loans, Inc. 2025 WL 3072653 (U.S.D.C., D. Rhode Island November 4, 2025) — The court noted that materiality is a “fact-intensive and context-specific inquiry”.

United States ex rel. Omni Healthcare Inc. v. MD Spine Solutions LLC 2025 WL 3442574 (U.S.C.A, First Circuit, December 1, 2025) — The court evaluated the scienter requirement for laboratories performing “medically unnecessary” tests, holding that a laboratory can generally rely on a doctor’s order to show that a test is medically necessary.

31 U.S.C. § 3730(b) — Actions by Private Persons (Qui Tam)

United States ex rel. Goebel v. Anchorage SNF, LLC 2025 WL 2898087 (U.S.D.C., D. Maryland October 10, 2025) — Interpreting the first-to-file bar, the court held that an earlier-filed lawsuit that alerts the government to the essential facts of a fraudulent scheme completely bars a later action, even if the new action names entirely different defendants.

Ronetta Smith v. Respiro, LLC 2025 WL 3140610 (U.S.D.C., N.D. Illinois November 10, 2025) — The court ruled that a relator’s complete failure to comply with the procedural requirements of § 3730(b)(2)—by filing on the public docket and failing to serve the government—inherently harms the government and mandates dismissal with prejudice.

Jevarien Z. Dunlap v. Bay Area Rapid Transit 2025 WL 3146412 (U.S.D.C., N.D. California November 11, 2025) — Reaffirmed that a non-attorney pro se litigant cannot prosecute a qui tam action.

United States ex rel. Gentry v. Encompass Health Rehabilitation Hospital 2025 WL 3063921 (U.S.C.A, Fifth Circuit, November 3, 2025) — Touched on constitutional issues with unaccountable private actors exercising core executive power.

Michael Hunter v. Doctor Haas 2025 WL 2830261 (U.S.D.C., D. South Dakota October 6, 2025) — Non-attorney pro se litigant cannot prosecute a qui tam action.

Terasa DeMarinis v. Southern New Hampshire University 2025 WL 3012854 (U.S.D.C., D. Massachusetts October 28, 2025) — Non-attorney pro se litigant cannot prosecute a qui tam action.

United States ex rel. Relator LLC v. Pape (The Articom Group) 2025 WL 3707557 (U.S.D.C., N.D. California December 22, 2025) — Discussed constitutional and public disclosure limits on private actions.

31 U.S.C. § 3730(d) — Award to Qui Tam Plaintiff

United States ex rel. Jahr v. Tetra Tech EC, Inc. 2025 WL 3124335 (U.S.D.C., N.D. California November 7, 2025) — The court noted that arguments regarding the extent to which relators “substantially contributed to the prosecution of the action” under § 3730(d)(1) must be made claim-by-claim with specific evidentiary support.

BNSF Railway Company v. The Center for Asbestos Related Disease 2025 WL 3004741 (U.S.D.C., D. Montana October 27, 2025) — Following a jury finding that the defendant committed 337 violations of the FCA, the court awarded the relator 25% of the total proceeds.

31 U.S.C. § 3730(e)(4) — The Public Disclosure Bar

Christopher A. Feduccia v. I.C.E. Services, Inc. 2025 WL 3251221 (U.S.D.C., D. Alaska November 21, 2025) — Confirmed that data hosted on federal websites regarding PPP loans constitute “federal reports” that trigger the public disclosure bar.

United States v. William Allan Jones 2025 WL 3240804 (U.S.D.C., N.D. California November 20, 2025) — Consistently confirmed that data hosted on federal websites regarding PPP loans constitute “federal reports” that trigger the public disclosure bar.

United States ex rel. Relator LLC v. Pape (The Articom Group) 2025 WL 3707557 (U.S.D.C., N.D. California December 22, 2025) — Evaluated whether the Small Business Administration’s website disclosing a company’s PPP loan triggered the bar, concluding it did not because the website only disclosed the misrepresented facts.

31 U.S.C. § 3730(h) — Relief From Retaliatory Actions

United States ex rel. Thomas v. Premier Home Health Care Services, Inc. 2025 WL 3002967 (U.S.D.C., S.D. New York October 27, 2025) — Distinguished retaliation claims from substantive fraud claims, holding that an FCA retaliation claim need not be plead with particularity.

United States v. Alabama Psychiatry LLC 2025 WL 3213480 (U.S.C.A, Eleventh Circuit, November 18, 2025) — Affirmed a grant of summary judgment in favor of a former employer regarding an FCA retaliation claim.

2026Q1 (January 1 – March 31, 2026)

31 U.S.C. § 3729(a)(1)(A) and (B) — Liability for False Claims and Statements

United States ex rel. Sedona Partners LLC v. Able Moving & Storage, Inc. 2026 WL 492402 (U.S.D.C., S.D. Florida February 23, 2026) — Interpreted the presentment claim requirement, ruling that a relator must offer indicia of reliability or actual submission of a false claim.

Mary Bixler Wood v. Siemens Medical Solutions USA, Inc. 2026 WL 504530 (U.S.C.A, Second Circuit, February 24, 2026) — Dismissed FCA claims because the relator failed to plead under Rule 9(b) that the allegedly malfunctioning medical devices were actually sold to or paid for by the government.

United States ex rel. Camburn v. Novartis Pharms. Corp. 2026 WL 864529 (U.S.D.C., S.D. New York March 30, 2026) — Ruled that a relator successfully pled fraud with particularity by utilizing a representative sample exhibit detailing specific doctors, the exact number of tainted claims, and exact Medicare reimbursement amounts resulting from illegal kickbacks.

Calvin Andrews v. Spokane Housing Authority 2026 WL 851989 (U.S.D.C., E.D. Washington March 27, 2026) — Briefly defined a false or fraudulent claim for payment as the imposition of civil liability on anyone who knowingly presents or uses a false record or statement material to a claim to the United States government.

United States ex rel. Scarbrough v. Alabama Cancer Care, LLC 2026 WL 208627 (U.S.D.C., N.D. Alabama January 27, 2026) — Elaborated that presentment requires specific information about the submission of claims.

United States ex rel. Adventist Health System of West v. AbbVie Inc. 2026 WL 743495 (U.S.C.A, Ninth Circuit, March 17, 2026) — Held that a relator adequately stated claims by alleging drug manufacturers fraudulently inflated drug prices in violation of the Section 340B Program.

Adam Josephs v. Amentum Services Inc. 2026 WL 183543 (U.S.D.C., D. Maryland January 23, 2026) — Addressed an interlocutory appeal request over pleading an implied false certification claim.

United States ex rel. Koehler v. United Site Services, Inc. 2026 WL 865782 (U.S.D.C., E.D. New York March 30, 2026) — In a non-intervened qui tam alleging false claims tied to a GSA Multiple Award Schedule contract for portable-restroom and related services, the court granted the defendant’s motion to dismiss the relator’s federal and state FCA claims under Rules 9(b) and 12(b)(6) for failure to plead the alleged fraud with the required particularity.

United States ex rel. Segura v. Surgical Care Affiliates, LLC 2026 WL 872445 (U.S.D.C., D. Kansas March 31, 2026) — In an FCA suit alleging that ambulatory surgery centers ran an illegal upcoding scheme, the court granted in part and denied in part the defendants’ motion to dismiss—allowing the presentment and false-statement claims under § 3729(a)(1)(A) and (B) to proceed while dismissing the conspiracy claim under § 3729(a)(1)(C) as resting on only a formulaic recitation of an agreement.

United States ex rel. Hennessey v. UPMC Altoona 2026 WL 878755 (U.S.D.C., W.D. Pennsylvania March 31, 2026) — In a qui tam alleging that UPMC hospitals fraudulently upcoded emergency-room visits billed to Medicare and Medicaid, the court granted the defendants’ motion to dismiss the amended complaint, holding the relator failed to plead the alleged fraud with Rule 9(b) particularity and failed to plausibly allege scienter.

31 U.S.C. § 3729(a)(1)(G) — Reverse False Claims

United States v. LabQ Clinical Diagnostics, LLC 2026 WL 787460 (U.S.D.C., S.D. New York March 20, 2026) — Determined that the Affordable Care Act’s requirement that a provider report and return overpayments imposes an immediate, self-executing obligation sufficient to support a reverse false claim action.

United States ex rel. Frey v. Health Management Systems, Inc. 2026 WL 637725 (U.S.C.A, Fifth Circuit, March 6, 2026) — Evaluated reverse false claims allegations, finding the summary-judgment record did not contain evidence that the defendant actually failed to bill even a single claim under its contracts.

31 U.S.C. § 3729(b) — Definitions of “Knowing” (Scienter) and “Material”

United States ex rel. Scarbrough v. Alabama Cancer Care, LLC 2026 WL 208627 (U.S.D.C., N.D. Alabama January 27, 2026) — Interpreted the FCA’s “scienter” requirement—demanding actual knowledge, deliberate ignorance, or reckless disregard—and found it adequately alleged.

United States ex rel. Sheldon v. Allergan Sales, LLC 2026 WL 706428 (U.S.C.A, Fourth Circuit, March 13, 2026) — Applying the subjective scienter standard, the court noted that the ambiguity of a statute does not defeat scienter if the defendant was subjectively aware of a substantial risk that the government interpreted the statute differently.

31 U.S.C. § 3730(b) — Actions by Private Persons (Qui Tam)

United States ex rel. Adventist Health System of West v. AbbVie Inc. 2026 WL 743495 (U.S.C.A, Ninth Circuit, March 17, 2026) — Evaluating the purpose of the qui tam provision, emphasized that a relator uses the FCA as an independent mechanism, not barred by the 340B statute lacking a private right of action.

United States v. Lockheed Martin Corporation (Ferguson) 2026 WL 656046 (U.S.C.A, Fifth Circuit, March 9, 2026) — Distinguishing the first-to-file bar, ruled it does not apply if the later complaint alleges a different mechanism or scheme of perpetrating the fraud, rather than merely adding details or new locations.

Alana Sullivan v. Murphy Medical Center 2026 WL 657192 (U.S.D.C., E.D. Tennessee March 9, 2026) — Clarified that when the government intervenes on only some claims within an action, the relator is not precluded from independently proceeding with the non-intervened claims.

Michael J. Izquierdo v. United States 2026 WL 626731 (U.S.D.C., N.D. Ohio March 6, 2026) — Reaffirmed that because a relator brings an action on behalf of the United States, a non-attorney pro se litigant cannot prosecute a qui tam action.

Adam Josephs v. Amentum Services Inc. 2026 WL 183543 (U.S.D.C., D. Maryland January 23, 2026) — Addressed an interlocutory appeal regarding constitutionality.

Corey Spaulding v. Pamela Bondi 2026 WL 189488 (U.S.D.C., D. Massachusetts January 23, 2026) — Dismissed a pro se plaintiff’s FCA complaint entirely because the plaintiff failed to comply with statutory relator procedures.

United States ex rel. McDermott v. Haworth Apothecary 2026 WL 836604 (U.S.D.C., D. New Jersey March 26, 2026) — In a qui tam action alleging a hospice-billing scheme in which the United States and New Jersey declined to intervene, the court denied the relator’s third motion for leave to amend the complaint under Rules 15 and 16 given the advanced stage of the litigation, declining to reach the defendant’s futility arguments.

United States ex rel. Pepe v. Fresenius Medical Care Holdings 2026 WL 875240 (U.S.D.C., E.D. New York March 31, 2026) — In a partially-intervened qui tam against dialysis providers, the court granted the relators’ motion for leave to file a Fifth Amended Complaint reviving previously-dismissed non-intervened claims, rejecting the defendants’ futility arguments—including their contention that the FCA public-disclosure bar barred the relators from relying on information in the government’s intervention complaint.

31 U.S.C. § 3730(d) — Award to Qui Tam Plaintiff

United States ex rel. David Perry v. First Psychiatric Planners, Inc. 2026 WL 412327 (U.S.D.C., D. Massachusetts February 13, 2026) — Interpreted § 3730(d)(3) to mean that if a relator is convicted of criminal conduct arising from his role in the underlying FCA violation, he is barred from recovering any share.

31 U.S.C. § 3730(e)(4) — The Public Disclosure Bar

United States ex rel. Scarbrough v. Alabama Cancer Care, LLC 2026 WL 208627 (U.S.D.C., N.D. Alabama January 27, 2026) — Applied the public disclosure bar to dismiss claims against a doctor because his status and Medicare billing history were publicly disclosed on the CMS database.

United States ex rel. St. Paul’s Foundation v. Timothy Wipperman 2026 WL 622771 (U.S.D.C., M.D. Tennessee March 5, 2026) — Noted that following the 2010 amendments to the FCA, the public disclosure bar is no longer a jurisdictional hurdle, and must be evaluated under Rule 12(b)(6).

United States ex rel. Relator LLC v. David O’Rourke 2026 WL 799601 (U.S.D.C., E.D. New York March 23, 2026) — Confirmed that data hosted on federal websites regarding PPP loans constitute “federal reports” that trigger the public disclosure bar.

31 U.S.C. § 3730(h) — Relief From Retaliatory Actions

United States ex rel. Quintin J. Schwartz Sr. v. Document Reprocessors 2026 WL 795590 (U.S.D.C., W.D. New York March 23, 2026) — Analyzed the 2009 amendments to the FCA, concluding that the deletion of the word “employer” did not expand retaliation liability to include individual supervisors; liability may only be imposed on the employer entity.

United States ex rel. Sargent v. Collins 2026 WL 171536 (U.S.C.A, First Circuit, January 22, 2026) — Held that the FCA does not contain an express waiver of federal sovereign immunity for retaliation claims, meaning a federal employee cannot sue the United States government for retaliation under this section.

John Libby is an arbitrator, mediator, and settlement counsel with LibbyADR LLC. This post contains his own summaries of the decisions discussed, prepared for general informational purposes only. The summaries are not intended to be a complete statement of any court’s reasoning, nor should they be taken to indicate how he would rule as an arbitrator in any particular case. In addition, the summaries are not legal advice, nor should they be construed as legal advice. Readers should not act on these posts, but should review the decisions themselves and consult with legal counsel.

Executive Summary

Decided on the same day, United States ex rel. Sheldon v. Allergan Sales, LLC and United States ex rel. White v. Gainwell Technologies LLC are two district-court opinions applying the Supreme Court’s landmark False Claims Act (FCA) scienter decision, United States ex rel. Schutte v. SuperValu Inc., 598 U.S. 739 (2023). Schutte held that the FCA’s “knowing” requirement is subjective: it turns on what the defendant actually knew or believed, not on what an objectively reasonable person would have understood. The Sheldon court applied that standard to move a twelve-year-old Medicaid drug-rebate case — that had previously been dismissed on the theory that the manufacturer’s reading of an ambiguous statute was objectively reasonable — to discovery. In contrast, in White, the same subjective standard was not enough to save the relators, whose complaint against a Medicaid fiscal agent failed to plead non-conclusory facts about that defendant’s own knowledge, and the case was dismissed with prejudice. Read together, the two decisions show that Schutte‘s holding denies FCA defendants the “reasonable interpretation” shield, but it does not relieve relators of pleading concrete, plausible facts about the particular defendant’s state of mind.

Why It Matters

For anyone advising healthcare providers, drug manufacturers, pharmacy-benefit managers, and claims processors, these cases are examples of where the FCA scienter battle now takes place. After Schutte, a defendant can no longer win dismissal simply by showing that its reading of an ambiguous legal requirement was objectively reasonable — the question is what the defendant subjectively believed, which is rarely resolvable on the pleadings. That raises the litigation and settlement exposure of any FCA defendant relying on an “everyone read it that way” defense, as Sheldon vividly shows. At the same time, White confirms that the subjective standard is not a free pass for relators: conclusory allegations that a defendant “knew” or “recklessly disregarded” the truth will still be dismissed, especially against downstream intermediaries whose role is processing someone else’s claims. For settlement counsel and neutrals, the practical upshot is that valuing an FCA case now turns less on the reasonableness of the legal position and more on the strength of the evidence of the specific defendant’s knowledge — a fact-intensive inquiry that rewards early, candid evaluation.

Detailed Discussion of the Facts

These cases are good examples of how the district courts are applying Schutte v. SuperValu Inc., where the Supreme Court construed the FCA’s scienter element — “actual knowledge,” “deliberate ignorance,” or “reckless disregard” of the truth or falsity of a claim. The Court held that this standard is subjective, referring to “the defendant’s knowledge and subjective beliefs — not to what an objectively reasonable person may have known or believed.” Schutte thereby abrogated the widely used defense — drawn from Safeco Insurance Co. of America v. Burr — that a defendant who adopted an objectively reasonable interpretation of an ambiguous requirement could not have acted “knowingly,” regardless of its actual beliefs.

Sheldon is a qui tam action under the Medicaid Rebate Statute alleging that Allergan misreported its drug “Best Price” — omitting price concessions — to reduce the rebates it owed state Medicaid programs. The case has a long history. The district court originally dismissed it, and the Fourth Circuit affirmed (Sheldon II, 24 F.4th 340 (2022)), holding that Allergan’s interpretation of the ambiguous Best Price requirement was objectively reasonable and therefore defeated scienter. After Schutte, the Supreme Court vacated that judgment and remanded; on remand the Fourth Circuit (Sheldon VII, 170 F.4th 227 (2026)) applied the subjective standard and revived the case, holding that statutory ambiguity does not defeat scienter where a defendant may have subjectively known its reading was wrong. Back in the district court — now in the case’s twelfth year — Allergan asked, under Rule 54(b), for leave to file a third motion to dismiss.

White is a qui tam action against Gainwell Technologies, the private fiscal agent that processes Medicaid claims for Rhode Island. The relators alleged that Gainwell facilitated a years-long scheme by Eleanor Slater Hospital (ESH) — a Rhode Island state hospital — to submit false and inflated Medicaid bills. The United States declined to intervene. The court had dismissed the first amended complaint and allowed a single narrow theory to proceed on amendment; on the second amended complaint it had earlier found the relators plausibly alleged reckless disregard, while noting that “the facts point to the state of Rhode Island, not Gainwell, as the source of ESH’s fraud.” Gainwell again moved to dismiss.

Legal Analysis

Applying Schutte‘s subjective standard, the two courts reached opposite conclusions — a contrast that maps the post-Schutte terrain:

• The subjective standard is the common ground. Both courts applied Schutte‘s rule that FCA scienter turns on the defendant’s own knowledge and beliefs. The question is no longer whether a hypothetical reasonable person could have read the requirement the defendant’s way, but whether this defendant actually knew, was deliberately ignorant of, or recklessly disregarded the truth.
• Sheldon: ambiguity no longer ends the case at the pleadings. Because Schutte removed the objective-reasonableness shield, whether Allergan subjectively believed its Best Price reporting was correct is a fact question that cannot be resolved on a motion to dismiss. The court denied Allergan’s Rule 54(b) request to file a third motion to dismiss, holding that a twelve-year-old case should proceed to discovery rather than absorb another round of pre-discovery motion practice, and declined to let Allergan re-litigate Rule 9(b) falsity at this late stage.
• White: the subjective standard still demands particularized facts. The relators’ complaint “failed to plausibly allege that Gainwell possessed the requisite scienter under the subjective standard established by the Supreme Court in SuperValu.” It pleaded no non-conclusory facts about Gainwell’s subjective knowledge of the adequacy of the hospital’s billing, and no particularized facts showing a scheme to defraud by Gainwell rather than by the hospital or the State.
• Causation compounds the problem for intermediaries. As the recipient and processor of the hospital’s claims — with no substantive input into them — Gainwell could not have “knowingly caused” the submission of false claims. The scienter and causation inquiries converged: without facts showing Gainwell’s own culpable state of mind, there was no basis to hold the fiscal agent liable for the hospital’s fraud.
• Opposite procedural outcomes. Sheldon proceeds to discovery, its scienter question preserved for a factual record; White was dismissed with prejudice, the relators having neither sought nor warranted further amendment.
• The synthesis — Schutte focuses on facts. Post-Schutte, the decisive FCA question has migrated from “was the defendant’s interpretation reasonable?” — a legal issue courts could resolve on the pleadings — to “what did this defendant actually know or believe?”, a fact-specific inquiry. That migration makes ambiguity-based dismissals far harder for defendants, but it puts a premium on the relator’s ability to plead the specific defendant’s knowledge with particularity.

Holding

In Sheldon, the court denied Allergan’s Rule 54(b) motion and refused to permit a third motion to dismiss, holding that under Schutte the subjective-scienter question could not be resolved on the pleadings and the case should proceed to discovery. In White, the court held that the second amended complaint failed to plausibly allege that Gainwell acted with the subjective scienter Schutte requires — or that it knowingly caused the submission of false claims — granted the motion to dismiss, and entered judgment dismissing the case with prejudice.

John Libby is an arbitrator, mediator, and settlement counsel with LibbyADR LLC. This post contains his own summaries of the decisions discussed, prepared for general informational purposes only. The summaries are not intended to be a complete statement of any court’s reasoning, nor should they be taken to indicate how he would rule as an arbitrator in any particular case. In addition, the summaries are not legal advice, nor should they be construed as legal advice. Readers should not act on these posts, but should review the decisions themselves and consult with legal counsel.

Executive Summary

In United States ex rel. Kyer v. Thomas Health System, Inc., the Fourth Circuit Court of Appeals affirmed the dismissal of a qui tam False Claims Act (FCA) suit brought by a former hospital nurse against a nonprofit health system, its two hospitals, its employed-physician group, and a former executive. The relator alleged that the defendants submitted Medicare claims tainted by violations of the Stark Law and the Anti-Kickback Statute (AKS), so that the system’s certifications of compliance rendered those claims false. Reviewing an 83-page amended complaint supported by roughly 30 pages of billing tables, the court held that the complaint failed to plead fraud with the particularity Rule 9(b) requires. At the heart of the decision is a clean legal line: paying physicians for their own productivity — measured in work relative value units (wRVUs) for services they personally perform — is not the same as paying them for referrals, and does not, by itself, create the prohibited financial relationship the Stark Law requires.

Why It Matters

This decision is a meaningful win for health systems, employed-physician groups, and the compliance teams that advise them. It confirms that widely used wRVU productivity compensation does not, standing alone, create Stark Law exposure, because the statute excludes a physician’s personally performed work from the definition of a “referral.” The ruling also cabins the Fourth Circuit’s landmark Tuomey decision — distinguishing ordinary productivity pay from a “collections” formula that captured the hospital’s facility fees — and it reaffirms rigorous Rule 9(b) gatekeeping: a relator cannot dump thousands of billing codes into an appendix and ask the court to find the fraud, but must connect those codes to Medicare’s “designated health services” and to a concretely pleaded self-referral or kickback scheme. For settlement counsel and neutrals, it is a useful marker of how pleading-stage vulnerabilities drive the realistic value of a healthcare FCA case.

Detailed Discussion of the Facts

Thomas Health System, Inc. is a nonprofit corporation in South Charleston, West Virginia, that owns two hospitals — Thomas Memorial Hospital and St. Francis Hospital — and controls THS Physician Partners, Inc. (THSPP), a multi-specialty group employing physicians and nonphysician providers such as physician assistants and nurse practitioners (who, under West Virginia law, generally must practice under physician supervision). The hospitals participate in Medicare and, on enrollment and in annual cost reports, must certify compliance with the Stark Law and the Anti-Kickback Statute. The relator, Liesa Kyer, was a former nurse at Thomas Memorial.

THSPP paid its physicians based on their wRVU totals — a work-based measure of the time, skill, and effort a procedure requires — with a minimum target to earn a base salary and a bonus that scaled with wRVUs above the target; some physicians also received credit for a share of the wRVUs generated by nonphysicians they supervised, and a handful were paid at or above the 90th percentile of national benchmarks. In early 2015, the system adopted a “provider-based billing” structure, converting certain physician offices into hospital departments. That change “unbundled” billing so that THSPP billed the professional-services component while the hospital separately billed a higher facility fee, leaving THSPP to run operating losses that the parent backfilled through transfers — while the integrated system captured more Medicare revenue overall.

Kyer filed her qui tam complaint under seal in November 2020; the government obtained five seal extensions over nearly three years before declining to intervene. Her March 2024 amended complaint asserted four counts — presenting false claims, false statements material to false claims, conspiracy, and a reverse false claim. Rather than sue to recover any overcharges itself, she pursued the claims on the government’s behalf. The district court (S.D. W. Va., Judge Goodwin) dismissed the complaint under Rule 9(b) and denied post-judgment vacatur and leave to amend; Kyer appealed both rulings, which the Fourth Circuit reviewed together as a single judgment.

Legal Analysis

The district court dismissed the complaint for failing to plead fraud with the particularity Rule 9(b) requires — a standard that, where FCA liability hinges on an underlying Stark or Anti-Kickback violation, demands that the underlying scheme itself be pleaded with particularity. The relator’s billing tables established the who, what, where, and when, but not the “how,” or indeed “whether,” any claim was actually false. Affirming, the Fourth Circuit detailed several key points:

• wRVU productivity is not referral-based compensation. The dispositive Stark element was the “financial relationship.” An indirect compensation arrangement requires physician pay that “varies with, or takes into account, the volume or value of referrals,” and wRVU compensation rewards the physician’s own personally performed work — which the statute expressly excludes from the definition of a “referral.” A formula “takes into account” referrals only if it includes referrals as a variable; a wRVU formula contains no such input.
• Distinguishing Tuomey. In Tuomey II, the unlawful formula was based on “collections” that included the hospital’s facility fees, tying physician pay directly to referral revenue. wRVUs, by contrast, track only the physician’s labor — so Tuomey does not sweep in ordinary productivity pay.
• Supervision credit and high pay did not bridge the gap. Crediting a physician for supervising nonphysicians rewards the physician’s own (legally required) work, not referrals. Pay above the 90th percentile, standing alone, does not show variation with referrals — by definition, ten percent of physicians exceed it — distinguishing Bookwalter, where compensation ran two-to-three times that benchmark with other red flags.
• The Anti-Kickback theories failed. The hospitals’ transfers covering THSPP’s operating deficit were at least as consistent with lawful explanations — maintaining unprofitable service lines or the accounting consequence of provider-based billing — as with a kickback, and facts equally consistent with lawful and unlawful conduct do not survive Rule 9(b). A $5,000 marketing stipend cut the other way entirely: it induced THSPP physicians to attract patients to their own practices, making them the inducers of outside referrals rather than parties induced to refer to the hospitals.
• The derivative counts collapsed. Because no claim was rendered false, there was no unlawful agreement to support the conspiracy count, and the reverse-false-claim count necessarily failed as well.
• Denial of leave to amend was no abuse of discretion. Having filed in 2020, amended in 2024 with the benefit of more than 500,000 pages of pre-amendment discovery and the roadmap of a motion to dismiss, and still offered no proposed cured complaint, the relator gave the district court ample basis to deny another round for undue delay and repeated failure to cure.

Holding

The Fourth Circuit affirmed, holding that the complaint failed to plead FCA fraud with Rule 9(b) particularity: it alleged neither a Stark Law violation — because wRVU-based productivity compensation is not compensation tied to the volume or value of referrals — nor a plausible Anti-Kickback Statute violation. The derivative conspiracy and reverse-false-claims counts failed with the substantive claims, and the district court did not abuse its discretion in denying post-judgment vacatur and leave to amend. The judgment was affirmed.

John Libby is an arbitrator, mediator, and settlement counsel with LibbyADR LLC. This post contains his own summaries of the decisions discussed, prepared for general informational purposes only. The summaries are not intended to be a complete statement of any court’s reasoning, nor should they be taken to indicate how he would rule as an arbitrator in any particular case. In addition, the summaries are not legal advice, nor should they be construed as legal advice. Readers should not act on these posts, but should review the decisions themselves and consult with legal counsel.