On June 3, 2022, the Washington, D.C., office of the Civil Division of the Department of Justice (DOJ) filed a statement of interest in a relator's action in the Southern District of Florida, captioned U.S. ex rel. Patricia Crocano v. Trividia Health Inc., arguing that "[c]onduct giving rise to a regulatory violation can also give rise to [False Claims Act] liability." Specifically, requesting "that the ruling not foreclose the possibility that, under certain circumstances, conduct giving rise to violations of the [Federal Food, Drug and Cosmetic Act] or FDA regulations could be material to the government's payment decisions and provide a basis for FCA liability assuming all necessary FCA elements are demonstrated," also known as "fraud on the FDA." This filing is notable because it makes clear the DOJ's decision to reawaken a theory of liability thought to be dead. First rejected by the First Circuit in 2016, the Ninth Circuit gave the theory a second chance resulting in a circuit split on this issue.
The fraud-on-the-FDA theory stems from the well-established legal doctrine of fraudulent inducement. Fraudulent inducement under the FCA occurs when a company's fraudulent conduct induces the government to enter into a contract with the company, making any claims for payment under the contract false. Under the theory, fraudulent inducement occurs when a company's violations of the Federal Food, Drug and Cosmetic Act (FDCA) or FDA regulations materially and...
University of Rochester Medical Center and a former pathologist resolved a retaliation suit alleging URMC violated the False Claims Act by firing her for calling attention to federal grant fraud. ...