Medical providers often are left confused by the incredibly complex statutory and regulatory body of law implemented by the Centers for Medicare and Medicaid Services (CMS). Without further administrative guidance, providers are left to their own conclusions with regard to what CMS intended. Unfortunately, sometimes these decisions lead to expensive and time-consuming False Claims Act litigation brought by relators, who disagree with the provider’s interpretation. In a recent decision, the Fourth Circuit offers some well-deserved protection from False Claims Act actions to medical providers struggling to decipher CMS requirements.
It Isn’t a “Knowing” Violation of the FCA if Your Interpretation of the Law is “Objectively Reasonable”
In United States ex rel. Sheldon v. Allergan Sales, LLC, the Fourth Circuit affirmed the United States District Court for the District of Maryland’s dismissal of a relator’s False Claims Act complaint. The relator claimed that his employer, a drug manufacturer, violated the False Claims Act by engaging in a fraudulent scheme inconsistent with the federal Medicaid Drug Rebate Statute. The Fourth Circuit held that the defendant did not act “knowingly” under the False Claims Act in following its own “objectively reasonable” interpretation of the law.
The court’s analysis focused on the scienter element of the False Claims Act allegation. Joining a host of other federal circuits, the Fourth Circuit interpreted the scienter requirement consistent...
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