False Claims Act Insights

Host Jonathan Porter welcomes Tynan Kugler, Principal with PYA, P.C., and Mara Smith Kouba, legal counsel with Bristol Myers Squibb, to discuss a recent False Claims Act trial verdict from a New Jersey federal court. United States ex re Penelow et al. v. Janssen Products, LP was decided on June 13, 2024, resulting in potential damage awards of over $1 billion. The case is awaiting appeal.

Our discussion centers on the financial relationships that life sciences companies have with physicians and the potential risks inherent in those relationships. We dissect the Penelow case and the legal theories at play from both the relator and defense perspectives, including how they concern the use of a speaker network program and the ‘one-purpose’ theory of the Anti-Kickback Statute. We then pivot to what the Penelow verdict means for compliance programs and risk management practices.

Jonathan Porter Biography

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Jonathan focuses on white collar criminal defense, federal investigations brought under the False Claims Act, and litigation against the government and whistleblowers, where he uses his experience as a former federal prosecutor to guide clients in sensitive and enterprise-threatening litigation. At the Department of Justice, Jonathan earned a reputation as a top white collar prosecutor and trial lawyer and was a key member of multiple international healthcare fraud takedowns and high-profile financial crime prosecution teams. He serves as a vice chair of the American Health Law Association’s Fraud and Abuse Practice Group and teaches white collar crime as an adjunct professor of law at Mercer University School of Law.

Tynan Kugler Biography

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Tynan is a Principal with PYA, P.C., a Certified Valuation Analyst (CVA), and a frequent speaker on valuations and related topics for various healthcare organizations. Her experience includes performing fair market value compensation analyses and valuations of medical practices and ancillary service lines for a variety of physician and hospital transactions. Additionally, her experience includes valuations specific to the life sciences industry, including key opinion leader (KOL) compensation and fee-for-service arrangements. Tynan also conducts provider needs analyses and strategic market assessments. She has more than two decades of healthcare consulting experience, and prior to rejoining PYA in 2007, spent several years assisting community hospitals/healthcare systems, academic medical centers, and physician groups with strategic planning related to the development of coordinated, comprehensive cancer programs. 

Mara Smith Kouba Biography

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Mara Smith Kouba, JD, MBA, MHA, is an attorney at Bristol Myers Squibb where she provides legal support for the company’s worldwide cardiovascular brand teams. She has spent her career developing an expertise in health and life sciences law. She is also an adjunct professor at Drexel University’s Kline School of Law, teaching courses on risk assessment and management and currently serves as the Vice Chair of Education for the American Health Law Association’s Life Sciences Practice Group, is on the Kline School of Law’s Health Law Program Advisory Board, and is a board member for the Come to Believe Network.

Host Jonathan Porter welcomes Husch Blackwell attorney Karen Courtheoux to the show to discuss the False Claims Act in the context of government-funded research programs that are often carried out under the auspices of institutions of higher education. 

Their discussion kicks off with a short summary of the mechanics of government research funding and the reporting processes of the post-award monitoring phase of research. From there, the conversation turns to the various sets of rules in play across the expanse of government-funded research, including how research misconduct is defined and how compliance works in this context.

Jonathan and Karen also discuss specific recent examples of research misconduct and the lessons learned from them.

Jonathan Porter Biography

Full Biography

Jonathan focuses on white collar criminal defense, federal investigations brought under the False Claims Act, and litigation against the government and whistleblowers, where he uses his experience as a former federal prosecutor to guide clients in sensitive and enterprise-threatening litigation. At the Department of Justice, Jonathan earned a reputation as a top white collar prosecutor and trial lawyer and was a key member of multiple international healthcare fraud takedowns and high-profile financial crime prosecution teams. He serves as a vice chair of the American Health Law Association’s Fraud and Abuse Practice Group and teaches white collar crime as an adjunct professor of law at Mercer University School of Law.

Karen Courtheoux Biography

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Karen is a Chicago-based attorney on Husch Blackwell’s Education team. She handles a variety of matters for public and private institutions of higher education, including faculty, student and employment matters; research misconduct and compliance; investigations; governance questions; and federal and state litigation. Specifically, Karen has advised universities, academic medical centers, and healthcare clients on the development, implementation, and enforcement of research-related policies—including IRB, confidentiality, and conflict of interest policies—and has negotiated sponsored research agreements, data use agreements and other contracts and memoranda of understanding. More broadly, she has well over a decade of experience in private practice and as a litigator at national law firms representing clients in all stages of federal and state litigation involving commercial, trade secret, employment, consumer finance and property disputes, including appeals and class actions.

Jonathan Porter welcomes Raul Ordonez, Vice President & Chief Compliance Officer at Jackson Health System, and Husch Blackwell senior counsel Megan Phillips to the podcast to explore the intersection of the False Claims Act with Stark Law, the body of federal law that regulates physician self-referrals in connection with Medicare patients and designated health services (DHS). Our discussion kicks off with a brief introduction to Stark Law, its origin, evolution, and current application to healthcare. Because Stark Law violations concern fraudulent claims submitted to a federally funded program, they often serve as a predicate to allegations of False Claims Act violations, greatly increasing the legal liabilities associated with the initial claim.

The discussion also traces Stark Law developments back to United States ex rel. Drakeford v. Tuomey Healthcare Sys., Inc., the so-called Tuomey case that has had such an enduring impact on healthcare compliance, especially concerning fair-market value calculations and employment contracts and compensation arrangements.

Jonathan, Raul, and Megan turn to regulatory compliance and the challenges faced by healthcare providers in managing the risks created by the complexities of the Stark Law. They discuss the nature of the Stark Law’s strict liability provisions, which in effect punish honest mistakes or good-faith efforts at compliance with which regulators disagree.

The discussion ultimately takes up a recent record $345 million settlement in a Stark Law case where a health system defendant’s physician compensation structures were questioned by government regulators. In the case, the defendant had sought fair-market value opinions but failed to incorporate them into their compensation agreements, which allowed the government to use the defendant’s own valuation assessments as evidence of Stark Law violations. 

Jonathan Porter Biography

Full Biography

Jonathan focuses on white collar criminal defense, federal investigations brought under the False Claims Act, and litigation against the government and whistleblowers, where he uses his experience as a former federal prosecutor to guide clients in sensitive and enterprise-threatening litigation. At the Department of Justice, Jonathan earned a reputation as a top white collar prosecutor and trial lawyer and was a key member of multiple international healthcare fraud takedowns and high-profile financial crime prosecution teams. He serves as a vice chair of the American Health Law Association’s Fraud and Abuse Practice Group and teaches white collar crime as an adjunct professor of law at Mercer University School of Law.

Raul Ordonez Biography

LinkedIn Profile

For over a decade, Raul has served on the compliance team of Jackson Health System, one of the nation’s largest public healthcare networks. In March 2022 he was named Vice President & Chief Compliance Officer, in which capacity he directs JHS’s compliance efforts system-wide, including its flagship Jackson Memorial Hospital, three community hospitals, Holtz Children’s Hospital/The Women’s Hospital at Jackson Memorial, Jackson Behavioral Health Hospital, the Christine E. Lynn Rehabilitation Center for The Miami Project to Cure Paralysis at UHealth/Jackson Memorial, two nursing homes, and a network of urgent care centers, physician practices, and clinics. Raul earned an Executive MBA in Health Management and Policy from the University of Miami, a J.D. from the University of Tennessee College of Law, and a B.A. from Swarthmore College.

Megan Phillips Biography

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For over two decades, Megan has guided hospitals and health systems, physician practices, and wellness companies on a nationwide basis through complex regulatory compliance matters, including Stark Law, Anti-Kickback Statute, False Claims Act, and associated state laws. Since 2007, Megan has concentrated the majority of her time on the Stark Law, making her one of the Husch Blackwell’s most knowledgeable attorneys on the statute. After observing years of updates and changes, she knows the law’s history and commentary inside and out and is a go-to resource for clients and colleagues alike.

Host Jonathan Porter welcomes Adam Briggs, Associate General Counsel at UPS, to the podcast to discuss corporate compliance, its role within a corporation, and how it can lessen a corporation’s exposure to False Claims Act liability. Jonathan and Adam discuss the fundamentals of a properly designed and resourced compliance program, including the scale of compliance required by government contracting. They explore the importance of the human element in building cultures of compliance, in addition to the reporting structure and processes needed for compliance.

Jonathan and Adam also discuss the evolution of the Department of Justice’s ability to assess the health and vigor of corporate compliance programs and to determine whether violations of law are outliers or something more problematic.

Finally, Jonathan and Adam explore best practices around internal investigations and how corporations handle allegations of wrongdoing that surface within the organization.

Jonathan Porter Biography

Full Biography

Jonathan focuses on white collar criminal defense, federal investigations brought under the False Claims Act, and litigation against the government and whistleblowers, where he uses his experience as a former federal prosecutor to guide clients in sensitive and enterprise-threatening litigation. At the Department of Justice, Jonathan earned a reputation as a top white collar prosecutor and trial lawyer and was a key member of multiple international healthcare fraud takedowns and high-profile financial crime prosecution teams. He serves as a vice chair of the American Health Law Association’s Fraud and Abuse Practice Group and teaches white collar crime as an adjunct professor of law at Mercer University School of Law.

Adam Briggs Biography

LinkedIn Profile

Adam Briggs is Associate General Counsel with United Parcel Service (UPS), the world’s leading transportation company. In his role with UPS, he manages a variety of regulatory enforcement risk areas for UPS’s global operations. Adam re-joined UPS in 2023 after four years as Chief Compliance Officer of Mayo Clinic. At Mayo Clinic, Adam led an extensive transformation of the organization’s compliance program and oversaw risk areas including data privacy, internal investigations, employee hotline, fraud prevention, third-party risk management, government contracts, and employee training. He also served on the Audit & Finance Committee of Sheikh Shakhbout Medical City, a 700+ bed hospital in Abu Dhabi, UAE. Adam previously worked for UPS from 2010 to 2019, during which time he served as UPS’s Region Compliance Officer for the Asia Pacific region, Director of Special Investigations, and lead counsel for anti-corruption, antitrust, privacy, trade sanctions & embargoes, third-party risk, and cybersecurity. Adam began his legal career with Godfrey & Kahn, a Wisconsin law firm.  He received his law degree from Georgetown University and his undergraduate degree from the University of Wisconsin-Madison.

Host Jonathan Porter is joined by Troy Clark, Director and Corporate Counsel with Wellstar Health System, to discuss the peculiarities and difficulties of tackling parallel proceedings, that is, investigations and/or enforcement actions that have both a False Claims Act and criminal component. Jonathan and Troy recount a prosecution they handled in parallel while serving together at the Department of Justice involving government procurement fraud and the bribery of public officials, among other charges. From there, they explore the nuance and complexities of how dual-track investigations proceed and the importance for in-house and defense counsel to establish the scope of investigations early on and to know how to ask the right questions of the right people at the right time.

Jonathan and Troy also discuss a possible third track for these actions, the administrative level, that can have enterprise-altering implications for government contractors, particularly if government authorities pursue disbarment, which would forbid a company from contracting with the government in the future.

Finally, Jonathan and Troy cover some due process considerations that often bear upon parallel proceedings, including the use of “stalking horse” tactics by prosecutors. They discuss case law and statutory law protections in place that can help defendants manage risk and liability in parallel civil and criminal cases. 

Jonathan Porter Biography

Full Biography

Jonathan focuses on white collar criminal defense, federal investigations brought under the False Claims Act, and litigation against the government and whistleblowers, where he uses his experience as a former federal prosecutor to guide clients in sensitive and enterprise-threatening litigation. At the Department of Justice, Jonathan earned a reputation as a top white collar prosecutor and trial lawyer and was a key member of multiple international healthcare fraud takedowns and high-profile financial crime prosecution teams. He serves as a vice chair of the American Health Law Association’s Fraud and Abuse Practice Group and teaches white collar crime as an adjunct professor of law at Mercer University School of Law.

Troy Clark Biography

Troy currently serves as Director and Corporate Counsel for Wellstar Health System. In that role, Troy leverages his years of practical experience earned as a former trial and appellate lawyer and as a former Assistant United States Attorney, to help manage all aspects of litigation, compliance and risk management, and internal investigations for all health system entities. In addition, Troy provides practical legal advice to all health system departments to help achieve business objectives, institutional projects, mitigate risk, and provide the highest level of patient care.

Host Jonathan Porter welcomes Husch Blackwell’s Lorinda Holloway to explore settlements in the context of False Claims Act (FCA) litigation. Jonathan and Lorinda discuss the differences between FCA settlements and those typically seen in commercial litigation. They explore what is meant by “covered conduct” and why broad releases are rarely seen in FCA settlements. The presence of whistleblowers, or relators, is another distinguishing feature of FCA litigation, adding another layer of complexity to FCA settlement negotiations, especially around attorneys’ fees which the FCA allows whistleblowers to demand as part of a recovery. 

Jonathan and Lorinda also take on the crucial issue of how FCA settlement discussions need to account for the defendant’s ongoing business objectives and its ability to continue doing business with the government. The Department of Justice often has a tight focus on FCA litigation, leaving parallel administrative issues or disputes to its agency clients; however, defendants should seek to gain as much clarity as possible on their ability to operate as a contractor and make those inquiries part of the larger settlement negotiation, especially as it might impact any admission of liability as part of the settlement.

Finally, Jonathan and Lorinda discuss the concept of pocket judgments, also called spring-loaded judgments, which often involves defendants that have an inability to pay the judgment in a bullet payment. Pocket judgments usually involve something akin to an installment plan, and typically, defendants also enter into a consent judgment for a higher sum of money that can be invoked by the government if the defendant fails to abide by the installment plan. 

Jonathan Porter Biography

Full Biography

Jonathan focuses on white collar criminal defense, federal investigations brought under the False Claims Act, and litigation against the government and whistleblowers, where he uses his experience as a former federal prosecutor to guide clients in sensitive and enterprise-threatening litigation. At the Department of Justice, Jonathan earned a reputation as a top white collar prosecutor and trial lawyer and was a key member of multiple international healthcare fraud takedowns and high-profile financial crime prosecution teams. He serves as a vice chair of the American Health Law Association’s Fraud and Abuse Practice Group and teaches white collar crime as an adjunct professor of law at Mercer University School of Law.

Lorinda Holloway Biography

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Based in Austin, Texas, Lorinda is a member of the Husch Blackwell’s Healthcare, Life Sciences and Education industry team and counsels clients on matters concerning government investigations and disputes. For more than 25 years, she has advised and represented clients in and out of the courtroom with a particular focus on the healthcare industry, including False Claims Act, Texas Medicaid Fraud Prevention Act, and qui tam related investigations and lawsuits, audits, and in business disputes in state and federal court. Her experience in healthcare has also led to the education field, including a focus on the legal challenges faced in academic medicine.

Host Jonathan Porter welcomes Husch Blackwell’s Catherine Hanaway to explore the government’s use of civil investigation demands (CIDs) within the context of False Claims Act investigations. The CID is a powerful and broad tool, and they are used to gather a variety of information regarding the conduct under investigation.

Jonathan and Catherine discuss the importance of handling CIDs with care from the earliest possible juncture, including communication through counsel with government investigators that can provide valuable insight as to the scope and nature of the inquiry. The discussion follows the arc of effective CID responses, exploring why it is vital to initiate a litigation hold and to refrain from internal communications regarding the investigation, as well as how to narrow the initial inquiry through collaboration with government investigators.

Finally, Jonathan and Catherine wrap up the discussion with a brief overview of how internal investigations can provide companies with the perspectives and knowledge needed to address the concerns of government investigators.

Jonathan Porter Biography

Full Biography

Jonathan focuses on white collar criminal defense, federal investigations brought under the False Claims Act, and litigation against the government and whistleblowers, where he uses his experience as a former federal prosecutor to guide clients in sensitive and enterprise-threatening litigation. At the Department of Justice, Jonathan earned a reputation as a top white collar prosecutor and trial lawyer and was a key member of multiple international healthcare fraud takedowns and high-profile financial crime prosecution teams. He serves as a vice chair of the American Health Law Association’s Fraud and Abuse Practice Group and teaches white collar crime as an adjunct professor of law at Mercer University School of Law.

Catherine Hanaway Biography

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Catherine is a St. Louis-based partner with Husch Blackwell’s White Collar, Internal Investigations & Compliance team and a former chair of the firm. She has successfully handled high-profile, bet-the-company, complex matters in federal court and before regulatory agencies and represents leading global and closely-held companies—as well as their officers and owners—in civil and criminal investigations and in business litigation.

Before leading Husch Blackwell as its first female chair, Catherine served as the chief federal law enforcement officer for the Eastern District of Missouri and as the only woman Speaker of the Missouri House of Representatives. As U.S. Attorney, she supervised more than 4,000 criminal, affirmative, and defensive civil cases and personally tried cases to jury verdicts. She also supervised and assisted in the development of cutting-edge theories of criminal prosecution.

Host Jonathan Porter welcomes Husch Blackwell’s Jody Rudman to this inaugural podcast episode to discuss the changing profile of whistleblowers in False Claims Act (FCA) litigation.

Traditionally, relators, or whistleblowers, in FCA litigation, have been employees who bring fraud claims against their employers, but recent cases demonstrate that potential whistleblowers are lurking far beyond a company’s roster of employees and include vendors, consultants, customers or clients, and members of the general public.

This episode of False Claims Act Insights explores the role whistleblowers play in FCA litigation and the mechanics of how cases are filed and handled, including how companies find out whether they have been accused of fraud by a whistleblower and the government’s decision-making process in determining if and when it will intervene in the lawsuit. We talk about how whistleblowers can be current employees who take records and record conversations, leading to occasionally criminal results, and we talk about ways companies wrongfully accused by a whistleblower can sue their whistleblower for malicious prosecution. We end with some practical considerations for companies embroiled in FCA disputes that can help drive better outcomes.

Jonathan Porter Biography

Full Biography

Jonathan focuses on white collar criminal defense, federal investigations brought under the False Claims Act, and litigation against the government and whistleblowers, where he uses his experience as a former federal prosecutor to guide clients in sensitive and enterprise-threatening litigation. At the Department of Justice, Jonathan earned a reputation as a top white collar prosecutor and trial lawyer and was a key member of multiple international healthcare fraud takedowns and high-profile financial crime prosecution teams. He serves as a vice chair of the American Health Law Association’s Fraud and Abuse Practice Group and teaches white collar crime as an adjunct professor of law at Mercer University School of Law.

Jody Rudman Biography

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Jody serves as the Office Managing Partner for Husch Blackwell's Austin office and leads the firm's White Collar, Internal Investigations & Compliance practice group. She also spearheads the firm’s False Claims Act working group. She has assisted clients across a wide range of industries with investigations, negotiations, mediations, pretrial matters, grand jury proceedings, civil lawsuits, criminal indictments, jury trials, sentencings and appeals. She has tried dozens of jury and bench trials in the federal and state courts, argued before the U.S. Court of Appeals for the Fifth Circuit, and appeared before the U.S. Supreme Court.

Prior to entering private practice, Jody served as a federal prosecutor for the Northern District of Texas and was appointed by the Texas Attorney General to spearhead high-profile charitable trust and healthcare litigation matters for the State of Texas.