Magazine Ad Doesn’t Bar Suit for Fraudulent Rewards Program Discounts

Case: A former account manager filed a qui tam lawsuit against an optician for using its rewards program to pay kickbacks to ordering providers. Knowing that Medicare based reimbursement for lenses on the invoice price, the optician offered providers discounts and invoiced them for the full price, in effect shifting the costs of the discounts to the government. The California federal court said that the allegations were “substantially similar” to promotional articles the optician published on its website and in industry publications and dismissed the claim under the False Claims Act “public disclosure bar.” Significance: The U.S. Court of Appeals for the Ninth Circuit reversed. The articles merely discussed the optician’s rewards programs and how they make lenses more affordable. They didn’t specifically describe how the billing worked. And the court disagreed with the lower court’s finding that “[t]he only available conclusion” from the materials was that the rewards program discounts came at the government and not the optician’s expense. Courts shouldn’t allow generalized description of a program that could give rise to fraud in public documents to prevent the pursuit of legitimate fraud,” it concluded. [Mark v. Shamir United States, 2022 U.S. App. LEXIS 3090, 2022 WL 327475].