News-At-A-Glance: Lawsuit Challenging OIG Special Fraud Alert Dismissed

A California court Feb. 5 dismissed a lawsuit challenging the Health and Human Services Office of Inspector General’s Special Fraud Alert (SFA) concerning physician-owned distributorships (PODs). In dismissing the case, the court stated that even if it had subject matter jurisdiction in the case, it would decline to exercise it. Reliance Medical Systems LLC filed the suit on Oct. 8, 2013, in the U.S. District Court in the Central District of California alleging that the SFA violated its First Amendment right of speech, its rights to due process under the Fifth and 14th Amendments, and the Administrative Procedure Act. Reliance said in the complaint that the SFA chilled any discussions of a POD with any other party. The court dismissed the complaint saying that Reliance had no standing because it had not suffered an injury-in-fact and because there has been no concrete action applying the SFA, and as a result, the components of the controversy are as yet not in focus. Reliance filed the suit because it had previously included physician owners and was considering returning to the POD business model.