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Primary Care Providers Win Challenge of CMS Interpretation of Enhanced Payment Law

With the help and support of the Tennessee Medical Association, 21 Tennessee physicians of underserved communities joined together and retained Bass, Berry & Sims to file suit against the Centers for Medicare & Medicaid Services to stop improper collection efforts. Our team, led by David King, was successful in halting efforts to recoup TennCare payments that were used legitimately to expand services in communities that needed them. Read more

Tennessee Medical Association & Bass, Berry & Sims

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Download the Healthcare Fraud & Abuse Review 2017, authored by Bass, Berry & Sims

The Healthcare Fraud & Abuse Review 2017 details all healthcare-related False Claims Act settlements from last year, organized by particular sectors of the healthcare industry. In addition to reviewing all healthcare fraud-related settlements, the Review includes updates on enforcement-related litigation involving the Stark Law and Anti-Kickback Statute, and looks at the continued implications from the government's focus on enforcement efforts involving individual actors in connection with civil and criminal healthcare fraud investigations.

Click here to download the Review.

Sixth Circuit Articulates New Standard for Evaluating Corporate Scienter in Securities Fraud Claims


October 17, 2014

On October 10, 2014, the Sixth Circuit revisited the standard for pleading scienter and a material misrepresentation or omission to support a securities-fraud claim under Section 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5.  See In Re: Omnicare, Inc. Securities Litigation, No. 13-5597, 2014 U.S. App. LEXIS 19326 (6th Cir. Oct. 10, 2014).  The panel observed that despite the multiple decisions that have come out of the Sixth Circuit to date, these pleading requirements "remain somewhat hazy and muddled."  In an effort to "clear[] away any confusion" that has come out of prior Sixth Circuit decisions, the court went through the base line needed to satisfy these elements under the Private Securities Litigation Reform Act of 1995.  The court then adopted a new standard in the Sixth Circuit for determining whether a corporation has acted with the requisite scienter.

Currently, a circuit split exists with respect to the standard for the doctrine of collective corporate scienter.  The Omnicare panel adopted a new middle approach for the Sixth Circuit that has three categories of individuals whose states of mind could give rise to a strong inference that a defendant corporation acted with the requisite scienter.  Those categories include the following:

  • The individual agent who uttered or issued the misrepresentation;
  • Any individual agent who authorized, requested, commanded, furnished information for, prepared (including suggesting or contributing language for inclusion therein or omission therefrom), reviewed, or approved the statement in which the misrepresentation was made before its utterance or issuance;
  • Any high managerial agent or member of the board of directors who ratified, recklessly disregarded, or tolerated the misrepresentation after its utterance or issuance.

Out of these three categories, the first one is more likely to establish corporate scienter as it relies on the state of mind of the individual officer making the statement. Depending on the circumstances of each case, the last two categories are designed to permit a finding of scienter when corporations permit shielding of bad news from management. The Sixth Circuit stated that this new approach is intended to "protect[] corporations from liability—or strike suits—when one individual unknowingly makes a false statement that another individual, unrelated to the preparation or issuance of the statement knew to be false or misleading" but also should "prevent[] corporations from evading liability through tacit encouragement and willful ignorance."

When evaluating the alleged securities fraud at issue in the case, the court further cautioned that companies cannot simply "attach[] throat-clearing language to their public utterances" by including phrases in a statement such as "we believe" or "the government might have a different view" to insulate the corporation or its officers from potential liability. The panel, however, affirmed dismissal because, even if the alleged statement had been misleading, the plaintiffs still did not adequately plead scienter against the individual defendants or the company under its new corporate scienter standard. It should be noted that only the Sixth Circuit has explicitly adopted this new corporate scienter approach, and it remains to be seen whether any other circuit will endorse it or whether the Supreme Court may ultimately weigh in on this circuit split.

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