On April 14, 2025, the Second Circuit issued a summary order holding that the relator failed to plead scienter, a necessary element under the Anti-Kickback Statute (AKS) and the False Claims Act (FCA), where the defendant company, an online platform that allows users to find healthcare providers and schedule appointments with them, sought and relied on two favorable OIG advisory opinions. The defendant sought two advisory opinions, and both opinions addressed the same facts as the relator alleged in the complaint. The Second Circuit reasoned that the defendant had not misled the OIG and implemented the at-issue structure in a manner consistent with the advisory opinions.
The defendant operates an online platform for patients to search providers and schedule appointments. The defendant’s platform charges providers an annual listing fee, as well as an additional fee for any new patient who books an appointment on the platform. The new patient fee varies based on provider specialty. Additionally, providers who do not pay the new patient fee or who have reached a monthly fee cap are subject to altered search rankings. All fees were assessed by a third-party fair market value assessor. The defendant described the fee structure and provider ranking process to the OIG in connection with two separate advisory opinions. OIG concluded that the proposed arrangements implicated the AKS but did not violate the statute and that favorable opinions were warranted because the arrangements presented low risks of fraud and abuse.
Relator, a New York doctor enrolled with the online platform, filed a qui tam complaint in the U.S. District Court for the Southern District of New York alleging the new patient booking fee was a “success fee” pushing federal healthcare program beneficiaries to medical providers willing to pay the fee over other providers who do not pay the new patient fee. Relator further alleged that the defendant was not wholly forthcoming with the OIG about the specific structure of the fees and provider listings. The court dismissed the relator’s complaint on a motion to dismiss, and the relator appealed to the Second Circuit.
The U.S. Court of Appeals for the Second Circuit upheld the district court’s opinion. The court rejected the relator’s theories and held the relator did “little more than apply conclusory labels to the exact practices and fees discussed by the OIG[.]” In light of the OIG’s advisory opinions, the court held the complaint failed to allege a factual basis for a strong inference of defendant’s fraudulent intent.
Notably, the Second Circuit issued its decision as a summary order, meaning that the decision will not have precedential effect. However, the decision may be cited as persuasive authority and is still strong support for any defendant facing an FCA action after receiving a supportive advisory opinion.
The Second Circuit summary order is available here.
