backJury Rejects FCA Claims in Favor of Defendant SuperValu
On March 4, 2025, a jury in the Central District of Illinois ruled in favor of SuperValu Inc. in a FCA lawsuit initiated by relators alleging that SuperValu submitted inflated pharmacy claims to federal healthcare programs by charging higher than customary prices. The jury concluded that the relators failed to demonstrate that SuperValu’s actions caused damages to the government or the State of Illinois.
The relators contended that SuperValu misrepresented the “usual and customary” prices of certain prescription drugs by reporting the sticker prices instead of the prices paid through its price match program. SuperValu's price matching policy matches prices of prescription drugs with competitors. The relators claimed that SuperValu’s higher usual and customary charges led to inflated reimbursement from federal healthcare programs such as Medicare and Medicaid. SuperValu argued that they believed the sticker price represented the usual and customary price rather than the price matched amount.
Although the jury circled “YES” to the question “[d]o you find by a preponderance of the evidence that Defendants knowingly presented, or caused to be presented, false or fraudulent claims for payment to federal programs,” it circled “NO” to the question of whether the whistleblowers had proven “by a preponderance of the evidence that Defendants’ false claim(s) caused the United States government to suffer damages.” The jury responded similarly to questions directed at claims submitted to the State of Illinois.
This verdict follows the U.S. Supreme Court’s earlier 2023 decision, which clarified the FCA’s scienter requirement. The Supreme Court concluded that liability under the FCA hinges on the defendant’s subjective belief about the falsity of their claims, rather than an objectively reasonable interpretation of the law.
The jury verdict from U.S. District Court for the Central District of Illinois is available here.
Reporter, Dennis Mkrtchian, Los Angeles, + 1 213 218 4046, dmkrtchian@kslaw.com.
OIG Releases Report Warning About Medicare and Medicaid EFT Fraud
Last week, OIG released its March 2025 report notifying the industry about its findings regarding alleged fraud in electronic fund transfer (EFT) requests for Medicare and Medicaid services. In the report, OIG describes the typical ways that EFT fraud works. Though the full scale of the fraud is unknown, OIG identifies at least $26.5 million of wrongfully diverted funds across four Medicare Administrative Contractors (MACs) and twenty-two state Medicaid agencies between January 2020 and June 2023. Per OIG’s survey, 67% of surveyed payors indicated that they were targeted by these scams, with 62% of managed care organizations, 29% of MACs, and 27% of state governments reporting that they lost money because of EFT fraud.
EFT fraud principally targets payors over providers, but providers suffer too because they tend to be the originally intended destinations for these funds. Additionally, as cracking down on EFT fraud becomes a greater priority for both the government and MACs, they may soon have stricter requirements for making EFT requests as payors work to combat the fraud. There are various methods that OIG identifies as potential vehicles for EFT scams: phishing attacks (using deceptive emails to obtain information from a source), impersonation (using falsified or stolen documents to claim an authorized user’s account), and insider threats (using their unauthorized institutional access to divert funds).
OIG’s report includes a litany of recommendations to help payors safeguard themselves from these attacks, such as implementing two-factor authentication for transactions, establishing transaction logs to better monitor and identify suspicious behaviors, and establishing expert groups to monitor new threats and coordinate response strategies. Though most of the safety suggestions focus on the payor-side, providers should expect changes to their methods for requesting EFTs as payors tighten up security. For example, one of the core recommendations from OIG involved “revalidating Medicare provider information . . . and educating providers on reporting responsibilities and the need to update their enrollment information.”
Additionally, OIG encourages payors “to include the use of passwords, PINs, or security questions that help to validate the identities of providers requesting EFT changes[,]” so providers would be wise to study good habits for creating and managing passwords. This could include practices such as not reusing passwords across websites or services, avoiding the use of common names or words for passwords, and ensuring that the mediums for sharing passwords (when necessary) within organizations remain secure.
OIG’s March 2025 report regarding EFT fraud can be found here.
Reporter, Gregory Fantin, Washington D.C., +1 202-626-9271, gfantin@kslaw.com.
Register for the 34th Annual King & Spalding Health Law & Policy Forum
King & Spalding is hosting the 34th Annual Health Law & Policy Forum on Monday, March 17th from 8:00 am to 5:00 pm ET at the St. Regis Atlanta. Registration is available here.