This transcript has been auto generated
00;00;00;00 - 00;00;32;14
Jonathan Porter
Welcome to another episode of Husch Blackwell's False Claims Act Insights podcast. I'm your host, Jonathan Porter. Earlier this year, we released a two part podcast episode where we try to figure out what a switch from the Biden administration to the Trump administration might do for False Claims Act enforcement. My law partner, Cormac Connor, made a lot of very good predictions about FCA enforcement and where we were going and how FCA enforcement was likely going to stay the course through the next administration.
00;00;32;17 - 00;01;03;11
Jonathan Porter
And I think he's largely correct about that. But in today's episode, what we're going to do, we're looking at how turnover at two of the biggest federal government positions that impact FCA might impact this enforcement landscape going forward. Today, we're talking about Michael Granston leaving DOJ last month and how Brenna Jenny is filling his shoes. And we're talking about how a new inspector general at HHS, following Christi Grimm's firing earlier this year, how this might play out in real life FCA enforcement.
00;01;03;18 - 00;01;31;05
Jonathan Porter
So these are two people coming from outside government now taking major roles that directly impact FCA investigations and litigation. So the question we're asking today is what might change now with this new leadership. Joining me to answer that question is my law partner, Brian Flood. Brian is a former prosecutor and former inspector general of the Texas Health and Human Services Commission, a position he was appointed to by former Texas Governor Rick Perry.
00;01;31;07 - 00;02;00;16
Jonathan Porter
As inspector general, Brian oversaw a staff of 500 people. He saved up Texas taxpayers billions of dollars on his watch, and Brian also previously served on the board of directors of the Association of Inspectors General and on Cms's Medicaid Integrity Program Advisory Committee. Now in Blackwell's Austin, Texas office, Brian helps clients with all manner of government problems. And so who better to talk about our new government leadership can impact enforcement than Brian Flood.
00;02;00;19 - 00;02;04;22
Jonathan Porter
Brian, thanks for joining the podcast and sharing your experience with our listeners.
00;02;04;25 - 00;02;06;10
Brian Flood
Thanks for having me, I appreciate it.
00;02;06;12 - 00;02;39;16
Jonathan Porter
All right. So Brian, let's start with the turnover at DOJ. Michael Granston, he was a 30 year veteran of the Department of Justice, moved from line level DOJ trial attorney within civil fraud up into more and more leadership roles left as the DAG, the person who oversees FCA enforcement. Listeners may recall episodes in the past where we've talked about the Cranston memo, and so he's had big responsibilities for overseeing how the FCA is enforced.
00;02;39;19 - 00;03;02;04
Jonathan Porter
So, you know, I don't know that having the new person overseeing FCA enforcement at DOJ is going to have a huge across the board impact on day to day enforcement matters, but I think it could have some impact on some key issues. And I think Brenna Jenny, the new DAG in charge of overseeing civil fraud, I think she could have a real impact because she's coming from private practice.
00;03;02;04 - 00;03;22;29
Jonathan Porter
She's seen how key teams play out in the real world. And so I think there could be some additional sympathy for people who are being investigated. She could have a different background than Michael Granston's had ever had. So one example of where this could play out is the hotly contested issue in FCA right now of causation. So causation.
00;03;23;02 - 00;03;41;18
Jonathan Porter
The big question there is what level of causation does DOJ or whistleblowers, what level do they need to show between kickbacks and government claims? So Brian, first question for you. How am I new DOJ leadership changed that landscape is causation issues in FCA litigation in coming months?
00;03;41;21 - 00;04;10;21
Brian Flood
Well, those are good questions. And we're all trying to forecast the future. But for causation was a position Jenny pushed while in private practice. It's also now a circuit split and there's some momentum behind it. And so I think Jenny could raise that as the standard for application as policy rather than law and push that out. Jenny also raised the issues of Escobar when she was previously out in private practice.
00;04;10;23 - 00;04;32;12
Brian Flood
If you kind of marry that up with. But for causation, it starts to change the level of evidence. And then if you add to that, the final horse of the apocalypse, that Chevron is now dead and you don't have deference, then if you combine those three things together, I think she could push a change in policy, which would change prioritization.
00;04;32;14 - 00;04;59;14
Jonathan Porter
Yeah, I think that's right. Brian. You know, the way causation is playing out, the first circuit weighed in earlier this year on this and said, but for causation is the right standard because there is a circuit split, as you said. I said at the time, I could absolutely see this being the next Supreme Court FCA case. But as you said, Brian, you know, if Brenna is going to look at this landscape and said, well, no, we're going to take the position that statutes mean what they say.
00;04;59;17 - 00;05;15;14
Jonathan Porter
And these words resulting from the courts have always said that means bad for causation. So we're not going to say we're going to follow the law. Congress can go and change the law if they want to. But we're going to follow the law here at the bottom of justice and say that this is bad for causation. I can absolutely see her doing that.
00;05;15;14 - 00;05;33;00
Jonathan Porter
I don't think that would be a wild position is to say, look, Congress changed the words and we're going to follow what Congress said. And that could have a huge like you said, Brian, that could have a huge impact on this landscape. Another issue where I could see DOJ leadership making waves is with declines, key terms. So, you know, decline key terms.
00;05;33;00 - 00;05;56;21
Jonathan Porter
Those are the ones where whistleblowers the file a key term and DOJ doesn't take the key down for whatever reason. Years back, Michael Gaston, he wrote a memo, as I alluded to earlier, wrote a memo with various factors that DOJ ought to consider when analyzing whether DOJ should step in and dismiss certain decline key terms. But to be honest, Brian, I mean, DOJ never really got active on that front.
00;05;56;22 - 00;06;19;15
Jonathan Porter
There was the memo and it had two factors. But, you know, Michael Grayson was speaking to a group earlier this year. And in that speech, he acknowledged that civil frauds really only dismissed a handful of key items in the year since he wrote that memo. But Brian, if read, is going to come in sort of with this experience of defending companies accused of fraud, the DOJ doesn't take and choose litigating these declined key terms.
00;06;19;17 - 00;06;27;04
Jonathan Porter
Could that have a real impact on whether DOJ could start stepping in and dismissing declined key terms more often? What do you think about that, Brian?
00;06;27;06 - 00;06;53;26
Brian Flood
You know, I think that there's a push pull and the whole dismissal arena, the prior administrations, we might call them a DOJ. You know, they still had to present justification for the dismissal. They had to research all the issues. They had to show why they had merit in dismissing it. And I think there was some excessive caution in taking those issues on and be willing to defend them.
00;06;53;28 - 00;07;23;27
Brian Flood
I also think they had a lack of resources to actually do that research, to make that push back, to fight the appeals, but whenever they did choose to dismiss them, I think the flavor right now at DOJ could push a change in prioritization, create specialized units. The prosecutors who could look at the cases quicker, get the position papers out faster, and then push back and dismiss those cases.
00;07;23;29 - 00;07;31;24
Brian Flood
So DOJ had its resources that are used on cases that she, from her background would see had merit.
00;07;31;24 - 00;08;00;14
Jonathan Porter
Yeah, I think that's right, Brian. It's one thing. If you are Michael Cranston, you're a career DOJ person and you're looking at these things, you're saying, okay, I understand there could be some key terms that are, for whatever reason, bad, and we don't want them to go forward. But it's another if you're Brenna and you've been in the trenches fighting with whistleblower lawyers on cases where you think are wrong, you think they're wrong from a policy level, is is that is that these are cases that maybe you're abusing the process somehow?
00;08;00;16 - 00;08;20;20
Jonathan Porter
I could absolutely see where where Brenna would come in and say, no, we're gonna make some real changes here. We're going to we're going to step in. And for cases where we think that there's, an issue, we're going to step in and stop these, I could absolutely see her doing that. The interesting the interesting thing is, if you're a line attorney, a DOJ, a lot of times you're going for the easiest solution.
00;08;20;20 - 00;08;38;28
Jonathan Porter
And a lot of times the easiest solution is to just do nothing and let teams play by themselves out. It's hard to go to a row later that you've been working with and say, we're going to put a stop to this, you're going to get nothing. That's not the easiest thing to do. But if someone in DOJ leadership's going to come in and say, no, we're going to start exercising this power more frequently, that's what's going to happen.
00;08;39;01 - 00;09;03;17
Jonathan Porter
So Brian, putting a bow on the DOJ side, that's who you and I work with most often is DOJ attorneys. Big picture with new DOJ leadership. How should that impact our day to day jobs of advocating for our clients to DOJ? You know, to me, going over USA's and line DOJ attorneys heads, it's something that I think I usually reserve for dire circumstances.
00;09;03;19 - 00;09;14;24
Jonathan Porter
And so, Brian, tell our listeners how you think new leadership will really play out and whether it changes how you think that we should be approaching our advocacy to DOJ on behalf of our clients.
00;09;14;26 - 00;09;43;05
Brian Flood
Sure. It is always small, politically sensitive. Whenever you start jumping around and the management levels at DOJ or in other agencies that oversee Medicare or Medicaid. But I would look at the playing field, emphasize the points we are discussing, and use the recent changes as a push back against the traditional DOJ playbook and guidance that the line prosecutor is going to be looking in to make their decisions from.
00;09;43;07 - 00;10;24;28
Brian Flood
And what I mean by that is we should either directly or indirectly raise the issues of causation as a link to the alleged violation under a but for causation overtly said or overtly said, and then link that with highlighting any opportunities for escobars materiality and super values intent as it links up to this but for causation idea and then raise the heightened burden of proof that that's going to require the government to meet, because the lone prosecutor is going to be thinking through how is this going to play in front of a court or a judge and show that, you know, it's a lack of deference with Chevron, you're now going to have to
00;10;24;28 - 00;10;42;27
Brian Flood
have a real witness show up from the agency and take a position that they might be uncomfortable to say out loud. And I would start those themes with the line prosecutor so that I would have them ready if I wanted or needed to go above them in the small political time.
00;10;43;00 - 00;11;01;15
Jonathan Porter
Yeah, absolutely. Brian, you know, when I was at DOJ, if people did go over my head from time to time, that usually was not received. Well, it happened once where I was not even looped in, and they just went straight to straight to a political appointee and, and complained about something. I did not receive that. Well, it torched our relationship, to be honest.
00;11;01;17 - 00;11;21;20
Jonathan Porter
But Brian, it is different when you give the line attorney a warning, saying, look, these are the things that I feel strongly about. I think your leadership would agree with me on this. And so I want you to consider these things. And that way you're setting it up and you can go, you say, look, I'd love to hear the perspective of someone else in leadership because I think what you're doing here is going against the directives of your superiors.
00;11;21;22 - 00;11;39;01
Jonathan Porter
Setting there is a right way of setting that up. It's still going to make a bit of a contentious relationship because, you know, DOJ lawyers, like all of us, have egos. And so you've got to manage that a certain way. Brian, I think you're absolutely right. Setting it up with the line attorney to then appeal to someone higher is a bit of an art.
00;11;39;01 - 00;12;04;07
Jonathan Porter
And take some careful navigation. So, Brian, let's switch over and talk about HHS. Now, HHS, as we said in the open, Christy Graham got fired earlier this year, along with a whole a lot of other IGS. And the president's selection to replace Christy is, as we're recording this in early June, pending in the Senate. At some point, I imagine there will be action in the new IG.
00;12;04;07 - 00;12;29;28
Jonathan Porter
And so everyone's sort of looking to that as something that's going to happen down the road. Brian, I think people understand what DOJ does and how they're supervisors. They're our listeners maybe less knowledgeable about the weeds of HHS in the role that IGS play. So, Brian, on this front, could you start us out by telling our listeners what exactly the Inspector General's role is and how that person impacts day to day enforcement of health care?
00;12;30;01 - 00;13;17;05
Brian Flood
So the IG role is to look for issues of waste, fraud and abuse. And an auditor will dial and to look for evidence of the program's measures against the activities of the provider and see if they meet standards, don't meet standards if there is an overpayment, if there's some type of waste issue that's causing loss or leakage to the organization, and then report up that issue and or collect that issue back under their authority, where they don't have independent authorities or they need more authority than they would partner with the Department of Justice or a counsel's office to then litigate that issue and try to force a resolution for the waste, fraud and abuse.
00;13;17;07 - 00;13;47;00
Brian Flood
There's always been a push pull with the IG because in one sense, they need to partner with the industry to do their job, to have them actually have compliance programs monitor for waste, fraud and abuse, limit leakage, and do all the things that the government simply doesn't have enough resources to do. There's no way they could oversee the entire system in the academic, theoretical way that everybody wants them to.
00;13;47;03 - 00;14;30;12
Brian Flood
And so there's been a shift in the IGS from a cop type of mentality to industry partner type of mentality, where they are issuing guidance, they are putting out alerts to the industry. They are trying to correct the issues before they have to do full blown retroactive investigative audits. What you're seeing now is the administration pushing out the cop mentality, instead of the industry partner mentality that's been developed over the last ten years with partnerships by the IG, LA, the DOJ, all kind of coming together in the Medicare Medicaid space to define how that industry is going to work.
00;14;30;14 - 00;14;39;00
Brian Flood
And so you're now seeing a shift from an older traditional role out of the modern role that they kind of morphed into.
00;14;39;03 - 00;15;00;09
Jonathan Porter
Yeah. Brian, I think that's exactly right. You know, I think the inspector general that's still a law enforcement position. It's got that dual role of being the sort of primary law enforcement arm of HHS. But they also have that internal review where they're trying to figure out what people within HHS are doing, whether they're abiding by the sort of expectations.
00;15;00;11 - 00;15;26;27
Jonathan Porter
And so it is an interesting position. What's interesting, and this is an interesting coincidence, Brian, is a couple of months ago, Brenna, Jenny, while she was still in private practice, she did a podcast for Angel, like where she talked about how there is a shift going on where things that are normally within OIG at HHS are being pulled out, noting how there are particular pieces where OIG has been the office for forever opining on various issues.
00;15;27;00 - 00;16;02;11
Jonathan Porter
And Brenna talked about how there's an intentional change now where things that were within OIG are now going into OGC within HHS, which is not a law enforcement agency. That's more of your traditional legal minds within HHS, because there's a lot of things, Brian, like, for example, when it comes to the anti Cuba statute, the OIG, over the last several years, they put out a bunch of advisory opinions that say, you know, we think that whatever this dynamic is where there's dollars changing hands and referrals that are being impacted, OIG puts out these advisories opinions.
00;16;02;11 - 00;16;26;05
Jonathan Porter
It says, yeah, that's technically a kickback, but we would decline to enforce this because we see little risk of fraud and abuse. But why are we going to do that? None of you other people out there can rely on this. And so there's a bunch of uncertainty. Brian, I'm curious, like if someone coming in fresh is going to look at this structure and say, is there going to be like massive changes in the way that health care is enforced?
00;16;26;07 - 00;16;32;05
Jonathan Porter
What would that look like? I just think, Brian, do you agree with me? I mean, there's a chance here that there could be some major shifts going on.
00;16;32;10 - 00;16;54;21
Brian Flood
Yeah, I think that's right, because the IG's partner with the entity that they are embedded in in is that in another sense, they regulate the entities that they're embedded in. And so they have a good deal of push pull because they get their budgets from the entity that they work with. They get coordination because of the way the laws are written.
00;16;54;23 - 00;17;23;07
Brian Flood
But on the other hand, they're supposed to give guidance and sometimes some gotchas. And so you will see from time to time a shifting of those responsibilities into or out of the IG's office. And so as you go to a more of a cop mentality of you're going to do these things hard core and we're going to take these other more advisory soft core issues and move them over to other silos of activity.
00;17;23;10 - 00;17;46;26
Brian Flood
But that's, I think, what you're going to see, what that's going to do is destabilize the industry in the reliance on the guidance that it received in the past. And because now they don't know where the wind is blowing and it may shift, which ripples your risk when you're trying to advise, especially on a new business structure or a business structure that bumps right along the lines.
00;17;46;28 - 00;18;07;27
Brian Flood
And you're trying to decide, am I going to, you know, invest millions or billions in that structure to then have it litigated later and undone and damage numbers through the roof? That's what you're going to see here for a little while, because over the last ten years, you know, I was on the board of HCA, there was a partnership between the industry and the IGS.
00;18;07;29 - 00;18;11;05
Brian Flood
And now that same question at the moment.
00;18;11;07 - 00;18;44;06
Jonathan Porter
Yeah, those are great insights, Brian. I think we're at a very interesting point right now in health care enforcement. And so, Brian, I guess close this out. Give us just a little bit more of your IG experience and wisdom with with all of this change, with new leadership coming in from outside of the community, what do you expect to see within HHS now and how can we best help our clients with advocacy in health, healthcare fraud investigations, the like, you know, given these shifts in leadership.
00;18;44;08 - 00;19;22;20
Brian Flood
So, you know, I would expect hope to see some new guidance or public statements that begin to shape some types of reasonable policy. I don't know if that's going to be a hard launch with a memo or a soft launch with speeches and a slow curve into change. It'd be interesting to see if the issues of materiality and causation kind of begin to push out to each district as standards, either soft or hard, to actually make a prioritization of the resources of DOJ because of just the mass of key Tams that are just sucking the oxygen out of the room.
00;19;22;23 - 00;19;59;18
Brian Flood
This would let them do, actually a thoughtful job on the most necessary cases. And I think it would help kind of restore confidence in the industry that they're really seeking to do justice. I know you and I are familiar with that term, rather than just feeding on the plaintiff's bar because they're controlling the dockets right now with so much caseload to do that, I think clients have to start pushing back with themes beginning early, staying consistent through on the causation and materiality and intent to get the False Claims Act to kind of go back to its original purpose of solving certain problems.
00;19;59;21 - 00;20;23;21
Brian Flood
Not every problem. Right. Because, you know, back in the 1990s, I think I looked the number up, there were 75 cases that were filed, and now we're over 900 cases that are filed. And the law was passed back in the Civil War. So if there was really all of this need for this tool to solve the problem, you would have expected to see that load carry through.
00;20;23;21 - 00;20;46;09
Brian Flood
And that's not what's happened. Instead, it's become a plaintiff's bar issue. But I think if you push materiality, causation or knowledge into the cases we've talked about today and push that at each level of the office, that's the way to start pushing back the false Claims Act into the box it was intended to be in.
00;20;46;11 - 00;21;15;25
Jonathan Porter
100% agree with you there, Brian. You hit the nail on the head. The False Claims Act has grown in the last several decades in terms of its use and importance. Exactly like you said, it was designed to solve certain problems rather than every problem, and now it's being used largely as a tool to address every problem. But there are other tools in DOJ's toolkit and IG's toolkit, and, you know, maybe we're at a time when there could be a shift.
00;21;15;27 - 00;21;31;18
Jonathan Porter
So, Brian, 100% agree with you, and I'm proud to practice with you. And we can talk about these things all the time and forever. And we will. But no, Brian, thanks for coming on the podcast today and helping our listeners understand what this personnel shift could potentially do to FCA enforcement. So, Brian, thanks for joining us.
00;21;31;20 - 00;21;32;16
Brian Flood
Thanks for having me.
00;21;32;17 - 00;21;52;21
Jonathan Porter
As Brian talked about the mass of key items that are out there, there were a record number of key items filed last fiscal year. Those are being played out right now. And I think the whistle blower bar is watching, and they're hearing about the Justice Department and people within the Trump administration talking about how they want more and more uses of the false claims Act.
00;21;52;23 - 00;22;18;19
Jonathan Porter
I think you're about to see a lot more false claims that cases getting filed under seal and in the investigations blowing and so on this podcast, we're going to continue to follow that development and try to help our clients stay ahead of the curve. And so we thank everyone for listening. However you're listening to us, you can subscribe to us and hear more of these podcasts as we try to keep you up to speed on this interesting enforcement time.
00;22;18;22 - 00;22;25;28
Jonathan Porter
So, listeners, thank you for joining us, and we'll see you next time.