Bass, Berry & Sims attorney and co-leader of the firm’s Controlled Substances & Diversion practice Brian Irving was recently featured in a Law360 Healthcare Authority article examining the U.S. Department of Justice’s (DOJ) growing use of the False Claims Act (FCA) to pursue pharmacies accused of violating controlled substance laws. The article highlights a recent settlement involving two Tennessee pharmacies and their owner, which legal observers view as a sign that the government is extending enforcement strategies previously used against large national pharmacy chains to smaller providers.
In the article, Brian noted that the Tennessee settlement demonstrates the DOJ’s willingness to apply a Controlled Substances Act-based FCA theory beyond major retail pharmacy organizations. “The consent order from Nashville recently is an example of the Department of Justice pursuing this Controlled Substances Act-based False Claims Act case against something other than a large national pharmacy chain,” he said.
The article explains that, unlike traditional Controlled Substances Act enforcement actions, FCA allegations can significantly increase potential financial exposure through treble damages and penalties tied to individual reimbursement claims. According to the report, recent settlements involving national pharmacy chains have signaled the government’s interest in leveraging the FCA as part of its broader opioid-related enforcement efforts.
Brian also discussed how the theory continues to evolve beyond the pharmacy sector. Referring to a pending case stemming from alleged employee diversion from a hospital, he noted “that is extending the CSA-based False Claims Act case to a completely different provider type entirely.” At the same time, Brian emphasized that the government’s approach remains largely untested in court. “There have not been many of these cases that have gone to litigation, and there are some indications that when these cases are litigated, there are very strong defenses that are available to defendants,” Brian said.
The article suggests that healthcare providers, pharmacies, and other organizations involved in controlled substance dispensing should continue monitoring enforcement developments as DOJ tests new FCA theories in the opioid enforcement space.
The full article, “DOJ Targets Small Pharmacies With Novel FCA Claims,” was published by Law360 Healthcare Authority on August 18 and is available online (subscription required).