Category: Healthcare Contracting

Federal Contractor Vaccine Mandate to End

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Merle M. DeLancey Jr. and Samarth Barot ●

Samarth Barot headshot image

After several Federal District Courts issued injunctions against the federal contractor vaccine mandate in December 2021, the Federal Government issued guidance fully suspending its enforcement of the federal contractor mandate. Despite the guidance, the future of the federal contractor vaccine mandate continued to remain in a state of limbo. This was best demonstrated two weeks ago when the Ninth Circuit sided with the Federal Government by lifting the district court’s preliminary injunction of the federal contractor vaccine mandate. The Ninth Circuit’s decision created a split with the Fifth, Sixth, and Eleventh Circuits that have enjoined the mandate. This Circuit split was likely headed to the United States Supreme Court.

On May 1, 2023, all of this changed. The Biden Administration announced its plan to end its federal contractor vaccine mandate on May 11, 2023, the same day the public health emergency ends. Accordingly, the Administration plans to issue an Executive Order “rescinding the vaccination requirement for federal employees and COVID-19 safety protocols for federal contractors, effective at 12:01 am on May 12, 2023.” For Federal Contractors | Safer Federal Workforce. Until then, the guidance suspending the enforcement of the federal contractor mandate remains in effect.

This should be the end of the federal contractor vaccine mandate; however, we will know more by May 11, 2023. Stay tuned for further developments.

What Is “Knowing” under the FCA? Supreme Court to Consider Impact of Ambiguous Regulations

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Jennifer A. Short, Bridget Mayer Briggs, and Tjasse L. Fritz ●

Jennifer A. Short headshot image
Bridget Mayer Briggs headshot image
Tjasse L. Fritz headshot image

A successful False Claims Act (“FCA”) claim must show that the defendant submitted a false claim or statement “knowingly.” The “knowing” element—the scienter prong—depends on whether the defendant actually knew that the claim or statement was incorrect, or recklessly disregarded the facts or legal requirements that rendered the claim “false.” But, of course, government regulations, contract terms, and grant requirements can be incredibly complex and difficult to understand. When the ground rules are unclear, how does a company “know” that its claims for payment may be false under the FCA?

What does the FCA say about “knowing”?

The FCA defines “knowing” as (1) having “actual knowledge of the information;” (2) acting “in deliberate ignorance of the truth or falsity of the information;” or (3) acting “in reckless disregard of the truth or falsity of the information.” 31 U.S.C. § 3729(b). A “specific intent to defraud” is not required for liability under the FCA. 

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Nevada Publishes 2023 Drug Price Transparency Lists

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Merle M. DeLancey, Jr. ●

On January 31, 2022, the Nevada Department of Health and Human Services (“DHHS”) released its annual drug lists in accordance with its Drug Transparency Reporting Program. DHHS published four drug lists: List #1 Essential Diabetes Drug Summary List; List #2 Essential Diabetes Drug List with WAC; List #3 Essential Diabetes Drug List (with Significant Price Increase); and List #4 Over $40 Drug List (with Significant Price Increase). (Nevada Drug Transparency Drug Lists 2023)

Drug manufacturers with drugs identified on Lists #2, #3, and/or #4 are required to submit reports to the Transparency Program on or before April 1, 2023. The reporting templates and instructions can be found here: Manufacturers. Do not wait until late March to prepare the reports because the information requested is detailed and will likely require input from multiple divisions or functions within a company. Examples of the information required to be reported include: total cost of producing the drug; total administrative expenditures related to the drug; profit manufacturer earned from the drug; percentage of manufacturer’s total profit attributed to drug during marketing period for drug; and, for lists #3 and #4, an explanation for the applicable drug’s price increase.

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May 19, 2022: “Special Focus on FSS Post Award Compliance and Audits” at ACI “BIG FOUR” Pharmaceutical Pricing Boot Camp

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Merle M. DeLancey Jr. will serve as a speaker for the American Conference Institute (“ACI”) “BIG FOUR” Pharmaceutical Pricing Boot Camp, taking place May 18–19, 2022, as an interactive live virtual conference.

Michael Grivnovics, Director, Federal Supply System, Contracts Division, Veterans Affairs Office of Inspector General, will join Merle to present the “Special Focus on FSS Post Award Compliance and Audits” session on May 19 at 9:00 a.m. EDT.

For more details, visit our website.

The Medicaid Drug Rebate Program and Value-Based Purchasing

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Merle M. DeLancey Jr.

On March 23, 2022, the Centers for Medicare and Medicaid Services (“CMS”) issued long-awaited guidance regarding how drug manufacturers are to report multiple best prices (“BPs”) to the Medicaid Drug Rebate Program (“MDRP”) under value-based purchasing (“VBP”) arrangements. See Manufacturer Release 116 (medicaid.gov/prescription-drugs/downloads/mfr-rel-116.pdf). CMS delayed issuing the guidance to allow states, payers, and manufacturers to administratively prepare for multiple BP reporting in connection with VBP arrangements. The regulatory amendments are effective July 1, 2022.

VBP Arrangements and Medicaid’s Best Price Rule

VBP arrangements consist of additional rebates or price concessions that states may be able to earn based on a drug’s clinical outcomes in Medicaid beneficiaries. CMS’ challenge was reconciling Medicaid’s long-standing BP reporting rule used to calculate manufacturer rebate payments to states with anticipated low prices available under VBP arrangements. Since 1991, the MDRP agreed to cover every drug a manufacturer sells regardless of price. In exchange for this unprecedented access, manufacturers agreed to pay rebates ensuring that Medicaid programs paid no more than the “best prices” paid by manufacturers’ commercial customers. Many argued that Medicaid’s BP rule prevented states from accessing innovative manufacturer programs involving cutting-edge therapies.

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Beyond DOJ’s Blockbuster Year in FCA Recoveries, Whistleblower Activity and Investigations Continue

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Elizabeth N. Jochum and Jennifer A. Short

Jennifer A. Short headshot image


The attention-grabbing headline from the Department of Justice’s (“DOJ”) annually released statistics on False Claims Act (“FCA”) settlements and judgments is that the government recovered more than $5.6 billion from FCA cases in fiscal year (“FY”) 2021. While this is the second largest annual recovery in FCA history and the largest since 2014, procurement fraud cases represented a substantially smaller percentage of the total recoveries than in years past. Healthcare resolutions dominated, accounting for more than five billion of the $5.6 billion in settlements and judgments. In previous years, healthcare matters have accounted for closer to two-thirds of the total recoveries, making last year’s outsized healthcare figure—driven by the blockbuster opioid settlements of late 2020[1]—an outlier.

Beyond the top-line dollar figures, the report shows that FCA activity continues at a healthy, if not fully robust, pace. The COVID-19 pandemic continues to impact qui tam filings; the number of new whistleblower suits dropped to 598 in FY 2021, a ten-year low. The number of DOJ-initiated matters remains higher than the near-term average, particularly in healthcare, but also in Department of Defense (“DOD”)-related cases. Contractors, healthcare providers, and others—especially those who received federal funding through pandemic aid programs—can anticipate that FCA investigations and resolutions will play out over the next several years.

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Affirmative Action Program Compliance Alert: OFCCP Online Contractor Portal

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Merle M. DeLancey Jr.

Beginning February 1, 2022, contractors and subcontractors required to maintain affirmative action plans (“AAPs”) can register for access to a new secure online contractor portal. The portal was developed and will be monitored by the Office of Federal Contract Compliance Programs (“OFCCP”). OFCCP has been working on an information and verification process for three years. In August 2021, the Office of Management and Budget approved OFCCP’s use of the portal. The portal provides contractors a secure method of (i) annually certifying compliance with AAP requirements and (ii) submitting AAPs to OFCCP during audits or compliance evaluations.

Executive Order 11246 and Section 503 of the Rehabilitation Act of 1973 require contractors and subcontractors that hold a contract valued at $50,000 or more and employ 50 or more employees to comply with equal employment and affirmative action requirements. This includes developing and maintaining written AAPs. Currently, only services and supply contractors, not construction contractors, are required to certify compliance.

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The Government Will Likely Look to the Defense Production Act to Fulfill Its 500 Million COVID-19 Rapid, At-Home Test Kits Requirement

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Merle M. DeLancey Jr. and John M. Clerici*


Last week, in response to the Omicron variant, President Biden announced the Government intends to purchase 500 million at-home, rapid COVID-19 tests for distribution to Americans. According to the announcement, Americans will be able to order test kits to be delivered to their homes starting in January. While this may have been a good sound bite, as discussed below, it does not appear realistic. More likely, while Americans may be able to place orders in January, those orders may not be filled until several months into 2022.

As widely reported, rapid COVID-19 at-home test kits are already in short supply. Moreover, the Government has yet to enter into additional contracts beyond the limited contracts to a small number of suppliers previously announced by the Defense Logistics Agency (“DLA”) and a handful of “prototype” contracts finalized in 2020 under the Trump administration. The Government has not made any recent additional contract awards for rapid COVID-19 at-home test kits.

On December 22, one day after the president’s announcement, the Department of Defense (“DoD”), on behalf of the Department of Health and Human Services (“HHS”), issued a Request for Information (“RFI”) seeking information to assess market availability and sourcing for rapid COVID-19 at-home tests. The RFI, however, is not an actual procurement nor contract award and merely seeks information for 500,000 test kits for agency “personnel use.” Responses were due by 3:00 p.m. on December 24. (See, Rapid COVID-19 Antigen Test Kits.) Proposals to supply test kits are unlikely until after a Request for Proposal (“RFP”) has been issued. As of today, no RFP has been issued.

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Department of Veterans Affairs Releases Contractor Vaccination Guidelines

Merle M. DeLancey Jr.

At the end of July 2021, the Biden administration announced that, in addition to federal government employees, onsite federal contractor employees will be required to attest to their COVID-19 vaccination status. Visitors to federal buildings or federally controlled indoor workspaces and other individuals interacting with the federal workforce also will be required to submit a signed Certification of Vaccination form.

Any onsite contractor employee or visitor who declines to respond or responds that they are not fully vaccinated must (i) wear a mask regardless of the level of community transmission; (ii) physically distance; and (iii) provide proof of having received a negative COVID-19 test from within the previous three days if not enrolled in the applicable agency’s testing program. Federal agencies are required to establish a weekly or twice-weekly testing program for individuals not fully vaccinated. In addition, all onsite contractor employees and visitors, even those fully vaccinated, will be required to wear a mask in areas of high or substantial transmission.

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“Rule of Two” Cheat Sheet

Merle M. DeLancey Jr.

June 2021 marked the five-year anniversary of the Supreme Court’s Kingdomware decision[1], which is best known for broadly interpreting the so-called “Rule of Two” requirement flowing from the Veterans Benefits, Health Care, and Information Technology Act of 2006 (the “VBA”). The Rule has been criticized for delaying Department of Veterans Affairs (“VA”) procurements and increasing the prices the government pays for goods and services. However, the importance of the Rule’s purpose—to prioritize and increase the government’s use of small businesses owned by veterans—cannot be credibly challenged.

Over the past five years, the Federal Circuit, Court of Federal Claims, and Government Accountability Office (“GAO”) protest decisions have created some bright-line rules interpreting the VBA’s Rule of Two. After a brief summary of the Rule of Two, this post lays out these bright-line rules, and concludes with predictions regarding future VBA Rule of Two protests.

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