DC Circuit Agrees Vertex Pharmaceuticals’ Fertility Support Program Would Violate Anti-Kickback Statute

DC Circuit Agrees Vertex Pharmaceuticals’ Fertility Support Program Would Violate Anti-Kickback Statute

On September 4, the US Court of Appeals for the DC Circuit ruled that the US Department of Health and Human Services Office of the Inspector General (HHS-OIG) properly found that Vertex Pharmaceuticals’ Fertility Support Program would violate the Anti-Kickback Statute (AKS) but that HHS-OIG erred in also finding that the program would run afoul of the Beneficiary Inducement Statute.

Vertex developed Casgevy, a gene therapy for sickle cell disease and transfusion-dependent beta-thalassemia. Because the treatment requires intensive chemotherapy that can impair fertility, Vertex created a program offering patients up to $70,000 for fertility services to address concerns that might deter patients from choosing the therapy. Vertex requested an advisory opinion from HHS-OIG on whether extending the program to federally insured patients would comply with federal law. After more than a year of delay, HHS-OIG issued an unfavorable opinion concluding the program would violate both the AKS and the Beneficiary Inducement Statute.

On the AKS, the DC Circuit affirmed, holding that the statute’s terms “remuneration” and “induce” carry their ordinary meanings — valuable compensation and to influence or prevail upon a person, respectively — rather than the narrower criminal-law reading that Vertex proposed. The court reasoned that adopting Vertex’s interpretation would render many of the AKS’ safe harbors superfluous.

However, the court disagreed with HHS-OIG’s interpretation of the Beneficiary Inducement Statute, finding that HHS-OIG failed to reasonably explain why the Promotes Access to Care Exception did not apply, and that HHS-OIG’s conclusion was arbitrary and capricious. The court found that HHS-OIG failed to engage with the evidence Vertex had submitted, which had demonstrated the program would improve patient access to Casgevy and pose a low risk of harm.

The court also reversed the lower court’s dismissal of Vertex’s challenge to HHS-OIG’s advisory opinion timing regulations. The court held that HHS-OIG’s regulations, which allow the agency to toll and extend the statutory 60-day deadline for issuing advisory opinions, are contrary to law because US Congress imposed a mandatory deadline that HHS-OIG lacks authority to circumvent.

The case is Vertex Pharmaceuticals Inc. v. U.S. Department of Health and Human Services, No. 25-5133 (D.C. Cir., filed Apr. 21, 2025). 

Man Sentenced to 30 Years for $270 Million Medi-Cal Fraud Scheme 

On September 9, Paul Richard Randall of California was sentenced to 30 years in federal prison for orchestrating a massive health care fraud scheme involving submission of nearly $270 million in fraudulent claims in less than a year to California’s Medicaid program, Medi-Cal. According to the government, Randall submitted claims for pricey prescription drugs containing generic ingredients that were medically unnecessary and often were not provided to the purported recipients. 

Randall operated the scheme alongside pharmacist Kyrollos Mekail and nurse practitioner Patricia Anderson. According to the US Department of Justice (DOJ), these individuals capitalized on a temporary gap in Medi-Cal’s oversight — a period during which the program suspended its prior authorization requirements for certain high-cost drugs as part of Medi-Cal’s transition to a new claims payment system. Using a pharmacy called Monte Vista, the group billed the Medi-Cal program tens of millions of dollars monthly for high-cost generic medications that were either medically unjustified or never actually dispensed to patients. 

Randall facilitated the fraud by funneling kickback payments to recruiters who supplied Medi-Cal beneficiary information and to Anderson, who allegedly rubber-stamped pre-completed prescriptions without ever examining or consulting with the purported patients. Over approximately 11 months, the scheme purportedly generated more than $269 million in fraudulent billings, with Medi-Cal paying out roughly $178.7 million. Notably, Randall carried out the scheme while on pretrial release in a separate federal tax case (United States v. Paul Richard Randall, No. CR 20-00031-GW).

Randall entered a guilty plea to a single count of wire fraud in April and was ordered to pay approximately $178.7 million in restitution.

The DOJ’s press release about this sentence is here.

Man Found Guilty of Multi-Million-Dollar Investment and Bankruptcy Fraud 

A federal jury in the Eastern District of Virginia convicted Jihoon Park, 52, of Chantilly, Virginia, on charges arising from a scheme in which he misappropriated more than $2.5 million from individuals who trusted him to manage their investments and then attempted to shield his ill-gotten gains through a fraudulent bankruptcy filing.

Park leveraged his personal ties within his community and a prior affiliation with a major national financial institution to persuade victims — including families, investing retirement savings, and life earnings — to hand over funds for what he described as safe, high-return investment opportunities. Rather than placing the money into legitimate investments, Park diverted the funds for his own benefit, using victims’ money to purchase a home and cryptocurrency for himself, among other personal expenditures.

When a victim initiated civil litigation against him, Park took steps to place assets beyond creditors’ reach, including transferring property to his spouse and concealing significant cryptocurrency holdings before filing for bankruptcy protection, where he falsely reported possessing just $0.34 in financial assets and denied owning any cryptocurrency.

The jury returned guilty verdicts on three counts of wire fraud and two counts of bankruptcy fraud. Park faces up to 20 years in prison on each wire fraud count and up to five years on each bankruptcy fraud count. Sentencing is scheduled for December 10. 

The DOJ’s press release about the conviction is available here.