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When 340B Overcharges Become False Claims Act Violations

2026-08-06 · 15:08 UTC ·Husch Blackwell ·3 min read

Brief

The Husch Blackwell interview (published August 6, 2026) features host Jonathan Porter and senior counsel Robert Hess in a 30–40 minute presentation/interview explaining how the Ninth Circuit’s Adventist Health ruling exposes 340B stakeholders to False Claims Act risk. Hess outlines 340B fundamentals—Congress created the drug discount program to help safety‑net providers—and explains why longstanding views that 340B violations cannot support FCA claims are now challenged: certain 340B overcharges can cause increased federal payments (Medicaid reimbursements, duplicate discounts), satisfying the government loss element. He compares the Ninth Circuit’s reasoning to the Second Circuit’s Mosaic decision, describes where the Adventist litigation currently stands procedurally, and gives concrete compliance actions (audits, contract pharmacy controls, duplicate‑discount reconciliation, reimbursement reviews) for manufacturers, covered entities, contract pharmacies, and payors while noting HRSA’s limited rulemaking role.

Why it matters

The Ninth Circuit’s Adventist Health decision (case argued pre-2026; covered in the Husch Blackwell episode published 2026-08-06) allowed False Claims Act (FCA) claims tied to 340B overcharges to proceed, expanding potential FCA exposure for manufacturers, covered entities, contract pharmacies, and payors.

Key details

  • Robert Hess explained that although 340B is a manufacturer discount program, overcharges can make the government pay more than it should (e.g., via Medicaid reimbursements or duplicate discount risks), creating the financial loss element required for FCA liability.
  • The episode contrasts the Ninth Circuit’s approach with the Second Circuit’s Mosaic decision, signaling an emerging inter‑circuit debate about whether the connection between 340B pricing and federal payments is legally sufficient for FCA claims.
  • Practical steps recommended: audit 340B pricing flows, tighten contract pharmacy agreements, reconcile and document Medicaid duplicate‑discount protections, review cost‑based reimbursement practices, and monitor limited HRSA rulemaking and further litigation developments.
Cleaned source text

Host Jonathan Porter (https://www.huschblackwell.com/professionals/jonathan-porter) welcomes Husch Blackwell senior counsel Robert Hess (https://www.huschblackwell.com/professionals/robert-hess) to discuss a groundbreaking Ninth Circuit decision that expands False Claims Act exposure in the 340B drug pricing program (https://www.huschblackwell.com/newsandinsights/ninth-circuit-holds-fca-claims-related-to-340b-program-may-proceed) . With the Adventist Health case challenging long-held assumptions about FCA liability in the 340B context, Rob provides essential guidance for manufacturers, covered entities, contract pharmacies, and payors navigating this evolving risk landscape.

We begin with the fundamentals of the 340B program. Rob explains what 340B is, why Congress created this drug discount program, and how it operates in practice. While 340B is notoriously complex—with lawyers dedicating entire careers to guiding clients through its intricacies—Rob breaks down the basics that general counsels need to understand, providing a foundation for the FCA implications we explore later in the episode.

Next, we tackle a critical misconception about 340B and the False Claims Act. Many practitioners have long believed that 340B violations cannot form the basis of FCA liability because the program involves manufacturer discounts rather than direct federal payments. Rob unpacks why this assumption is more complicated than it appears, explaining how 340B overcharges can actually result in the government paying more than it should—creating the kind of financial loss that triggers FCA exposure.

Our conversation then turns to the Adventist Health case itself. Rob walks us through the story: who sued whom, what the core allegations involve, and where the case currently stands procedurally. We examine the Ninth Circuit's analysis and rationale for allowing these FCA claims to proceed, and how this decision compares to other recent litigation involving pharmaceutical manufacturers and 340B-related pricing issues, including the Second Circuit's Mosaic decision.

We then address the debate this decision has sparked in the healthcare bar. Rob tackles the fundamental question: Is the Ninth Circuit wrong on the law, with the connection between 340B overcharges and federal money too attenuated to support FCA liability? Or does this case simply demonstrate how broadly the FCA can be enforced when courts are willing to follow the statutory language? Rob provides his perspective on what this case means for FCA risk going forward and how covered entities appear to be calculating the balance of litigation risks between themselves and manufacturers.

We close with practical guidance for our listeners. Rob outlines specific steps that manufacturers, hospitals and clinics participating in 340B, contract pharmacies, and payors should take now to prevent 340B compliance issues from escalating into FCA problems. We discuss cost-based reimbursements, Medicaid duplicate discounts, and other 340B issues that may create connections to federal claims for payment—and what stakeholders can do to manage these risks in an increasingly complex regulatory environment with limited HRSA rulemaking authority.

Jonathan Porter | Full Biography (https://www.huschblackwell.com/professionals/jonathan-porter)

Jonathan focuses on white collar criminal defense, federal investigations brought under the False Claims Act, and litigation against the government and whistleblowers. He draws on his experience as a former federal prosecutor to guide clients in sensitive and enterprise-threatening litigation. At the Department of Justice, Jonathan earned a reputation as a top white-collar prosecutor and trial lawyer and was a key member of multiple international healthcare fraud takedowns and high-profile financial crime prosecution teams. He also teaches white collar crime as an adjunct professor of law at Mercer University School of Law.

Robert Hess | Full Biography (https://www.huschblackwell.com/professionals/robert-hess)

Rob counsels academic medical centers and other healthcare clients on regulatory compliance matters. He offers health systems and healthcare providers advice on state and federal regulatory requirements, including licensure, reimbursement rules, Medicaid and Medicare requirements, medical staff privileging and credentialing, Stark Law and Anti-Kickback compliance, 340B program matters, and graduate medical education requirements. Drawing on his broad range of experience, including 12 years in-house advising the University of Missouri’s health system and health schools, Rob helps health systems successfully plan and complete strategic transactions and integrations. While he works frequently with healthcare clients generally, a significant portion of his practice focuses on academic medical centers, medical schools, and university health systems. He regularly assists these clients in managing the multi-layered legal issues...

Channel: Husch Blackwell

Published: 2026-08-06

Video URL: https://www.youtube.com/watch?v=k4lv1xvuw2g