Latest Case This Week: United States ex rel. Drummond v. BestCare Laboratory Services, LLC (5th Cir.)

The Clients’ Waiver of Their Rights Under Regulation BI of the Securities and Exchange Commission

TAMAR FRANKEL

BU Law emerita professor Tamar Frankel discusses the Securities and Exchange Commission (SEC)’s Regulation Best Interest (BI), which imposes on broker-dealers a commitment to act in the best interests of their clients. Specifically, Frankel addresses the SEC’s treatment of client waivers of the Regulation BI, which goes even further than general fiduciary law to prohibit any waiver of the broker-dealer’s conflicting interests.

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United States ex rel. Drummond v. BestCare Laboratory Services, LLC

Court: US Court of Appeals for the Fifth Circuit

Docket: 18-20501

Opinion Date: February 17, 2020

Judge: Oldham

Areas of Law: Government Contracts

The Fifth Circuit affirmed the district court's grant of summary judgment to the United States in a False Claims Act (FCA) suit alleging that BestCare obtained millions of dollars in reimbursements from Medicare for miles that its technicians never traveled. The court held that the district court did not err in granting the Government's motions for summary judgment where BestCare violated the Medicare statute's limitations on travel reimbursements. Furthermore, the court rejected BestCare's alternative argument that their good-faith reliance on the CMS Manual created a genuine dispute about whether they had the requisite mental state to violate the FCA. Because the court affirmed the $30.6 million award under the FCA, defendant's challenge to the $10.6 million award was moot. Finally, the district court did not err in holding Defendant Maghareh jointly and severally liable, and defendants' claim that the district court should be recused under 28 U.S.C. 455 lacked merit.