OIG Advisory Opinions as a Shield: FCA and AKS Claims Require Misrepresentation Beyond Regulatory Approval

Introduction

In U.S. ex rel. D.O. Stephen Sisselman v. Zocdoc, Inc., the United States Court of Appeals for the Second Circuit reviewed the dismissal of a qui tam False Claims Act (“FCA”) and Anti-Kickback Statute (“AKS”) suit. Relator Dr. Stephen Sisselman alleged that Zocdoc’s “booking fee” structure for Medicare, Medicaid, and other federal health‐care program beneficiaries constituted unlawful referral fees in violation of the AKS and resulted in false claims under the FCA. The government declined to intervene. Upon Zocdoc’s motion, the district court dismissed Sisselman’s second amended complaint for failure to state a claim and denied him leave to further amend. On April 14, 2025, the Second Circuit affirmed.

Summary of the Judgment

The Court of Appeals held that:

Under Rule 12(b)(6) and the heightened pleading standard of Rule 9(b), Sisselman’s complaint failed to allege sufficient factual detail to show (a) that Zocdoc misled the Office of Inspector General (“OIG”) or (b) that its “booking fee” varied directly with federal program referrals.
Two OIG Advisory Opinions (AO 19-04 and AO 23-04), which the complaint itself described, expressly concluded that Zocdoc’s pricing model “implicated” but did not violate the AKS and carried a “low risk” of fraud.
Sisselman did not and could not plausibly allege scienter—he pointed only to isolated marketing phrases and offered no strong inference of intent to defraud.
Having already filed three iterations of his complaint without identifying any additional facts he could plead, Sisselman was not entitled to further leave to amend.

Analysis

Precedents Cited

Ashcroft v. Iqbal, 556 U.S. 662 (2009), and Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007): Established the plausibility standard under Rule 12(b)(6).
In re 305 E. 61st St. Grp. LLC, 130 F.4th 272 (2d Cir. 2025): Confirmed de novo review of dismissals and the requirement to accept all well-pled facts as true.
Miller v. U.S. ex rel. Miller, 110 F.4th 533 (2d Cir. 2024): Held that FCA claims must satisfy the heightened pleading demands of Rule 9(b).
U.S. ex rel. Hart v. McKesson Corp., 96 F.4th 145 (2d Cir. 2024): Clarified that scienter must be pled with facts giving rise to a “strong inference” of wrongful intent.
Balintulo v. Ford Motor Co., 796 F.3d 160 (2d Cir. 2015): Stressed that leave to amend should be freely given unless amendment would be futile.
Krys v. Pigott, 749 F.3d 117 (2d Cir. 2014): Recognized futility as a valid ground to deny leave to amend.
Horoshko v. Citibank, N.A., 373 F.3d 248 (2d Cir. 2004): Explained that a plaintiff must indicate what additional facts would cure pleading deficiencies.
F5 Capital v. Pappas, 856 F.3d 61 (2d Cir. 2017): Supported denial of leave to amend when no plausible amendment is suggested on appeal.

Legal Reasoning

The Second Circuit applied standard principles for pleading fraud and wrongful payment claims under the FCA and AKS:

Plausibility and Particularity: Under Iqbal and Twombly, a complaint must state a plausible claim. Because the complaint itself detailed the OIG advisory opinions that approved the fee model, it could not simultaneously allege that Zocdoc knowingly solicited unlawful referral fees without contradicting those opinions.
Heightened Pleading for Fraud: Miller requires Rule 9(b) specificity. Sisselman did not identify precise false statements, speakers, dates, or the manner in which regulators were deceived.
Incorporation of OIG Opinions: The Court considered the advisory opinions (AO 19-04 and AO 23-04) because the complaint referenced them at length. Those documents demonstrated that Zocdoc had sought and received guidance and that the OIG found “low risk” under the AKS.
Scienter Requirement: Both the FCA and AKS demand that the defendant act knowingly or with intent to defraud. Isolated marketing communications to paying providers, without more, did not support a strong inference of intent.
Futility and Amendment: After three complaints and full briefing on dismissal, Sisselman offered no concrete facts he could add. Under Balintulo and Krys, denial of further amendment was not an abuse of discretion.

Impact

This decision reinforces several important takeaways for FCA and AKS litigants:

Regulatory Approval Matters: When a defendant has obtained and disclosed OIG advisory opinions, plaintiffs must allege that the defendant misled or concealed material facts from regulators.
Pleading Specificity in FCA Cases: Courts will strictly enforce Rule 9(b). General labels (“kickback,” “marketing fee”) without detailed factual glue will not survive.
Limits on Qui Tam Amending: Multiple rounds of complaint‐amending without new, concrete allegations justify refusal to grant further leave to amend.
Guidance for Providers: Healthcare platform operators with complex fee structures will benefit from seeking and clearly documenting advisory opinions if federal program patients are involved.

Complex Concepts Simplified

Anti-Kickback Statute (AKS): A federal law that prohibits knowingly offering or receiving remuneration to induce referrals for services paid by federal healthcare programs.
False Claims Act (FCA): A law allowing private individuals (relators) to sue on behalf of the government for fraudulently obtaining federal funds. It requires “knowing” submission of false claims.
Qui Tam Action: A whistleblower suit brought by a private party under the FCA. If successful, the relator shares in the recovery.
OIG Advisory Opinion: Non-binding guidance from the Department of Health & Human Services’ OIG on whether a particular arrangement poses a risk under the AKS.
Rule 12(b)(6): A court motion to dismiss a complaint for failure to state a plausible claim.
Rule 9(b): Requires that allegations of fraud be pled with particularity—who said what, when, where, and why it was fraudulent.
Scienter: Legal term for mental state—knowledge or intent required to establish fraud or illegal activity.

Conclusion

The Second Circuit’s decision in Sisselman v. Zocdoc underscores that, in FCA and AKS actions, plaintiffs cannot ignore or bypass a defendant’s sought‐and‐obtained regulatory guidance. A robust set of OIG advisory opinions can effectively immunize conduct from fraud claims unless a relator shows affirmative misrepresentation or concealment. Moreover, this case highlights that courts will not tolerate repeated, unproductive amendments—plaintiffs must bring forth specific, non‐conclusory allegations to survive dismissal. Going forward, healthcare providers and platforms should proactively seek and document clear regulatory feedback to mitigate fraud and abuse risk.