Reliance on OIG Advisory Opinions as a Bar to FCA and AKS Claims

Introduction

In U.S. ex rel. D.O. Stephen Sisselman v. Zocdoc, Inc., the Second Circuit addressed whether a relator’s qui tam complaint, based on allegations that a digital health-tech company’s pricing model violated the Anti-Kickback Statute (“AKS”) and False Claims Act (“FCA”), could survive a motion to dismiss when the company had secured favorable Advisory Opinions from the Department of Health & Human Services Office of Inspector General (“OIG”). The relator, Dr. Stephen Sisselman, asserted that Zocdoc’s “booking fee” was really a referral or success fee improperly steering federal health-care beneficiaries, and that Zocdoc concealed material facts from regulators. The government declined to intervene, and the district court dismissed the complaint for failure to plead fraud with particularity and denied further leave to amend. On April 14, 2025, a three-judge panel of the Second Circuit affirmed.

Summary of the Judgment

The Court of Appeals confirmed that, under Federal Rule of Civil Procedure 12(b)(6) and the heightened requirements of Rule 9(b) for fraud claims, the relator’s second amended complaint:

Failed to plausibly allege that Zocdoc misled the OIG or implemented its fee structure in conflict with the Advisory Opinions it had received;
Did not identify any concrete misrepresentations—specifying the who, what, when, and where—sufficient to meet the Rule 9(b) standard;
Did not raise a strong inference of scienter (fraudulent intent) as required by FCA decisions such as U.S. ex rel. Hart v. McKesson Corp.;
Offered no specific additional allegations that could cure those defects in a further amendment, making leave to amend properly denied as futile.

Accordingly, the Court affirmed the district court’s dismissal of all claims with prejudice.

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): reaffirmed de novo review of Rule 12(b)(6) dismissals.
Miller v. U.S. ex rel. Miller, 110 F.4th 533 (2d Cir. 2024): confirmed that FCA claims invoke the heightened pleading requirements of Rule 9(b).
U.S. ex rel. Hart v. McKesson Corp., 96 F.4th 145 (2d Cir. 2024): set forth the scienter standard for FCA violations.
Balintulo v. Ford Motor Co., 796 F.3d 160 (2d Cir. 2015): directs liberal grant of leave to amend, subject to futility exceptions.
Krys v. Pigott, 749 F.3d 117 (2d Cir. 2014): describes futility as a ground to deny further amendment.
Horoshko v. Citibank, N.A., 373 F.3d 248 (2d Cir. 2004): explains that a plaintiff must specify proposed new allegations to justify another amendment.
F5 Capital v. Pappas, 856 F.3d 61 (2d Cir. 2017): underscores that absent any clue as to how to fix pleading defects, denial of leave is justified.
Revitalizing Auto Comtys. Env’t Response Tr. v. Nat’l Grid USA, 92 F.4th 415 (2d Cir. 2024): permitted consideration of documents incorporated by reference, here the OIG Advisory Opinions.

Legal Reasoning

The Court’s reasoning unfolds in two stages:

Failure to State a Claim: Applying the Iqbal/Twombly plausibility standard and Rule 9(b), the panel held that the complaint’s conclusory labels (“booking fee,” “secret caste system,” “sleight of hand”) merely rehash details already vetted by OIG Advisory Opinions 19-04 and 23-04. Those Opinions recognized variations in provider fees by specialty, geography, and other factors affecting fair market value, and expressly concluded that Zocdoc’s model presented a low risk under the AKS. Because the relator did not plausibly allege any misrepresentation to, or deviation from, the OIG’s framework, there was no basis to infer fraud or kickbacks.
Denial of Leave to Amend: Having already filed three versions of his complaint, and offering only a vague promise to “address any perceived evidentiary deficiencies,” the relator failed to identify what new facts he could plead to cure the deficiencies. Under Krys and Horoshko, amendment would be futile, so the district court did not abuse its discretion in dismissing the case with prejudice.

Impact on Future Cases

This decision reinforces several key tenets in FCA and AKS litigation:

Advisory Opinions as a Safe Harbor: Entities that secure favorable OIG opinions may have a strong defense against qui tam actions, so long as they do not materially mislead regulators or depart from disclosed practices.
Heightened Pleading Standards: Relators must articulate specific statements, actors, dates, and circumstances of alleged fraud and explain how regulators were deceived. Mere labels and conclusory assertions will not survive.
Scienter Requirement: A strong inference of intent to defraud is indispensable under the FCA. Marketing communications alone will not suffice.
Limits on Serial Amendments: Plaintiffs who fail repeatedly to allege new actionable facts risk final denial of leave to amend on futility grounds.

Complex Concepts Simplified

Advisory Opinion (AO): A nonbinding but influential guidance letter from the OIG indicating how a business practice aligns with the AKS.
Anti-Kickback Statute (AKS): A criminal statute prohibiting remuneration to induce or reward referrals of federal health-care program business.
False Claims Act (FCA): A civil statute that allows private relators to sue on behalf of the government for fraudulently submitted claims.
Rule 12(b)(6) Plausibility: The complaint must plead facts such that the right to relief is “plausible” rather than merely possible.
Rule 9(b) Heightened Pleading: Fraud must be pleaded with particularity—identifying who said what, when, where, and why it was fraudulent.
Scienter: The defendant’s intent or knowledge that its conduct was wrongful.
Futility of Amendment: A court may deny leave to amend if the proposed changes cannot cure the underlying legal shortcomings.

Conclusion

U.S. ex rel. Sisselman v. Zocdoc underscores the protective value of OIG Advisory Opinions against FCA and AKS challenges and crystallizes the necessity for relators to plead precise misrepresentations and fraudulent intent. It also affirms that courts will not indulge endless amendments when a relator cannot identify additional actionable facts. Going forward, practitioners should carefully assess the sufficiency of their factual allegations under Rules 12(b)(6) and 9(b), and consider the binding influence of regulatory guidance before initiating or defending such suits.