By: Christopher Parrella, Esq., CPC, CHC, CPCO
Parrella Health Law, Boston, MA.
A Health Care Provider Defense and Compliance Firm

The Second Circuit has slammed the door shut on a whistleblower’s False Claims Act (FCA) case against Zocdoc, Inc., upholding the dismissal with prejudice and reinforcing key protections for companies that seek—and follow—OIG guidance.

In the case of the United States ex rel. Sisselman v. Zocdoc, Inc., a whistleblower alleged that Zocdoc’s patient-booking platform steered Medicare and Medicaid beneficiaries toward providers who paid per-booking fees, supposedly violating the Anti-Kickback Statute (AKS) and the FCA. The complaint accused Zocdoc of creating a “secret caste system,” making providers who paid more for each patient booking more visible to users of the site.

But the Second Circuit wasn’t buying it. Why? Because Zocdoc had already secured two favorable advisory opinions from the Department of Health and Human Services’ Office of Inspector General (OIG), first in 2019 and again in 2023, blessing their pricing structure. The OIG confirmed that while the model technically implicated the AKS, it posed a low risk of fraud and would not trigger enforcement, largely because the fees were set in advance, were consistent with fair market value, and were not based on the volume or value of patient referrals.

In affirming dismissal, the Court highlighted several key points:

• No Fraud Alleged Against OIG Sisselman didn’t plausibly allege that Zocdoc misrepresented its model to the OIG or implemented the model in a way that conflicted with the advisory opinions.
• No Scienter: There was no “strong inference of fraudulent intent,” which is a necessary element under both the FCA and AKS.
• No New Facts: After multiple amended complaints, Sisselman still couldn’t put forth new factual allegations to fix the defects in his case.

Big takeaway: Following OIG guidance isn’t just smart, it can be a bulletproof vest against whistleblower lawsuits. Zocdoc’s careful compliance efforts, including securing advisory opinions in advance, played a major role in its legal victory.

Practical advice for healthcare businesses:

If your business model touches federal healthcare program beneficiaries, proactive compliance matters. Advisory opinions are a powerful tool not only to assess risk but to defend against future allegations. If you have questions about how to structure your marketing, referral, or payment arrangements under the Anti-Kickback Statute or want to explore OIG advisory opinions, contact Parrella Health Law at 857-328-0382 or email Chris directly at cparrella@parrellahealthlaw.com. It’s much better to be protected before you’re in the government’s crosshairs.