U.S. Ex Rel. D.O. Stephen Sisselman v. Zocdoc, Inc.
24-2807
2d Cir.Apr 14, 2025Background
- Dr. Stephen Sisselman brought a qui tam action against Zocdoc, alleging its pricing practices violated the Anti-Kickback Statute (AKS) and False Claims Act (FCA).
- The alleged AKS violation involved Zocdoc's per-booking fee for doctors, which Sisselman claimed functioned as a referral fee for federally insured patients.
- The U.S. government declined to intervene in the case.
- Zocdoc moved to dismiss the suit. The district court granted dismissal and denied leave to amend; Sisselman appealed.
- The Office of Inspector General (OIG) had previously issued two advisory opinions addressing Zocdoc’s model, finding low risk under the AKS and no violation based on facts submitted.
- Sisselman's complaint did not detail fraudulent intent or allege Zocdoc misled the OIG or violated the advisory opinion parameters.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Sufficiency of FCA fraud claim | Zocdoc's booking fees are undisclosed referral fees that improperly steer federal patients, violating fraud statutes | Fees are consistent with OIG guidance and not misleading/fraudulent; OIG found low risk; complaint lacks particularity | Dismissed; complaint fails heightened pleading standards for fraud |
| Allegations of material misrepresentation to OIG | Zocdoc failed to disclose key details about fee calculations and provider ranking | OIG opinions directly address and approve challenged practices; no factual allegations of deception | Plaintiff did not allege plausible misrepresentation to OIG |
| Scienter requirement (intent to defraud) | Zocdoc knowingly sought to evade the AKS with its business model | No factual basis for strong inference of fraudulent intent; only vague marketing evidence cited | No sufficient allegations of scienter under FCA/AKS |
| Denial of leave to amend complaint | Sisselman should have been allowed to amend to correct deficiencies | Plaintiff failed to specify what new facts would cure defects; already had three attempts | Denial of leave to amend affirmed; amendment would be futile |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (Complaints must state a plausible claim to relief to survive dismissal)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (Plausibility standard for pleading)
- Balintulo v. Ford Motor Co., 796 F.3d 160 (Standard for granting leave to amend a complaint)
- Krys v. Pigott, 749 F.3d 117 (Leave to amend may be denied when amendment would be futile)