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False Claims Act Statistics, News & Analysis

Escobar Matters for Discovery, Too: District Court Emphasizes Right to Broad Materiality Discovery

While most post-Escobar decisions have involved the merits, Escobar also has significant implications for the scope of materiality discovery under the FCA. Last week, in United States ex rel. California v. Paramedics Plus LLC, the U.S. District Court for the Eastern District of Texas became one of the first courts to directly tackle that issue in a written opinion, holding that Escobar affords FCA defendants the ability to broadly discover how the government has actually handled the disputed issue, both in that case and in other analogous situations.

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Trap! Zap! Zing! — And Poof! A Florida Court Applies Escobar and Makes a $347 Million FCA Jury Verdict Disappear

On January 11, 2018, a Florida district court vacated a $350 million FCA jury verdict against defendants in U.S. ex rel. Angela Ruckh v. Salus Rehabilitation, LLC, No. 8:11-cv-1303 (M.D. Fla. Jan. 11, 2018). At trial in February 2017, relator claimed that the defendants, owners and operators of 53 specialized nursing facilities fraudulently inflated the amount of resources needed by their patients by upcoding Resource Utilization Group (“RUG”) levels to increase the amount they were able to bill Medicare and Medicaid. The jury agreed and found the defendants liable for $109.8 million in damages, which the judge then trebled to $347 million. The government had declined to intervene, but stood to reap the benefits of relator’s perseverance, but the court had other ideas.

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"The Granston Memorandum": Will DOJ Really Bite the Hands That Feed the FCA — Color LLB Skeptical

Last November, we reported that Michael Granston, Director of the DOJ Commercial Litigation Branch, Fraud Section, announced at a health care conference that in the future DOJ would move to dismiss meritless qui tam cases. We doubted that much would change, especially given that the speech was not accompanied by any type of policy memorandum. We also understood that DOJ had denied any formal change in policy, and yet, last week the other shoe dropped. The New York Law Journal obtained a copy of a memorandum issued by Granston and dated January 10 to all attorneys in the Fraud Section and all Assistant U.S. Attorneys handling FCA cases. The memorandum purports to encourage DOJ to “seek[] dismissal” of non-intervened qui tam cases that “lack substantial merit” and discusses at some length the factors that should guide the exercise of dismissal discretion. Perhaps the memorandum is some reason for optimism, but we at LLB will wait, as we do, for the statistics to see if this marks any real shift in government thinking on FCA enforcement or is mere window dressing.

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  • 24
  • January
  • 2018

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"Taint" Theory of Damages Dead in the Seventh Circuit? One District Court Has Not Received the Message

Adopting a view that has been roundly rejected by federal circuit courts (including the Seventh Circuit), the U.S. District Court for the Northern District of Illinois in United States & City of Chicago ex rel. Chicago Regional Council of Carpenters v. Sound Solutions Windows & Doors, Inc. endorsed the “taint” theory of FCA damages, awarding the full value of contracts as damages based on the defendants’ non-compliance with a contractual term, notwithstanding their complete performance of the tangible work under the contracts.

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The Gift That Keeps On Giving: Pre-ACA Public Disclosure Bar's Stringent Original Source Requirements Defeat Relator's Claim in the Fifth Circuit

As we have written about previously, although almost eight years have passed since the 2010 ACA amendments, because qui tam actions often stay under seal for many years, there are numerous cases before the courts to this day that involve conduct that occurred prior to the amendments. Most recently, the Fifth Circuit in United States ex rel Solomon v. Lockheed Martin Corp. upheld a grant of summary judgment in favor of defendants Lockheed Martin and Northrop Grumman where the relator failed to show that his knowledge of the allegedly false claim was not derived from earlier public disclosures under the pre-2010 amendments to the original source exception. 878 F.3d 139 (5th Cir. 2017).

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Behind Bars: Partial Intervention and Settlement Bars Future Qui Tams Based on Government Action Bar in Two Recent Cases

The little-used government action bar has recently surfaced in two cases where relators had attempted to revive declined and unsettled allegations from earlier qui tam actions in which the government had intervened in part to settle other allegations. United States ex rel. Bennett v. Biotronik, Inc., No. 16-15919, 2017 WL 5907900 (9th Cir. Dec. 1, 2017), and United States ex rel. Estate of Gadbois v. PharMerica Corp., No. 10-cv-471, 2017 WL 5466659 (D.R.I. Nov. 13, 2017). These decisions show that a partial intervention and settlement by the government of some, but not all, claims in one relator’s complaint can protect defendants from future claims by later relators based on even unresolved allegations from the earlier complaint.

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