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False Claims Act Statistics, News & Analysis

Specific Representations and Half-Truths Need Not Apply: D.C. District Court Finds Knowingly Billing at "Significantly Higher than Reasonable" Costs Sufficient for Implied False Certification

In a decision many in the defense bar will argue was wrongly decided, the U.S. District Court for the District of Columbia in U.S. v. DynCorp Int’l LLC ruled that knowingly billing for unreasonable costs can serve as the basis for an implied certification claim under the FCA. The court took an expansive view of implied certification that departs from the Supreme Court’s guidance in Escobar and, we would argue, sidesteps the rigorous materiality requirements emphasized by the Court.

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Bon Voyage, US ex rel ABLE v. US Bank: Cert. Denied in CVSG’d Public Disclosure Case

We have been writing about the relator’s cert. petition in U.S. ex rel. ABLE v. US Bank16-130since the earliest days of LLB, but today we say good-bye to that petition about the public disclosure bar because the Supreme Court denied cert, as the Solicitor General recommended.  In other news, because the “ex rel.” might catch some readers’ eyes, we note that the Court also denied cert. in U.S. ex rel. Bauchwitz v. Holloman16-1185, a cert. petition we did not cover because despite being a qui tam, it did not raise FCA issues.

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"Common Sense" and Concealment of Noncompliance Lead Fourth Circuit to Find Triple Canopy Invoices Hit Their Materiality Mark and Were Impliedly False Despite No Specific False Representations

Earlier this week, the Fourth Circuit issued its first substantive post-Escobar implied certification opinion in the closely watched U.S. ex rel. Badr v. Triple Canopy. Prior to Escobar, the Fourth Circuit found that the government’s complaint-in-intervention stated an implied certification FCA claim, causing Triple Canopy to seek cert. After issuing the Escobar opinion, the Supreme Court remanded the case to the Court of Appeals to reconsider in light of Escobar. The Fourth Circuit largely affirmed its prior decision, finding that the government had sufficiently alleged both falsity and materiality. [Disclosure:  Two of the authors of this piece represented amici in support of Triple Canopy’s cert. petition.]

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False Claims Act Cert. Monitor: Attorneys’ Fees, Reverse False Claims, Public Disclosure Bar, and Government Employees as Relators Feature in Three New Petitions

Three new FCA relator cert. petitions have landed in the past few weeks, covering the gamut of FCA legal issues.

First, the relator in U.S. ex rel. Harper v. Muskingum Watershed Conservancy District, 16-1278, takes us back to 1L Property, alleging that the Army in 1949 granted the defendant water district a “determinable fee simple estate subject to a possibility of reverter interest retained by the United States.” In other words, the government gave the water district government land to keep so long as the land was used for recreation, conservation, etc. The relator contends that when the defendant entered into oil and gas leases on the land but kept the land and the lease income, it knowingly and improperly avoided an obligation to return the property and income to the government—i.e., a conversion reverse false claim. The question presented to the Court is whether, for a reverse false claim, the relator needed to plead that the defendant subjectively knew that it was violating the terms of the deed and had not committed a mistake of law. A potential difficulty for this petition, however, is that neither Sixth Circuit’s majority nor the dissent focused on the question of subjective knowledge of mistake of law, but rather on whether the relator pleaded sufficient facts from which the court could infer that the defendant “knew or should have known” of the requirement to return the property. The response is currently due June 26, 2017.

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A Cure for the Common Qui Tam? Escobar’s Materiality Standard and Government Inaction has Pharma Defendant Feeling Good Again

The Third Circuit recently joined the growing number of circuits refusing to find materiality where the government fails to act or intervene in the face of alleged noncompliance. See United States ex rel. Petratos v. Genentech, No. 15-3805 (3rd Cir. May 1, 2017). The D.C. Circuit; First Circuit; and Seventh Circuit all have reached similar conclusions. The Ninth Circuit will address this issue in the coming months in United States ex rel. Rose v. Stephens Institute.

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Franks and the False Claims Act? District Court Uses Familiar Fourth Amendment Remedy to Dismiss Deceptive FCA Case

An “elaborate series of falsehoods, misrepresentations, and deceptive conduct” perpetrated by a relator’s counsel culminated last Friday with dismissal of a relator’s False Claims Act complaint by the U.S. District Court for the District of Massachusetts. In U.S. ex rel. Leysock v. Forest Labs., Inc., No. 12-11354, 2017 WL 1591833 (D. Mass. Apr. 28. 2017),  relator alleged off-label promotion of an Alzheimer drug, and to get over the Rule 9(b) “hump,” relied on a purported nationwide study of physician prescribing practices for the medication.  The study results were featured prominently in the complaint – including details about particular physicians and patients.  Turns out, however, that the “study” at issue was sponsored and directed entirely by relator’s counsel under false pretenses.

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False Claims Act Cert. Monitor: Solicitor General Presents Hurdle to Clearing the Public Disclosure Bar

Several months ago, we reported that the Supreme Court had called for the views of the Solicitor General (“CVSG”) on a relator’s cert. petition about the FCA public disclosure bar in U.S. ex rel. Advocates for Basic Legal Equality, Inc. v. U.S. Bank, N.A. (“ABLE”), No. 16-130. You can read our summary of the case in that blog post here. The Solicitor General has now weighed in.

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Do Pay Attention to the Contracting Officer Behind the Curtain: Court Rules that Government Cannot Conceal Reasons Why Its Own Contracting Officer Dumped Decision on which False Claims Case was Built

Earlier this week, the Eastern District of Michigan took up an important privilege issue with significant Escobar implications. In an opinion issued only six days after oral argument, the district court granted in full a motion to compel discovery by BAE Systems Tactical Vehicle Systems, LP (“BAE-TVS”) relating to a FCA case based on allegations of “defective pricing” under the Truth in Negotiations Act (“TINA”). United States v. BAE Systems Tactical Vehicle Systems, LP, No. 15-12225, 2017 WL 1457493 (E.D. Mich. Apr. 25, 2017). [Full disclosure: your authors are both counsel to BAE-TVS in this matter].

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The Hundred Years Firm

1917 was a momentous year: the Royal Bank of Canada took over Quebec Bank, Emperor Nicholas II of Russia abdicated his throne thus ending the Russian Empire, and the United States called off its search for Pancho Villa. But did you know that 1917 is also the year that our very own Vinson & Elkins was founded? Not quite as old as the False Claims Act – but almost!

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Armor Manufacturers (Mostly) Deflect FCA Claims Again Post-Escobar: District Court Finds Implied, Extra-Contractual Duties Not Bargained For and Thus Not Material

In related cases U.S. ex. rel. Westrick v. Second Chance Body Armor, Inc. and U.S. v. Toyobo Company, Ltd., the D.C. district court recently determined on a motion to reconsider post-Escobar that implied “extra-contractual” requirements, not included in the language of the contract with the government, may nevertheless form the basis of an implied certification claim. No. 1:07-cv-01144 (D.D.C. Mar. 31, 2017). But, the court found that since the government in Westrick and Toyobo presented no evidence that it in fact contracted or bargained for the alleged extra-contractual obligations, the obligations were not material to payment and affirmed its previous grant of summary judgment for defendants on their FCA claims based on a violation of those obligations.

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The Quicken Origin Story:  Michigan Federal Court Addresses False Claims Act

Last week we wrote about the opinion in United States v. Quicken Loans Inc., specifically discussing its ruling on causation of damages under the FCA. No. 16-CV-14050, 2017 WL 930039 (E.D. Mich. Mar. 9, 2017). As we noted, Quicken touches on other important FCA issues, including knowledge and materiality. But since liability necessarily precedes damages, let’s go back now to discuss certain of the court’s rulings on knowing violations of ambiguous rules under Safeco and on materiality after Escobar.

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Fifth Circuit Holds Relators’ Rubber Stamp Anxiety Insufficient to Clear Escobar’s Materiality Hurdle Given Government Inaction after Investigation

The Fifth Circuit recently issued a helpful materiality decision for defendants in Abbott v. BP Exploration & Production, finding that the Department of the Interior’s (“DOI”) decision to allow an oil production facility to continue operating after an investigation into the relators’ allegations is “strong evidence” that a regulation’s alleged stamping requirement is not material. No. 16-20028, 2017 WL 992506 (5th Cir. Mar. 14, 2017).

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A Rebel Claim Without a Cause? Michigan Federal Court Analyzes False Claims Act Causation of Damages Standard

In the recent decision in United States v. Quicken Loans Inc., the district court found the government adequately pleaded that Quicken Loan Inc. (“Quicken”) submitted false claims and made false statements material to false claims for insurance payouts from the Federal Housing Administration (“FHA”) for defaulted FHA-insured loans that Quicken had not properly underwritten. No. 16-CV-14050, 2017 WL 930039 (E.D. Mich. Mar. 9, 2017). As a result, the Court denied most of Quicken’s motion to dismiss except for one theory of liability and certain untimely claims.

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False Claims Act Cert. Monitor: Relator Asks Court to Extend Benefit of FCA Statute of Limitations Tolling Provision to Relators

As FCA aficionados know, the FCA’s statute of limitations provides that claims are timely only if they are brought either (1) within 6 years of the FCA violation, or (2) within 3 years of “the date when facts material to the right of action are known or reasonably should have been known by the official of the United States charged with responsibility to act in the circumstances,” up to 10 years after the FCA violation. A new FCA cert. petition raises the question whether relators in non-intervened qui tam cases can take advantage of the latter provision to toll the limitations period.

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Nursing Homes Save Payment for Another Day as Court Grants Emergency Motion to Stay $347 Million in Judgments Against Them

We last reported on United States and Florida ex rel. Ruckh v. CMC II, LLC, et al., 8:11-cv-1303 (M.D. Fl.) earlier this month, when a federal jury returned a verdict for $115 million against the defendant nursing homes, finding that defendants had submitted false claims to Medicare and Medicaid for unnecessary patient care or patient care that was never supplied.  After trebling and additional penalties, CMC II and the other corporate defendants now face over $347 million in damages.  In an unusual turn of events, the defendants filed an emergency motion on March 13 in which they asked the court to stay the execution of judgments pending the Court’s consideration of one or more post-trial motions to be filed by the end of March.  The emergency motion went unopposed, and the court granted the motion.

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