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False Claims Act Statistics, News & Analysis

Supreme Court Nominee Judge Gorsuch on the False Claims Act

President Trump recently announced that he was nominating Judge Neil M. Gorsuch to fill the Supreme Court seat vacated one year ago by the death of Justice Antonin Scalia. We at LLB went to work researching what a Justice Gorsuch might mean for future case law construing our favorite statute, the False Claims Act. Here is what we found.

In his quarter of a century practicing law, Judge Gorsuch has amassed a relatively short paper trail involving the FCA. As a judge on the U.S. Court of Appeals for the Tenth Circuit for the past decade, Judge Gorsuch appears to have participated in only four decisions addressing the FCA, only one of which he authored.

The opinion he wrote, United States ex rel. Boothe v. Sun Healthcare Grp., Inc., 496 F.3d 1169 (10th Cir. 2007), involved a relator’s laundry list of allegations that a healthcare provider overbilled Medicare in at least ten different ways. The appeal turned on the FCA public disclosure bar as it existed before its amendment by the Fraud Enforcement and Recovery Act of 2009. Writing for a unanimous panel, Judge Gorsuch rejected the relator’s contention that she could avoid the public disclosure bar by showing minor differences between the “time, place, and manner” of her claims of fraud and earlier allegations against the provider. Instead, Gorsuch concluded, the public disclosure bar had a “quick trigger”: New allegations would be barred if they were even “partly based upon” prior allegations, or if the essence of the new claims were “derived from a prior public disclosure.” But while Judge Gorsuch agreed that three of the relator’s ten FCA claims were barred by the public disclosure bar, FCA claims had to be assessed “on a claim-by-claim basis,” because “finding three bad apples does not necessarily warrant discarding the barrel.” Because the district court had dismissed the relator’s seven other claims without individually applying the public disclosure bar to them, Judge Gorsuch reversed and remanded for the district court to conduct an “independent jurisdictional analysis” of each claim. The opinion is well reasoned, clearly written, and even chuckle-worthy.

Boothe suggests Judge Gorsuch might be receptive to reading FCA bars broadly. Judge Gorsuch explained that a broad reading of the public disclosure bar was warranted because “once the government knows the essential facts of a fraudulent scheme, it has enough information to discover related frauds and the purpose of qui tam litigation is fulfilled.” That rationale applies equally to the first-to-file bar. Moreover, Gorsuch reasoned, courts must “construe narrowly statutes conferring our jurisdiction.” Some courts have held that the first-to-file bar is, like the public disclosure bar, jurisdictional in nature.

The remaining three cases—authored by other judges but joined by Judge Gorsuch—share the common thread of affirming a district court’s dismissal of a relator’s claims in a non-intervened qui tam. While this small handful of cases is not enough to reflect a “trend,” the decisions have aspects FCA defense counsel may find encouraging.

To be fair, we are talking about a pretty small sample size. It shrinks by another 33% after dispatching one throwaway case (Brown v. Sherrod, 284 F. App’x 542, 543 (10th Cir. 2008)), which resolved a pro se relator’s noncontroversial question: Whether the FCA requires the Attorney General to consent before a court can dismiss a case for failure to state a claim. Hint: It does not. (And, geez, we would have way more interesting commentary for you if Judge Gorsuch had ruled otherwise.)

And then there were two. United States ex rel. Wickliffe v. EMC Corp., 473 F. App’x 849, 852 (10th Cir. 2012), involved allegations that a contractor knowingly sold defective computers to government agencies and then fraudulently concealed information regarding the defect. Judge Stephanie Seymour, joined by Gorsuch and Judge Timothy Tymkovich, affirmed the district court’s decision granting the government’s motion to dismiss relator’s case where the government had previously resolved the fraud allegations against the defendant company in a related action. Because the district court had dismissed on first-to-file grounds in the alternative, Judge Gorsuch and his colleagues in dicta addressed the relator’s argument that the earlier-filed complaint did not plead fraud with particularity under Rule 9(b) and was therefore incapable of barring subsequent actions—an issue about which, the panel noted, “[t]he circuits are split.” While the panel recognized that it “need not decide the Rule 9(b) question” given its conclusion that the government had properly dismissed the action, Judge Gorsuch and his colleagues saw fit to emphasize that they were “uneasy with the parties’ suggestion that Rule 9(b)’s particularly requirement should be applied to the first-to-file bar.” Quoting a D.C. Circuit decision, the panel wrote that such a requirement “would create a strange judicial dynamic, potentially requiring one district court to determine the sufficiency of a complaint filed in another district court, and possibly creating a situation in which the two district courts disagree on a complaint’s sufficiency.” Wickliffe thus gives an early indication how a Justice Gorsuch might vote on an issue that could well be before the Supreme Court in coming years: Whether the first-to-file bar incorporates Rule 9(b)’s particularity requirement.

Finally, in United States ex rel. v. The Boeing Co., 825 F.3d 1138, 1140 (10th Cir. 2016), Judge Nancy Moritz, joined by Gorsuch and Judge Michael R. Murphy, affirmed the district court’s decision granting a government contractor summary judgment because the record contained no evidence of the required knowledge element of a false claim, where “at best, the evidence shows conflicting opinions regarding” the meaning of the requirements at issue. In view of the conflict, the panel “reject[ed] the relators’ contention that their interpretation [of the contract] is so indisputably correct as to render [the defendant’s] specifications ‘knowingly false as a matter of law.” The decision thus demonstrates that disputes about the meaning of contractual requirements may defeat FCA claims.

Eager for more data, LLB expanded the scope of our search to include Judge Gorsuch’s life before the bench, but to no avail. We found no indication Gorsuch participated as attorney of record in any False Claims Act case while he was in private practice (from 1995 to 2005) or when he served as an attorney at the Department of Justice (from 2005–2006). Stretching even further back, we found no decisions addressing the False Claims Act issued by any of the jurists for whom Gorsuch clerked during the time of his clerkships (Judge David Sentelle of the U.S. Court of Appeals for the D.C. Circuit (1991–1992), and retired Justice Byron White and Justice Anthony Kennedy of the U.S. Supreme Court (1993–1994)).

Lastly, we consider Judge Gorsuch’s judicial philosophy in a broader context. Gorsuch has earned a reputation as a thoughtful textualist who is wary of government overreach, skeptical of claims of broad government power, and serious about affording litigants due process. We suspect that philosophy will be welcomed by many in the FCA defense bar. 



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Authors

John P. Elwood

John P. Elwood Partner

Crystal Y'Barbo Stapley

Crystal Y'Barbo Stapley Senior Associate