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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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Holding a Mere Temporal Link Between Kickbacks and Medicare Claims Is Too Weak — the Third Circuit Says Goodbye to Relator's Case

Consistent with other recent decisions we have blogged about, the Third Circuit recently held in United States ex rel. Greenfield v. Medco Health Solutions, Inc., that to survive summary judgment, a relator must link alleged kickbacks to specific claims for payment submitted to the government; it is not enough to merely allege that the “taint” of a kickback scheme renders false every claim submitted while that scheme is ongoing. Finding no such link between the defendants’ Medicare claims and an alleged kickback scheme, the Third Circuit affirmed summary judgment for the defendants.

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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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Two Courts Confirm Penalties Not Yet Issued Do Not Support Reverse False Claims

The D.C. Circuit and the Tenth Circuit recently joined several other circuits, including the Fifth, Sixth, and Eighth, in holding that liability for reverse false claims cannot be based on contingent obligations to pay the government (meaning obligations to pay that may arise after future discretionary actions), reaffirming that when Congress amended the FCA in 2009 to define the term “obligation,” it intended that liability would result for reverse false claims only where there are failures to pay specific, definite obligations owed to the government.

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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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  • 11
  • January
  • 2018

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Penalty Preview: Department of Commerce Increase FCA Penalties 2% to a $22,363 Max Penalty, DOJ Likely Soon to Follow

As we wrote this time last year, each year, agencies are required by the Federal Civil Penalties Inflation Adjustment Act of 2015 (“the Act”) to adjust their civil penalties to account for inflation, including the FCA’s penalties. The agencies’ deadline to issue adjustments is January 15, though last year DOJ missed the deadline by two weeks. Previously, three agencies have issued adjustments for the FCA penalty range—DOJ, the Department of Commerce (“DOC”), and the Railroad Retirement Board (“RRB”)—each making the same dollar adjustment to the FCA’s penalties. Just as in 2017, DOC is first out of the gate with its adjustments, increasing the FCA penalties by about 2% from between $10,957 and $21,916 to between $11,181 and $22,363. We expect DOJ and RRB will follow suit with identical increases sometime in the next month, and we will let you know when they do.

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Impact of First Circuit's 2015 Gadbois' Decision on First-to-File Bar Limited by District Court on Remand

In a post right before the holidays, we noted that the district court in United States ex rel. Estate of Gadbois v. PharMerica Corp. interpreted the FCA’s government action bar as a perpetual bar to all claims brought by a relator in a qui tam action in which the government has intervened and settled, even when the government did not intervene in or settle all of the claims. No. 10-cv-471, 2017 WL 5466659 (D.R.I. Nov. 13, 2017). But there is more to the district court’s decision than the government action bar. In its government action bar analysis, the district court made a fairly technical civil procedure ruling that, if followed by other courts, should limit the ability of relators to use the First Circuit’s previous Gadbois decision to evade the FCA’s first-to-file bar and statute of limitations.

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D.C. Circuit Affirms Summary Judgment to Defendant Where Relator "Utterly Failed to Tie" Alleged Kickbacks to a "Specific False Claim"

We have previously blogged about the long-running Barko qui tam litigation, in which V&E is defending KBR against FCA claims brought by Relator Harry Barko. As our prior post explains, Barko’s complaint centers primarily around an allegation that a KBR procurement employee took kickbacks from a subcontractor in return for purported favorable treatment, including awarding subcontracts with insufficient competition, allowing double-billing for goods and services (without back-charging the subcontractor), concealing poor performance, and other alleged wrongdoing. In March 2017, the district court granted summary judgment to KBR.

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  • 02
  • January
  • 2018

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Ring in the New Year at ACI's FCA Conference

Happy New Year to our readers and thanks to you all for helping to make LLB such a success. We expect that 2018 will be at least as interesting as 2017 if not more so, and we at LLB intend to get off to a very strong start.  Indeed, we are preparing for the 5th Advanced Forum on False Claims & Qui Tam Enforcement, an annual American Conference Institute event focused on identifying and discussing strategies and trends in FCA enforcement. We have participated in this conference since its inception and find it to include a thorough, deep dive into the issues with speakers from the defense and relators’ bars, industry, and the government.

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LLB Hits DOJ's Recovery Stats On the Nose

Yesterday, on December 21, a little later and a bit more quietly than in past years, DOJ released its FCA recovery statistics for FY 2017. We are excited to share with our readers that this year LLB’s stats closely tracked DOJ’s! DOJ reports $3.70 billion in recoveries, compared to LLB’s estimate of a little under $3.58 billion. LLB also did well tracking industry recoveries. DOJ reports $2.47 billion versus LLB’s estimate of $2.60 billion in health care, $220 million versus LLB’s $149 million in defense, and $1.0 billion versus LLB’s $832 million in other industries.

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