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False Claims Act Statistics, News & Analysis

Short, Sweet, and Unambiguous: Ninth Circuit Cites Safeco and Finds Objectively Reasonable Interpretation of the ITAR Precludes Knowledge

Last week, we discussed developing FCA precedent on liability premised on violations of ambiguous contractual or legal obligations with a focus on the Eleventh Circuit’s Lincare decision. Today, we follow up on that with a look at a recent Ninth Circuit decision affirming a 2015 decision by the District Court for the District of Arizona dismissing a qui tam complaint alleging microelectronic manufacturer Microsemi Corporation and its subsidiary White Electronic Designs Corporation (“WEDC”) violated the FCA by falsely certifying compliance with the International Traffic in Arms Regulations (“ITAR”), which prohibit exporting controlled information without a license.

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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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Just What the Doctor Ordered: First Circuit Curtails Fraudulent-Inducement Theory Where Government Took No Action After Learning of FCA Allegations

In a pro-Defense bar, post-Escobar decision handed down shortly before the holidays, the First Circuit held that a relator could not proceed with an FCA claim based on alleged fraud in the inducement on the Food and Drug Administration because the FDA had not withdrawn or suspended its approval of the defendants’ medical device in response to relator’s allegations. D’Agostino v. ev3, Inc., No. 16-1126, 2016 WL 7422943 (1st Cir. Dec. 23, 2016). The opinion also doubles down on the First Circuit’s Cyberonics decision that we wrote about here, again rejecting as insufficiently particular under Rule 9(b), allegations that identify a fraudulent scheme but fail to show that false claims actually were submitted to the government as a result.

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Broad New DoD Cybersecurity Rule Could Put Defense Contractors at Risk for FCA Allegations

In late October, the Department of Defense (DoD) published the Network Penetration Reporting and Contracting for Cloud Services Final Rule (the Rule). The Rule amended Defense Federal Acquisition Regulation Supplement (DFARS) 252.204-7012, a clause that must be incorporated in all solicitations and contracts, except commercial-items contracts. See 81 FR 72986 (October 21, 2016). While ostensibly designed to require cybersecurity protections for unclassified defense-related information and to establish reporting requirements for cyber incidents, the Rule also imposes considerable compliance hurdles for contractors and could create FCA pitfalls.

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War Dogs Brings the False Claims Act to the Silver Screen, Offers Lessons to Government Contractors

While we here at LLB toiled away at our FCA mapFCA statistics, and FCA case law analysis in preparation for our August launch, we did poke our heads out of our cave long enough to notice that the FCA had just hit the big screen! No, we are not talking about the highly acclaimed FCA video that now appears on LLB. In August, mere weeks before we launched, the movie War Dogs hit theatres across the U.S., recounting the (highly-)dramatized but true tale of two twenty-somethings who cashed in on enormous profits by contracting to support military operations in Afghanistan and Iraq. Operating as AEY, Inc., the unlikely duo, working from their Miami apartment, won a $300 million ammunitions contract for the U.S. Army, and—allegedly—violated the FCA along the way.

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Once More, Unto the Breach of Contract…

The government and relators alike have long attempted to erode the distinction between breach of contract and fraud by bringing fraud cases based on conduct that, at most, gives rise to a claim for breach of contract. A recent case from the Second Circuit provides an illustrative peek into how one circuit is drawing a hard line in the sand this year when it comes to distinguishing between breach and fraud.

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