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False Claims Act Statistics, News & Analysis

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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Will Defendants Be Left With the Tab, Even When Government Pays the Bill?: Courts Continue to Wrestle With Post-Escobar Materiality Standard

Potentially adding to continued confusion regarding what to make of materiality in Escobar's wake, two more recent cases — one stemming from the Eastern District of Pennsylvania and the other from the Court of Federal Claims — have addressed when FCA claims fail because the government paid the bill with knowledge of the alleged noncompliance with underlying rules or requirements. In both cases, defendants urged the courts to strike down FCA claims by relying on Escobar’s holding that “if the Government pays a particular claim in full despite its actual knowledge that certain requirements were violated, that is very strong evidence that those requirements are not material.” Universal Health Servs., Inc. v. United States, 136 S. Ct. 1989, 2003-04 (2016). The Court of Federal Claims, after a trial, agreed with defendants, while the Eastern District of Pennsylvania, on a motion to dismiss, did not.

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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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False Claims Act Cert. Monitor: Relator Asks Supreme Court to Decide If Halo's Glow Shines New Light on FCA's Knowledge Standard

The Supreme Court's decision in the patent case Halo Electronics, Inc. v. Pulse Electronics, Inc., 136 S. Ct. 1923 (2016), which we wrote about previously, has now inspired a new FCA cert. petition by the relator in an 18-year-old case U.S. ex rel. Purcell v. MWI Corp., No. 16-361, in which the relator seeks review of the D.C. Circuit ’s 2015 decision, 807 F.3d 281 (D.C. Cir. 2015).

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Zero Damages Doesn’t Mean Zero Liability: DOJ Avoids Twice-Reversed False Claims Act Damages Calculation and Gets Paltry Disgorgement of Profits Instead

It is common knowledge that even if a relator or the government cannot prove the government suffered actual damages, the court may still impose FCA penalties where there is liability. But a recent district court opinion provides a reminder that the government’s recovery, even in FCA cases with zero actual damages, can contain a third component: disgorgement of profits based on claims of common law unjust enrichment, although such claims can be brought only by the government.

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Eighth Circuit Decision Suggests Supreme Court's Rejection of "Objectively Reckless" Test in Patent Case Leaves Intact Safeco's "Objectively Reasonable" Test for False Claims Act Knowledge

Courts finding that FCA defendants lacked knowledge sufficient to impose liability have frequently cited the Supreme Court’s holding in Safeco Insurance Company of America v. Burr, that where there is more than one objectively reasonable interpretation of a statute, regulation, etc., a defendant cannot be found to have acted knowingly or recklessly.

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