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False Claims Act Statistics, News & Analysis

Mikes v. Straus "Particularity" Requirement May Be Dead, But Materiality is Alive and Well Among District Courts in the Second Circuit

A New York district court recently held in United States v. Strock that Escobar’s materiality standard applies, at a minimum, to express false certification and fraudulent inducement FCA theories in addition to the implied false certification theory at issue in Escobar. The court further held that the government failed adequately to plead materiality under Escobar and dismissed the case.

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The More Things Change, the More They Stay the Same: Analyzing Recoveries by Circuit for FY 2017

We’re back with the third installment of our series analyzing FCA statistics for DOJ FY 2017, this time taking a closer look at recoveries by circuit. After our prior posts describing the steep drop in recoveries overall from last year, it may not come as a surprise to LLB readers that the geographic analysis has changed a fair bit in the last year. Only one of the leaders from DOJ FY 2016 is still at the top in DOJ FY 2017: the Eleventh Circuit. Indeed, the Eleventh Circuit, which ranked third last year with $808 million across 100 recoveries, came out in front in DOJ FY 2017 with the DOJ raking in just over $1 billion across 26 recoveries. This means that the number of cases brought to conclusion in 2017 dropped 74% from the previous year, but DOJ’s payout increased by just over 24%. Does this signal a smarter, more targeted civil fraud bar in the Eleventh Circuit, or is this mathematical windfall simply a fluke? Impossible to say definitively, but it is worth noting that over a third of this year’s Eleventh Circuit total was recovered from just one matter (the Shire Pharmaceuticals LLC medical device case we blogged about last week) and another third is derived from a CMC II Judgment (though that judgment is currently stayed pending appeal).

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The Second Circuit Protests Too Much We Think — Disguising Deepening Split on Rule 9(b)

Injecting additional uncertainty into the already-muddled case law regarding what precisely must be pleaded with particularity under Rule 9(b), the Second Circuit in U.S. ex rel. Chorches v. American Medical Response, Inc., No. 15-3930, 2017 WL 3180616 (July 27, 2017), held that a relator need not identify a specific invoice in order to adequately plead that a false claim was presented to the government. While Chorches would seem to deepen a circuit split on Rule 9(b) — one the Supreme Court has repeatedly declined to take up — the Second Circuit goes to great lengths to downplay its existence. According to the Second Circuit, “the reports of a circuit split are, like those prematurely reporting Mark Twain’s death, greatly exaggerated.”

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A Bad Week for Copycat Relators: Fourth and D.C. Circuits Say First-to-File Bars Cases Brought While Earlier-Filed Cases Were Pending Even After Earlier Case Is Dismissed

Defendants facing serial, related qui tam cases should breathe a collective sigh of relief because the Fourth Circuit and the D.C. Circuit have just rejected relators’ efforts to undermine the first-to-file bar. In decisions issued less than a week apart, the D.C. Circuit in U.S. ex rel. Shea v. Cellco Partnership, Nos. 15-7135 & 15-7136, and the Fourth Circuit in U.S. ex rel. Carter v. Halliburton Co., No. 16-1262, both held that the first-to-file bar compels dismissal of actions brought while earlier-filed actions were pending, even if those earlier-filed actions have since been dismissed. Both courts also put the kibosh on those relators’ efforts to evade the first-to-file bar by amending their complaints after dismissal of the earlier-filed action. We’re proud to say that the attorneys of Vinson & Elkins, the same people who bring you LLB, represented the defendants in Carter and an amicus supporting the defendants in Shea.

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False Claims Act Cert. Monitor: Second Circuit Case Remanded for Escobar, Three Other FCA Cert. Petitions Denied

On Tuesday, the Supreme Court granted the relators’ petition for certiorari, vacated the judgment below, and remanded (“GVR’d”) in Bishop v. Wells Fargo & Co., No. 16-578, with instructions for the Second Circuit to reconsider its decision in light of the Supreme Court’s decision in Escobar.  As we explained last November, the Second Circuit, following its precedent in Mikes v. Straus, 274 F.3d 687 (2d Cir. 2001), had concluded that a general certification of compliance with banking regulations was not an express certification  of compliance with a specific statute, and that because the relevant regulations did not state that compliance was a precondition of payment they could not form the basis of an implied certification  FCA claim.

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