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False Claims Act Statistics, News & Analysis

  • 22
  • August
  • 2017

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Government's Trip to Fairyland Comes at a Price: Sixth Circuit Vindicates FCA Defendant's Demand for Attorneys' Fees

The Sixth Circuit on Friday issued a decision holding that where the government had pursued a “nearly frivolous” theory of FCA damages wildly in excess of actual damages, defendants were entitled to recover the costs of defending themselves — even where the fraud itself was substantiated. This decision is welcome news to defendants who may not “prevail” in the common sense of the word (by fending off liability entirely) but for whom the cost of defending is driven disproportionately high by the government’s aggressive and unjustified litigation positions. And in the process, the court cast doubt on some applications of the government’s common “taint” theory of liability, under which it argues that (sometimes minor) frauds deprive the government of the full value of a contract.

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False Claims Act Cert. Monitor: Attorneys’ Fees, Reverse False Claims, Public Disclosure Bar, and Government Employees as Relators Feature in Three New Petitions

Three new FCA relator cert. petitions have landed in the past few weeks, covering the gamut of FCA legal issues.

First, the relator in U.S. ex rel. Harper v. Muskingum Watershed Conservancy District, 16-1278, takes us back to 1L Property, alleging that the Army in 1949 granted the defendant water district a “determinable fee simple estate subject to a possibility of reverter interest retained by the United States.” In other words, the government gave the water district government land to keep so long as the land was used for recreation, conservation, etc. The relator contends that when the defendant entered into oil and gas leases on the land but kept the land and the lease income, it knowingly and improperly avoided an obligation to return the property and income to the government—i.e., a conversion reverse false claim. The question presented to the Court is whether, for a reverse false claim, the relator needed to plead that the defendant subjectively knew that it was violating the terms of the deed and had not committed a mistake of law. A potential difficulty for this petition, however, is that neither Sixth Circuit’s majority nor the dissent focused on the question of subjective knowledge of mistake of law, but rather on whether the relator pleaded sufficient facts from which the court could infer that the defendant “knew or should have known” of the requirement to return the property. The response is currently due June 26, 2017.

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False Claims Act Cert. Monitor: Solicitor General Presents Hurdle to Clearing the Public Disclosure Bar

Several months ago, we reported that the Supreme Court had called for the views of the Solicitor General (“CVSG”) on a relator’s cert. petition about the FCA public disclosure bar in U.S. ex rel. Advocates for Basic Legal Equality, Inc. v. U.S. Bank, N.A. (“ABLE”), No. 16-130. You can read our summary of the case in that blog post here. The Solicitor General has now weighed in.

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  • 28
  • April
  • 2017

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Do Pay Attention to the Contracting Officer Behind the Curtain: Court Rules that Government Cannot Conceal Reasons Why Its Own Contracting Officer Dumped Decision on which False Claims Case was Built

Earlier this week, the Eastern District of Michigan took up an important privilege issue with significant Escobar implications. In an opinion issued only six days after oral argument, the district court granted in full a motion to compel discovery by BAE Systems Tactical Vehicle Systems, LP (“BAE-TVS”) relating to a FCA case based on allegations of “defective pricing” under the Truth in Negotiations Act (“TINA”). United States v. BAE Systems Tactical Vehicle Systems, LP, No. 15-12225, 2017 WL 1457493 (E.D. Mich. Apr. 25, 2017). [Full disclosure: your authors are both counsel to BAE-TVS in this matter].

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A Rebel Claim Without a Cause? Michigan Federal Court Analyzes False Claims Act Causation of Damages Standard

In the recent decision in United States v. Quicken Loans Inc., the district court found the government adequately pleaded that Quicken Loan Inc. (“Quicken”) submitted false claims and made false statements material to false claims for insurance payouts from the Federal Housing Administration (“FHA”) for defaulted FHA-insured loans that Quicken had not properly underwritten. No. 16-CV-14050, 2017 WL 930039 (E.D. Mich. Mar. 9, 2017). As a result, the Court denied most of Quicken’s motion to dismiss except for one theory of liability and certain untimely claims.

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I Knowingly Drank Coffee With Cream Today . . .

Because I knew both that I was drinking coffee and that it contained cream. The Sixth Circuit applied similar reasoning in its most recent False Claims Act decision, U.S. ex. rel. Harper v. Muskingum Watershed Conservancy District, No. 15-4406, 2016 WL 6832974 (6th Cir. Nov. 21, 2016), in which it decided—as a matter of first impression—construction of the FCA’s scienter requirements for a reverse false claim (31 U.S.C. § 3729(a)(1)(G)) and a conversion  (31 U.S.C. § 3729(a)(1)(D)), as amended in 2009 by the Fraud Enforcement and Recovery Act (“FERA”). Construing the FCA’s reverse false claim prohibition against knowingly avoiding an obligation to the United States, the court held that liability will attach only if the offender knows both of the obligation and that he avoided it. Similarly, to be liable for a conversion under the FCA, the offender must know both that he caused to be delivered “less than all” of certain property to the government and also that the property at issue belongs to the government. With these holdings, the Harper court reaffirmed the important threshold scienter distinctions separating an ordinary breach of contract from a violation of the FCA.

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