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False Claims Act Statistics, News & Analysis

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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Litigation Update: Ninth Circuit to Weigh In on Key Post-Escobar Issues

We have reported previously on an implied false certification case in the Northern District of California, United States ex rel. Rose v. Stephens Institute, in which the court considered whether a university violated the FCA when it obtained funding from the U.S. Department of Education by allegedly falsely certifying compliance with Title IV of the Higher Education Act. The university moved to certify the district court’s order ruling against it on falsity and materiality for immediate appeal to the Ninth Circuit, and as we reported here, the district court in October certified three of the university’s four proposed questions for interlocutory appeal and stayed the case pending resolution of the university’s appeal.

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Litigation Update: Rose District Court Recognizes Sanford-Brown Decision and Certifies Post-Escobar Questions for Interlocutory Appeal

We have been monitoring United States ex rel. Rose v. Stephens Institute, a post-Escobar implied false certification case in which the Northern District of California considered whether a university violated the FCA when it obtained funding from the U.S. Department of Education (DOE) by allegedly falsely certifying compliance with Title IV of the Higher Education Act. Relators allege in this non-intervened case that the university was providing incentive payments to student recruiters, which is a violation of Title IV. As we reported here, the court ruled against the university on both falsity and materiality and the university moved to certify the district court’s order for immediate appeal. Over the government’s objections in a statement of interest, the district court on October 28, 2016 certified three of the university’s four proposed questions for interlocutory appeal and stayed the case pending resolution of the university’s appeal.

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Seventh and Eighth Circuits Grade Relators’ Materiality Claims in First Appellate Materiality Decisions Applying Escobar

Last week, the Eighth Circuit issued the first appellate decision to engage in a detailed application of the False Claims Act’s (FCA) materiality standard after Universal Health Services, Inc. v. U.S. ex rel. Escobar, 136 S. Ct. 1989 (2016). The court, reviewing a summary judgment ruling against the relators below, reversed, concluding that even under the Escobar’s “demanding” materiality rule, there was a genuine issue of material fact about whether the regulatory and contractual violations at issue were material. The Seventh Circuit quickly followed this week, concluding that the relator presented no evidence of misrepresentations connected with claims for payment and no evidence that the government’s decision to pay actually would have been affected by knowledge of the defendant’s alleged violations.

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  • 20
  • October
  • 2016

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Litigation Update: U.S. Files Statement of Interest Arguing Against Immediate Appeal of Post-Escobar Materiality and Falsity Ruling in Rose

UPDATE: The Seventh Circuit recently issued one of the first appellate decisions applying the FCA’s materiality standard after Escobar, finding that the same incentive compensation ban at issue in Rose was not material. The university in Rose filed a notice with the district court on October 27, 2016 to notify the court of the decision. Read more in our post here.

We reported earlier this month on United States ex rel. Rose v. Stephens Institute, a post-Escobar implied false certification case in which a District Judge in the Northern District of California considered whether a university violated the FCA when it obtained funding from the U.S. Department of Education (DOE) by allegedly falsely certifying compliance with Title IV of the Higher Education Act, which prohibits universities receiving federal funding from providing incentive payments to student recruiters. The court denied the university’s motion to reconsider denial of its motion for summary judgment in mid-September, and the university moved to certify the district court’s order for immediate interlocutory appeal to the Ninth Circuit and to stay the case pending appeal.

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  • 05
  • October
  • 2016

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Court Finds Falsity and Materiality Post-Escobar; Defendant Seeks Immediate Appeal

Three months have passed since the Supreme Court decided the landmark Escobar case, and courts across the country are beginning to parse the opinion. On September 20, 2016, a U.S. District Court Judge in the Northern District of California denied a defendant’s motion to reconsider denial of its motion for summary judgment in what may be the most pro-government FCA decision after Escobar. We summarize the decision below, but a more in-depth analysis can be found here.

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