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False Claims Act Statistics, News & Analysis

It Doesn’t Take an Eisenstein to See the Eleventh Circuit Missed the Mark: New Decision Allowing Relators to Extend Statute of Limitations Is Contrary to Supreme Court Precedent and Creates Circuit Split

While not rocket science, or even particle physics, the FCA was complicated enough without introducing yet a new circuit split. Yet, in United States ex rel. Hunt v. Cochise Consultancy, Inc., the Eleventh Circuit has disagreed with at least two other circuits (the Fourth and the Tenth) in holding that relators in non-intervened qui tam actions can rely on a statutory exception to the otherwise-applicable six-year statute of limitations that allows suit to be brought within three years of when the government learns of the potential fraud. The court parted ways with the majority view that only the government can rely on this alternative provision, a rule grounded in the sensible position that the government itself is only a party when it decides to intervene. The Supreme Court in U.S. ex rel. Eisenstein v. City of New York, 556 U.S. 928 (2009), recognized as much when it held that a relator in a non-intervened case could not take advantage of the government’s sixty-day appeal period and instead had only the usual thirty days available to an ordinary party. This was because, as the Court recognized, the United States itself is not a party to the appeal in a non-intervened case. Id. at 937. Without much analysis, the Eleventh Circuit simply found Eisenstein’s reasoning inapplicable and held there was no textual basis in the FCA to prevent relators from taking advantage of the three-year alternative found in 31 U.S.C. § 3731(b)(2). Again, without much reasoning or discussion, it simply found the Fourth and Tenth Circuits unpersuasive (never mind the multiple district courts that have sided with the majority rule). 

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Impact of First Circuit's 2015 Gadbois' Decision on First-to-File Bar Limited by District Court on Remand

In a post right before the holidays, we noted that the district court in United States ex rel. Estate of Gadbois v. PharMerica Corp. interpreted the FCA’s government action bar as a perpetual bar to all claims brought by a relator in a qui tam action in which the government has intervened and settled, even when the government did not intervene in or settle all of the claims. No. 10-cv-471, 2017 WL 5466659 (D.R.I. Nov. 13, 2017). But there is more to the district court’s decision than the government action bar. In its government action bar analysis, the district court made a fairly technical civil procedure ruling that, if followed by other courts, should limit the ability of relators to use the First Circuit’s previous Gadbois decision to evade the FCA’s first-to-file bar and statute of limitations.

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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: 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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