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False Claims Act Statistics, News & Analysis

  • 24
  • January
  • 2018

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"Taint" Theory of Damages Dead in the Seventh Circuit? One District Court Has Not Received the Message

Adopting a view that has been roundly rejected by federal circuit courts (including the Seventh Circuit), the U.S. District Court for the Northern District of Illinois in United States & City of Chicago ex rel. Chicago Regional Council of Carpenters v. Sound Solutions Windows & Doors, Inc. endorsed the “taint” theory of FCA damages, awarding the full value of contracts as damages based on the defendants’ non-compliance with a contractual term, notwithstanding their complete performance of the tangible work under the contracts.

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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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  • 11
  • January
  • 2018

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Penalty Preview: Department of Commerce Increase FCA Penalties 2% to a $22,363 Max Penalty, DOJ Likely Soon to Follow

As we wrote this time last year, each year, agencies are required by the Federal Civil Penalties Inflation Adjustment Act of 2015 (“the Act”) to adjust their civil penalties to account for inflation, including the FCA’s penalties. The agencies’ deadline to issue adjustments is January 15, though last year DOJ missed the deadline by two weeks. Previously, three agencies have issued adjustments for the FCA penalty range—DOJ, the Department of Commerce (“DOC”), and the Railroad Retirement Board (“RRB”)—each making the same dollar adjustment to the FCA’s penalties. Just as in 2017, DOC is first out of the gate with its adjustments, increasing the FCA penalties by about 2% from between $10,957 and $21,916 to between $11,181 and $22,363. We expect DOJ and RRB will follow suit with identical increases sometime in the next month, and we will let you know when they do.

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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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D.C. Circuit Affirms Summary Judgment to Defendant Where Relator "Utterly Failed to Tie" Alleged Kickbacks to a "Specific False Claim"

We have previously blogged about the long-running Barko qui tam litigation, in which V&E is defending KBR against FCA claims brought by Relator Harry Barko. As our prior post explains, Barko’s complaint centers primarily around an allegation that a KBR procurement employee took kickbacks from a subcontractor in return for purported favorable treatment, including awarding subcontracts with insufficient competition, allowing double-billing for goods and services (without back-charging the subcontractor), concealing poor performance, and other alleged wrongdoing. In March 2017, the district court granted summary judgment to KBR.

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  • 22
  • December
  • 2017

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LLB Hits DOJ's Recovery Stats On the Nose

Yesterday, on December 21, a little later and a bit more quietly than in past years, DOJ released its FCA recovery statistics for FY 2017. We are excited to share with our readers that this year LLB’s stats closely tracked DOJ’s! DOJ reports $3.70 billion in recoveries, compared to LLB’s estimate of a little under $3.58 billion. LLB also did well tracking industry recoveries. DOJ reports $2.47 billion versus LLB’s estimate of $2.60 billion in health care, $220 million versus LLB’s $149 million in defense, and $1.0 billion versus LLB’s $832 million in other industries.

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  • 19
  • December
  • 2017

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Escobar Makes No Dent in Criminal Materiality Rules in Fourth Circuit

Last year, we wrote about a then-pending criminal wire fraud case, United States v. Raza, and the potential impact that Escobar’s materiality holding might have on its outcome. The Fourth Circuit recently issued its opinion, deciding that Escobar, if it had any application whatsoever in the criminal law context, did not upset long-held understandings of the objective materiality standard.

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Behind Bars: Partial Intervention and Settlement Bars Future Qui Tams Based on Government Action Bar in Two Recent Cases

The little-used government action bar has recently surfaced in two cases where relators had attempted to revive declined and unsettled allegations from earlier qui tam actions in which the government had intervened in part to settle other allegations. United States ex rel. Bennett v. Biotronik, Inc., No. 16-15919, 2017 WL 5907900 (9th Cir. Dec. 1, 2017), and United States ex rel. Estate of Gadbois v. PharMerica Corp., No. 10-cv-471, 2017 WL 5466659 (D.R.I. Nov. 13, 2017). These decisions show that a partial intervention and settlement by the government of some, but not all, claims in one relator’s complaint can protect defendants from future claims by later relators based on even unresolved allegations from the earlier complaint.

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  • 01
  • December
  • 2017

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Data Correction

Thanks to the careful reading of one of LLB’s followers, we have learned of two errors in our statistical reporting for FY 2017. We strive to record data accurately and in real time, but appreciate input from readers to help us correct the inevitable (and hopefully only occasional) mistakes.

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  • 22
  • November
  • 2017

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DOJ Heads for the Hills after Judge Rips FCA Case as a "House of Cards"

On October 27, 2017, Magistrate Judge Theresa Carroll Buchanan in the Eastern District of Virginia gave the government a brutal reality check on the viability of its case in United States of America ex rel. Ribik v. HCR ManorCare Inc., et al. when she plainly informed them at a hearing on defendants’ motion for sanctions: “I don’t think this case should have ever been brought.” DOJ has responded to this reproof by filing a motion to voluntarily dismiss the entire case with prejudice.

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  • 14
  • November
  • 2017

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Too Good To Be True? DOJ Teases Policy Shift to Dismiss Meritless Qui Tams

With good excuse, we at LLB are a bit late to the party on this bit of news. It appears that Michael Granston, the director of the DOJ Commercial Litigation Branch, Fraud Section — the office charged with guardianship of the FCA for all of DOJ — chose a health care compliance conference to announce what could be a major shift in enforcement policy. In an October 30 speech, which appears to have been covered only by RAC Monitor in the first instance, Granston announced that going forward, DOJ will move to dismiss cases it finds to be meritless, rather than permitting relators to litigate on their own.

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  • 03
  • November
  • 2017

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Frighteningly Large Settlement for Hospice Provider Whose Patients Lived

The day before Halloween, the DOJ announced that Chemed Corporation and its various subsidiaries have agreed to a $75 million settlement for submitting allegedly false hospice services claims to Medicare for reimbursement. Touting this as “the largest amount ever recovered under the False Claims Act from a provider of hospice services,” the government sets the tone early in the new fiscal year for a high-recovery agenda.

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  • 31
  • October
  • 2017

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Escobar Continues to Bring More Treats Than Tricks For FCA Defendants — Seventh Circuit Overrules Longstanding Causation Precedent, Adopts Proximate Cause Standard

Handing out a pre-Halloween treat to FCA defendants, the Seventh Circuit last week overruled its 1992 decision adopting a “but-for” causation standard to join its sister circuits in holding that FCA plaintiffs must prove that a defendant’s false claim was both the but-for and proximate (i.e., foreseeable) cause of the government’s loss.

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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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