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False Claims Act Statistics, News & Analysis

A Cause for Corporate Thanksgiving: 4th Circuit Announces False Claims Act Successor Liability Not Subject to Lenient "Substantial Continuity" Rule

Just in time for next week’s Thanksgiving holiday, asset-purchasers who are – or should be – concerned with a seller’s potential FCA culpability have something for which to be thankful. In an opinion published Tuesday, United States ex rel. Bunk v. Government Logistics N.V., No. 15-1088, 2016 WL 6695787 (4th Cir. Nov. 15, 2016), the Fourth Circuit announced that the government or relator, seeking recovery from the wrongdoer’s corporate successor-in-interest, cannot rely upon the relaxed “substantial continuity” theory. Instead, the FCA plaintiff must articulate a theory of liability on the more-difficult-to-meet traditional common law. This decision appears to be one of first impression among circuit-level courts.

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