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False Claims Act Statistics, News & Analysis

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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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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Spooky Stuff: FCA Trolls Win Big in the Third Circuit

In today’s post-Halloween blog, we take a look at a case out of the Third Circuit that may have sent a shiver down the spine of any potential FCA defendant. This non-intervened reverse false claim case originating from the Eastern District of Pennsylvania previously had been dismissed with prejudice by the District Court under Federal Rule of Civil Procedure 12(b)(6). United States ex rel. Customs Fraud Investigations, LLC v. Victaulic Co., No. 15-2169, 2016 WL 5799660 (3d Cir. Oct. 5, 2016). Last month, however, the Third Circuit brought the case back, giving the relator's case a potentially promising afterlife.

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There's a First Time for Every Exception: Sixth Circuit Endorses New Relaxed Version of Rule 9(b) for Relators with "Billing-Related Knowledge"

Further deepening a circuit-split – and potentially upping the odds the Supreme Court will ultimately have to weigh-in – the Sixth Circuit in United States ex rel. Prather v. Brookdale Senior Living Communities, Inc., No. 15-6377, 2016 WL 5539860 (6th Cir. Sept. 30, 2016), adopted a “relaxed” version of Rule 9(b) in certain FCA contexts. The court concluded that although Rule 9(b) generally requires a relator to identify a specific invoice to adequately plead that a false claim was presented to the government, an exception exists where a relator with “personal billing-related knowledge” pleads specific facts that give rise to a “strong inference” that a claim was presented.

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  • 27
  • September
  • 2016

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Pressing the Limits of Rule 9(b): Seventh Circuit Revives Billing Code Claim, But Holds Other Claims Fail Rule 9(b) for Lack of "Context"

In yet another post-Escobar case involving the application of Rule 9(b), the Seventh Circuit reaffirmed the critical role of that rule in weeding out thinly-supported qui tam claims. In United States ex rel. Presser v Acacia Mental Health Clinic, LLC, No. 14-2804, 2016 WL 4555648 (7th Cir. Sept. 1, 2016), the relator, a nurse practitioner, brought FCA claims against her employer, a mental health clinic, alleging that the clinic provided, and billed for, medically unnecessary services and required nurse practitioners and receptionists to use a billing code reserved exclusively for psychological assessments and medical evaluations performed by therapists or psychiatrists.

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