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False Claims Act Statistics, News & Analysis

"The Benefit of Hindsight": The D.C. Circuit Holds That the Government's Failure to Seek Repayments After Investigating a Relator’s Allegations Is "Very Strong Evidence" of Immateriality

On Friday, the D.C. Circuit issued its first decision applying Universal Health Services, Inc. v. United States ex rel. Escobar. The D.C. Circuit’s decision, United States ex rel. McBride v. Halliburton Co., provides important guidance regarding the False Claims Act’s materiality standard and applies that standard to an implied certification theory.

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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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Escobar Gives Relators a "Shot" at Implied False Certification Claim

Adding to the number of post-Escobar opinions already issued, the U.S. District Court for the Eastern District of Virginia recently denied a motion for judgment on the pleadings on the issue of whether an implied false certification claim was sufficiently pled under Escobar in United States ex. rel. Beauchamp v. Academi Training Center Inc., No. 11-cv-371 (E.D.Va. Nov. 30, 2016). The Beauchamprelators alleged that the defendant, a private security company, falsely certified compliance with its contract with the U.S. State Department when it billed the government for warzone security guards who did not meet weapons certification requirements. Relying on Escobar, the court found the relators sufficiently pled that the defendant had made specific misrepresentations about the services it provided and these misrepresentations were material to the government’s decision to pay the defendant.

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Broad New DoD Cybersecurity Rule Could Put Defense Contractors at Risk for FCA Allegations

In late October, the Department of Defense (DoD) published the Network Penetration Reporting and Contracting for Cloud Services Final Rule (the Rule). The Rule amended Defense Federal Acquisition Regulation Supplement (DFARS) 252.204-7012, a clause that must be incorporated in all solicitations and contracts, except commercial-items contracts. See 81 FR 72986 (October 21, 2016). While ostensibly designed to require cybersecurity protections for unclassified defense-related information and to establish reporting requirements for cyber incidents, the Rule also imposes considerable compliance hurdles for contractors and could create FCA pitfalls.

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False Claims Act Cert. Monitor: Relators Seek GVR from High Court in Light of Escobar

At the end of October, relators petitioned the Supreme Court for a “GVR” of the Second Circuit’s decision in Bishop v. Wells Fargo & Co., 823 F.3d 35 (2d Cir. 2016). That is, relators asked not that the Court hear their case on the merits, but rather that it grant the petition for certiorarivacate the decision below, and remand the case for further proceedings in light of the Court’s intervening decision in Escobar.

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  • 27
  • October
  • 2016


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Red Meat for Escobar: New Compliance Burdens Under the Fair Pay and Safe Workplaces Final Rule

UPDATE: A U.S. District Court Judge in Beaumont, Texas, has issued a nationwide preliminary injunction. Read the e-lert here.

As courts across the nation search for equilibrium after the Escobar decision, potential FCA defendants are watching closely to see the measure of their potential FCA liability for failure to observe contractual, regulatory, or legal obligations. On October 25, 2016, these possibilities will grow exponentially for many government contractors when the so-called Fair Pay and Safe Workplaces final rule (“the Rule”) goes into effect. See 81 Fed. Reg. 58562 (August, 25, 2016). 

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