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False Claims Act Statistics, News & Analysis

Made in China: Ninth Circuit Departs from Escobar and Rules Government’s Continued Payment of Claims Despite Knowledge of Chinese Origin of Drugs Not Enough to Defeat Materiality on the Pleadings

Since Escobar, FCA defendants have aggressively litigated materiality. They have asked courts to define when materiality can be defeated by a showing that the government knew of an alleged problem but paid anyway, which Escobar called “strong evidence” of immateriality. The Ninth Circuit in United States ex. rel. Campie v. Gilead Sciences, Inc. issued an opinion on July 7 that might make it more difficult for defendants in that circuit to obtain dismissal at the pleadings stage based on this “government knowledge” challenge to materiality. No. 15-16380, 2017 WL 2884047 (9th Cir. July 7, 2017). Fortunately, Gilead’s materiality ruling can likely be limited to the facts before the Court in that case, where the scope and timing of the government’s knowledge was unclear on the pleadings.

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District Court Shreds Defendant's Hopes of Summary Judgment on Materiality Due to Government's "Mixed Signals"

In a decision earlier this Spring, the D.C. District Court denied cross-motions for summary judgment in a government-intervened implied false certification suit alleging that defendant Capitol Supply sold document shredders through the General Services Administration (“GSA”) website that did not comply with the Trade Agreements Act (“TAA”) because they were manufactured in China.

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Specific Representations and Half-Truths Need Not Apply: D.C. District Court Finds Knowingly Billing at "Significantly Higher than Reasonable" Costs Sufficient for Implied False Certification

In a decision many in the defense bar will argue was wrongly decided, the U.S. District Court for the District of Columbia in U.S. v. DynCorp Int’l LLC ruled that knowingly billing for unreasonable costs can serve as the basis for an implied certification claim under the FCA. The court took an expansive view of implied certification that departs from the Supreme Court’s guidance in Escobar and, we would argue, sidesteps the rigorous materiality requirements emphasized by the Court.

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"Common Sense" and Concealment of Noncompliance Lead Fourth Circuit to Find Triple Canopy Invoices Hit Their Materiality Mark and Were Impliedly False Despite No Specific False Representations

Earlier this week, the Fourth Circuit issued its first substantive post-Escobar implied certification opinion in the closely watched U.S. ex rel. Badr v. Triple Canopy. Prior to Escobar, the Fourth Circuit found that the government’s complaint-in-intervention stated an implied certification FCA claim, causing Triple Canopy to seek cert. After issuing the Escobar opinion, the Supreme Court remanded the case to the Court of Appeals to reconsider in light of Escobar. The Fourth Circuit largely affirmed its prior decision, finding that the government had sufficiently alleged both falsity and materiality. [Disclosure:  Two of the authors of this piece represented amici in support of Triple Canopy’s cert. petition.]

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A Cure for the Common Qui Tam? Escobar’s Materiality Standard and Government Inaction has Pharma Defendant Feeling Good Again

The Third Circuit recently joined the growing number of circuits refusing to find materiality where the government fails to act or intervene in the face of alleged noncompliance. See United States ex rel. Petratos v. Genentech, No. 15-3805 (3rd Cir. May 1, 2017). The D.C. Circuit; First Circuit; and Seventh Circuit all have reached similar conclusions. The Ninth Circuit will address this issue in the coming months in United States ex rel. Rose v. Stephens Institute.

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  • 28
  • April
  • 2017

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Do Pay Attention to the Contracting Officer Behind the Curtain: Court Rules that Government Cannot Conceal Reasons Why Its Own Contracting Officer Dumped Decision on which False Claims Case was Built

Earlier this week, the Eastern District of Michigan took up an important privilege issue with significant Escobar implications. In an opinion issued only six days after oral argument, the district court granted in full a motion to compel discovery by BAE Systems Tactical Vehicle Systems, LP (“BAE-TVS”) relating to a FCA case based on allegations of “defective pricing” under the Truth in Negotiations Act (“TINA”). United States v. BAE Systems Tactical Vehicle Systems, LP, No. 15-12225, 2017 WL 1457493 (E.D. Mich. Apr. 25, 2017). [Full disclosure: your authors are both counsel to BAE-TVS in this matter].

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