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False Claims Act Statistics, News & Analysis

  • 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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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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Seventh and Eighth Circuits Grade Relators’ Materiality Claims in First Appellate Materiality Decisions Applying Escobar

Last week, the Eighth Circuit issued the first appellate decision to engage in a detailed application of the False Claims Act’s (FCA) materiality standard after Universal Health Services, Inc. v. U.S. ex rel. Escobar, 136 S. Ct. 1989 (2016). The court, reviewing a summary judgment ruling against the relators below, reversed, concluding that even under the Escobar’s “demanding” materiality rule, there was a genuine issue of material fact about whether the regulatory and contractual violations at issue were material. The Seventh Circuit quickly followed this week, concluding that the relator presented no evidence of misrepresentations connected with claims for payment and no evidence that the government’s decision to pay actually would have been affected by knowledge of the defendant’s alleged violations.

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  • 20
  • October
  • 2016

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Litigation Update: U.S. Files Statement of Interest Arguing Against Immediate Appeal of Post-Escobar Materiality and Falsity Ruling in Rose

UPDATE: The Seventh Circuit recently issued one of the first appellate decisions applying the FCA’s materiality standard after Escobar, finding that the same incentive compensation ban at issue in Rose was not material. The university in Rose filed a notice with the district court on October 27, 2016 to notify the court of the decision. Read more in our post here.

We reported earlier this month on United States ex rel. Rose v. Stephens Institute, a post-Escobar implied false certification case in which a District Judge in the Northern District of California considered whether a university violated the FCA when it obtained funding from the U.S. Department of Education (DOE) by allegedly falsely certifying compliance with Title IV of the Higher Education Act, which prohibits universities receiving federal funding from providing incentive payments to student recruiters. The court denied the university’s motion to reconsider denial of its motion for summary judgment in mid-September, and the university moved to certify the district court’s order for immediate interlocutory appeal to the Ninth Circuit and to stay the case pending appeal.

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False Claims Act Stats: Going Local—A Close-Up Look at FCA Recovery Geography

With the 2016 DOJ fiscal year at an end, we are hard at work identifying trends and piecing together the story of FCA enforcement across the nation over the last twelve months. Today, we take a look at how recoveries have varied on the local level, slicing our data to see which federal district court and U.S. Attorney jurisdictions have been the most active this year. Bear in mind as you read that although this data is grouped by district, these are not necessarily recoveries made in district court. Indeed, plenty of recoveries nationwide are made through settlements without ever setting foot inside the courtroom – in these instances, we locate those recoveries in the district of the U.S. Attorney’s office identified as involved in the investigation.

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Recent Decisions Give Teeth to Escobar’s Materiality Standard

As predicted, in the few months since the Supreme Court handed down Escobar, there has been a flurry of litigation and a few early district court decisions attempting to flesh out just what materiality means in a post-Escobar world. Although there is not unanimity among the courts to consider the issue thus far, a series of recent district court decisions signals a growing consensus that Escobar requires heightened scrutiny of materiality at the motion to dismiss stage, and in particular, an increased focus on the government’s actual conduct in paying claims.

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