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False Claims Act Statistics, News & Analysis

Open Season for FCA Relators? Ninth Circuit Finds Falsity in Gilead Case Despite Possible Discrepancy with Sister Court

We’re back with our second installment on the Ninth Circuit’s decision in United States ex. rel. Campie v. Gilead Sciences, Inc., No. 15-16380, 2017 WL 2884047 (9th Cir. July 7, 2017). If Gilead’s materiality ruling left you scratching your head, then best take a seat now, because the falsity analysis is even more puzzling. But peel back the problematic legal analysis, and what seems to have driven the Ninth Circuit to let this case proceed past the pleadings is that relators alleged specific examples of the defendant having misled the government about the product it was selling. Despite our other criticisms of this opinion, Gilead’s emphasis on alleged specific misrepresentations is a saving grace because it is consistent with Escobar’s two-part implied certification test, which requires (1) a specific representation that (2) is made a misleading half-truth by omission.

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  • 22
  • August
  • 2017

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Government's Trip to Fairyland Comes at a Price: Sixth Circuit Vindicates FCA Defendant's Demand for Attorneys' Fees

The Sixth Circuit on Friday issued a decision holding that where the government had pursued a “nearly frivolous” theory of FCA damages wildly in excess of actual damages, defendants were entitled to recover the costs of defending themselves — even where the fraud itself was substantiated. This decision is welcome news to defendants who may not “prevail” in the common sense of the word (by fending off liability entirely) but for whom the cost of defending is driven disproportionately high by the government’s aggressive and unjustified litigation positions. And in the process, the court cast doubt on some applications of the government’s common “taint” theory of liability, under which it argues that (sometimes minor) frauds deprive the government of the full value of a contract.

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Will Defendants Be Left With the Tab, Even When Government Pays the Bill?: Courts Continue to Wrestle With Post-Escobar Materiality Standard

Potentially adding to continued confusion regarding what to make of materiality in Escobar's wake, two more recent cases — one stemming from the Eastern District of Pennsylvania and the other from the Court of Federal Claims — have addressed when FCA claims fail because the government paid the bill with knowledge of the alleged noncompliance with underlying rules or requirements. In both cases, defendants urged the courts to strike down FCA claims by relying on Escobar’s holding that “if the Government pays a particular claim in full despite its actual knowledge that certain requirements were violated, that is very strong evidence that those requirements are not material.” Universal Health Servs., Inc. v. United States, 136 S. Ct. 1989, 2003-04 (2016). The Court of Federal Claims, after a trial, agreed with defendants, while the Eastern District of Pennsylvania, on a motion to dismiss, did not.

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A Year after U.S. ex rel. Escobar, Lower Courts Diverge on Key Question in Implied-False-Certification FCA Suits

Just over a year ago, False Claims Act (FCA) watchers eagerly awaited the US Supreme Court’s decision in U.S. ex rel. Escobar v. Universal Health Services, Inc., expecting that it would resolve once and for all whether implied false certification is a valid FCA theory. V&E’s Craig Margolis and Christian Sheehan provide a post-Escobar analysis in an article they recently wrote for Washington Legal Foundation (WLF).

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The Second Circuit Protests Too Much We Think — Disguising Deepening Split on Rule 9(b)

Injecting additional uncertainty into the already-muddled case law regarding what precisely must be pleaded with particularity under Rule 9(b), the Second Circuit in U.S. ex rel. Chorches v. American Medical Response, Inc., No. 15-3930, 2017 WL 3180616 (July 27, 2017), held that a relator need not identify a specific invoice in order to adequately plead that a false claim was presented to the government. While Chorches would seem to deepen a circuit split on Rule 9(b) — one the Supreme Court has repeatedly declined to take up — the Second Circuit goes to great lengths to downplay its existence. According to the Second Circuit, “the reports of a circuit split are, like those prematurely reporting Mark Twain’s death, greatly exaggerated.”

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A Bad Week for Copycat Relators: Fourth and D.C. Circuits Say First-to-File Bars Cases Brought While Earlier-Filed Cases Were Pending Even After Earlier Case Is Dismissed

Defendants facing serial, related qui tam cases should breathe a collective sigh of relief because the Fourth Circuit and the D.C. Circuit have just rejected relators’ efforts to undermine the first-to-file bar. In decisions issued less than a week apart, the D.C. Circuit in U.S. ex rel. Shea v. Cellco Partnership, Nos. 15-7135 & 15-7136, and the Fourth Circuit in U.S. ex rel. Carter v. Halliburton Co., No. 16-1262, both held that the first-to-file bar compels dismissal of actions brought while earlier-filed actions were pending, even if those earlier-filed actions have since been dismissed. Both courts also put the kibosh on those relators’ efforts to evade the first-to-file bar by amending their complaints after dismissal of the earlier-filed action. We’re proud to say that the attorneys of Vinson & Elkins, the same people who bring you LLB, represented the defendants in Carter and an amicus supporting the defendants in Shea.

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