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False Claims Act Statistics, News & Analysis

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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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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War Dogs Brings the False Claims Act to the Silver Screen, Offers Lessons to Government Contractors

While we here at LLB toiled away at our FCA mapFCA statistics, and FCA case law analysis in preparation for our August launch, we did poke our heads out of our cave long enough to notice that the FCA had just hit the big screen! No, we are not talking about the highly acclaimed FCA video that now appears on LLB. In August, mere weeks before we launched, the movie War Dogs hit theatres across the U.S., recounting the (highly-)dramatized but true tale of two twenty-somethings who cashed in on enormous profits by contracting to support military operations in Afghanistan and Iraq. Operating as AEY, Inc., the unlikely duo, working from their Miami apartment, won a $300 million ammunitions contract for the U.S. Army, and—allegedly—violated the FCA along the way.

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Posner Prods, But 7th Circuit Saves Implied Cert. Analysis for Another Day

In the few months since the Supreme Court’s Escobar decision, there have been a handful of judicial decisions exploring its impact. One particular example – and potentially lost opportunity – came in the Seventh Circuit’s decision in United States ex rel. Sheet Metal Workers Int’l Assoc., Local Union 20 v. Horning Investments, LLC, which affirmed summary judgment for the defendants based on scant evidence of knowledge, over a dissent from Judge Posner who believed the case to present the classic implied certification scenario so recently sanctioned by Escobar. In Horning Investments, the defendant had allegedly violated the Davis-Bacon Act, which requires contractors to pay “prevailing wages” on federally funded construction contracts. The relator, a metal workers union, argued that Horning had made false statements material to the government’s payment decision by incorrectly calculating the wages paid to its employees in certified payroll reports (by deducting a fee for certain fringe benefits allegedly inadequately tied to the insurance benefits received by the payors).

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Materiality Matters: Supreme Court Strengthens Materiality in Escobar

The Supreme Court decided Universal Health Services, Inc. v. United States ex rel. Escobar, (No. 15-7) on June 16, 2016, and held that the implied false certification theory can be a basis for False Claims Act (FCA) liability, expanding implied certification into circuits that had not yet embraced it. But the Court snatched victory from the hands of the government and relator’s bar by articulating a “demanding” materiality standard.

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