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False Claims Act Statistics, News & Analysis

Armor Manufacturers (Mostly) Deflect FCA Claims Again Post-Escobar: District Court Finds Implied, Extra-Contractual Duties Not Bargained For and Thus Not Material

In related cases U.S. ex. rel. Westrick v. Second Chance Body Armor, Inc. and U.S. v. Toyobo Company, Ltd., the D.C. district court recently determined on a motion to reconsider post-Escobar that implied “extra-contractual” requirements, not included in the language of the contract with the government, may nevertheless form the basis of an implied certification claim. No. 1:07-cv-01144 (D.D.C. Mar. 31, 2017). But, the court found that since the government in Westrick and Toyobo presented no evidence that it in fact contracted or bargained for the alleged extra-contractual obligations, the obligations were not material to payment and affirmed its previous grant of summary judgment for defendants on their FCA claims based on a violation of those obligations.

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  • 11
  • April
  • 2017

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The Quicken Origin Story:  Michigan Federal Court Addresses False Claims Act

Last week we wrote about the opinion in United States v. Quicken Loans Inc., specifically discussing its ruling on causation of damages under the FCA. No. 16-CV-14050, 2017 WL 930039 (E.D. Mich. Mar. 9, 2017). As we noted, Quicken touches on other important FCA issues, including knowledge and materiality. But since liability necessarily precedes damages, let’s go back now to discuss certain of the court’s rulings on knowing violations of ambiguous rules under Safeco and on materiality after Escobar.

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  • 04
  • April
  • 2017

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Fifth Circuit Holds Relators’ Rubber Stamp Anxiety Insufficient to Clear Escobar’s Materiality Hurdle Given Government Inaction after Investigation

The Fifth Circuit recently issued a helpful materiality decision for defendants in Abbott v. BP Exploration & Production, finding that the Department of the Interior’s (“DOI”) decision to allow an oil production facility to continue operating after an investigation into the relators’ allegations is “strong evidence” that a regulation’s alleged stamping requirement is not material. No. 16-20028, 2017 WL 992506 (5th Cir. Mar. 14, 2017).

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  • 10
  • March
  • 2017

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Moody’s Manhandles Materiality: Court Finds Materiality Defeated by Government’s Continued Payment after News Reports and Congressional Hearings

On the heels of the D.C. Circuit’s favorable materiality decision in U.S. ex rel. McBride v. Halliburton, which we wrote about previously, the Southern District of New York on March 2 issued another helpful materiality decision for defendants. In U.S. ex rel. Kolchinsky v. Moody’s Corp., the district court found that congressional investigations and news reports about a relator’s allegations put federal agencies on notice of the relator’s allegations. No. 12-cv-1399, 2017 WL 825478 (S.D.N.Y. Mar. 2, 2017). Because the government paid the defendant’s claims after those public investigations and reports, the court concluded the relator’s allegations failed Escobar’s materiality test.

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"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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Just What the Doctor Ordered: First Circuit Curtails Fraudulent-Inducement Theory Where Government Took No Action After Learning of FCA Allegations

In a pro-Defense bar, post-Escobar decision handed down shortly before the holidays, the First Circuit held that a relator could not proceed with an FCA claim based on alleged fraud in the inducement on the Food and Drug Administration because the FDA had not withdrawn or suspended its approval of the defendants’ medical device in response to relator’s allegations. D’Agostino v. ev3, Inc., No. 16-1126, 2016 WL 7422943 (1st Cir. Dec. 23, 2016). The opinion also doubles down on the First Circuit’s Cyberonics decision that we wrote about here, again rejecting as insufficiently particular under Rule 9(b), allegations that identify a fraudulent scheme but fail to show that false claims actually were submitted to the government as a result.

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