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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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  • 06
  • July
  • 2017

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False Claims Act Statistics: Is It Trump? Is It Escobar? Whatever It Is, With Only 3 Months Left, DOJ Fiscal Year 2017 Recoveries Are On Track to Fall Well Short of 2016

As the first DOJ fiscal year (mostly) under the Trump Administration flies past and we see round the bend to DOJ FY 2017’s end on September 30, the time has come to see how this year’s bout of DOJ versus Contractors is going as compared to last year. Subject to our usual flurry of methodological caveats, we count a little over $2 billion in recoveries spread out over 135 recoveries for the first nine months of FY 2017. At this time last year, DOJ had recovered $4.1 billion in 229 recoveries. If the match continues apace, without any last minute blockbuster FCA settlements, we predict FCA defendants will have paid roughly $2.7 billion across 180 recoveries by the end of FY 2017. That is well shy of FY 2016’s $4.8 billion recovered over 288 recoveries, and would leave FY 2017 with the lowest dollars recovered by DOJ since FY 2009.

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Short, Sweet, and Unambiguous: Ninth Circuit Cites Safeco and Finds Objectively Reasonable Interpretation of the ITAR Precludes Knowledge

Last week, we discussed developing FCA precedent on liability premised on violations of ambiguous contractual or legal obligations with a focus on the Eleventh Circuit’s Lincare decision. Today, we follow up on that with a look at a recent Ninth Circuit decision affirming a 2015 decision by the District Court for the District of Arizona dismissing a qui tam complaint alleging microelectronic manufacturer Microsemi Corporation and its subsidiary White Electronic Designs Corporation (“WEDC”) violated the FCA by falsely certifying compliance with the International Traffic in Arms Regulations (“ITAR”), which prohibit exporting controlled information without a license.

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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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False Claims Act Cert. Monitor: Defendant Asks Court to Resolve Asserted Rule 9(b) Split and Reverse FCA Liability for "Contingent" Obligations

Victaulic, a manufacturer of pipe fittings, asked the Supreme Court in late May to review a Third Circuit decision we have written about twice before in a petition captioned Victaulic Co. v. U.S. ex rel. Customs Fraud Investigations, LLC, No. 16-1398. Victaulic asks the Court to take up two issues: (1) whether Rule 9(b)’s pleading standard requires allegations of an “opportunity for fraud,” of “actual false claims,” or of “particular details of a scheme paired with reliable indicia of fraud,” and (2) whether an alleged failure to pay a “contingent” obligation that arises only after the exercise of discretion by the government is actionable as a reverse FCA claim.

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