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False Claims Act Statistics, News & Analysis

Litigation Update: Ninth Circuit to Weigh In on Key Post-Escobar Issues

We have reported previously on an implied false certification case in the Northern District of California, United States ex rel. Rose v. Stephens Institute, in which the court considered whether a university violated the FCA when it obtained funding from the U.S. Department of Education by allegedly falsely certifying compliance with Title IV of the Higher Education Act. The university moved to certify the district court’s order ruling against it on falsity and materiality for immediate appeal to the Ninth Circuit, and as we reported here, the district court in October certified three of the university’s four proposed questions for interlocutory appeal and stayed the case pending resolution of the university’s appeal.

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Keep Your Friends Close and Your Subcontractors Even Closer: Prime and Sub Mostly Win Motion to Dismiss Against Second-Tier Sub

The D.C. District Court recently dove headfirst into the complexities of government contracting (and subcontracting) and dismissed most of a hydra-headed 77-page FCA complaint against a prime contractor and first-tier subcontractor brought by executives of a second-tier subcontractor. United State ex rel. Keaveney v. SRA Int’l, Inc., No. 13-855, 2016 WL 6988787 (D.D.C. Nov. 29, 2016). That a subcontractor’s executives brought an FCA action against the contractors that hired them is by itself worth noting. But the opinion, too, offers a mixed bag of assuaging certain worries for government contractors while highlighting new ones.

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Rare FCA Jury Verdict Finds $92 Million in Damages Caused by "Shadow" Mortgage Offices and Reckless Underwriting Policies

A Houston federal jury in United States v. Allied Home Mortgage Corporation, et al., 4:12-cv-02676-GCH (S.D. Tex.) returned a verdict on November 30 in favor of the government on all counts, finding two mortgage brokers and their CEO liable for over $92 million in damages for violations of the False Claims Act (“FCA”) and the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (“FIRREA”). The government started off its fiscal year 2017 of FCA recoveries with this huge victory before a jury, at a time when FCA jury trials are becoming increasingly rare. The hefty damages figure here could balloon much further yet: Factoring in potential treble damages and penalties under the FCA, the FCA price tag alone could hover close to $300 million. And adding FIRREA penalties to the mix could potentially push the total to $1 billion or more. The verdict hit the crescendo in a more than five-year litigation battle and five-week trial against defendants Americus Mortgage Corp. (formerly Allied Home Mortgage Capital Corporation or “Allied Capital”) and AllQuest Home Mortgage Corp. (formerly Allied Home Mortgage Corporation or “Allied Corporation”) (collectively “Allied”) and their president and CEO, Jim C. Hodge.

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Escobar Gives Relators a "Shot" at Implied False Certification Claim

Adding to the number of post-Escobar opinions already issued, the U.S. District Court for the Eastern District of Virginia recently denied a motion for judgment on the pleadings on the issue of whether an implied false certification claim was sufficiently pled under Escobar in United States ex. rel. Beauchamp v. Academi Training Center Inc., No. 11-cv-371 (E.D.Va. Nov. 30, 2016). The Beauchamprelators alleged that the defendant, a private security company, falsely certified compliance with its contract with the U.S. State Department when it billed the government for warzone security guards who did not meet weapons certification requirements. Relying on Escobar, the court found the relators sufficiently pled that the defendant had made specific misrepresentations about the services it provided and these misrepresentations were material to the government’s decision to pay the defendant.

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  • November
  • 2016

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Government Declaration and Defendant’s Lackluster Response Allows D.D.C. to Effortlessly Find Materiality in Post-Escobar Case

In United States v. Dynamic Visions, Inc., decided at the end of October, the D.C. district court found that the United States had met Escobar’s stringent materiality standard by relying in part on the unchallenged declaration of an agency executive attesting that alleged violations of Medicaid regulations of the type alleged in the case would have caused the government to deny reimbursement of the claims. No. 11-695 (CKK), 2016 WL 6208349 (D.D.C. Oct. 24, 2016). The defendants’ apparent failure to challenge the government’s declaration, or to question materiality at all, limits our ability to draw conclusions about the use of such government declarations to prove materiality. But, we expect to see more declarations from government officials as parties in FCA cases strive to prove or disprove materiality after Escobar.

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