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False Claims Act Statistics, News & Analysis

  • 07
  • February
  • 2017

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The Ratchet Clicks: DOJ Increases FCA Penalties, Applies Worrisome Retroactivity Rule

Last week, we noted that DOJ missed the January 15 deadline for issuing its annual inflation adjustments to the FCA’s penalties. Perhaps DOJ read our post. Two days later, DOJ released for public inspection its FCA penalty adjustment, which was published in the Federal Register and took effect on February 3, 2017. As expected, DOJ has fallen in line with the Department of Commerce’s (“DOC’s”) earlier FCA penalty adjustment, increasing FCA penalties from between $10,781 and $21,563 to between $10,957 and $21,916.

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  • 27
  • January
  • 2017

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Jeff Sessions: Attorney General Nominee a One-Time Qui Tam Lawyer

In our FCA Year-End Review Webinar last November, we predicted that President Trump’s nominee for Attorney General, Sen. Jeff Sessions, would continue to support DOJ’s aggressive efforts at FCA enforcement. Long-time FCA champion and Senate Judiciary Committee Chairman Chuck Grassley confirmed our suspicions at Sen. Sessions’ confirmation hearings earlier this month. Under questioning from Sen. Grassley, not only did our likely future Attorney General express his support for qui tam cases as an “effective method of rooting out fraud” because they “cause[] companies to be more cautious” out of fear of whistleblowers, but he also revealed that in fact he “even filed [a qui tam] [him]self one time as a private lawyer.”

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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with an FCA claim based on alleged fraud in the inducement on the Food and Drug Administration because the FDA had not withdrawn or suspended its approval of the defendants’ medical device in response to relator’s allegations.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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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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Too Little and Too Late: First Circuit Rejects Relator's Claims of Possible Fraud and Refuses Unduly Delayed Leave to Amend

Again reiterating that Rule 9(b) is a formidable hurdle for relators, the First Circuit rebuffed a relator’s attempt to allege FCA violations based on broad inferences of fraudulent activity, without any specific facts or statistical evidence tying that conduct to false claims to the government. In United States ex rel. Hagerty v. Cyberonics, Inc., No. 16-1304, 2016 WL 7321224 (1st Cir. Dec. 16, 2016), a former sales representative for defendant Cyberonics, Inc. turned relator alleged that employees of Cyberonics had used fraudulent sales tactics to encourage medical providers to prematurely and unnecessarily replace batteries in medical devices used to treat patients with epilepsy, giving rise to false claims based on his presumption that providers that performed the unnecessary replacements then submitted reimbursement claims to the government for the procedures.

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False Claims Act Cert. Monitor: Six FCA Cert. Petitions Bite the Dust, Five Remain

Denied petitions for certiorari are a dime a dozen. So it should not come as a surprise that most FCA cert. petitions that we write about fail. But still, we hate to see ’em go. Yet, here we are, in this first Cert. Monitor post of 2017, saying bon voyage to six FCA cert. petitions from our mid-term review, leaving just five more that remain pending.

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  • 05
  • January
  • 2017

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Early Tremors: Commerce Department Increases FCA Penalties, DOJ Likely to Follow

As we have written about previously, in November 2015, Congress instructed federal agencies to adjust civil penalties within the agencies’ respective “jurisdiction[s]” to account for inflation. 28 U.S.C. § 2461 note. As directed by Congress, in the middle of 2016, DOJ, the Railroad Retirement Board (RRB), and the Department of Commerce (DOC) issued “catch up adjustment[s].” The adjustments each doubled FCA penalties from between $5,500 and $11,000 per false claim to between $10,781 and $21,563 per false claim, but they varied as to retroactivity: DOJ’s increased penalties applied only to FCA violations occurring after November 2, 2015, RRB’s were not retroactive, and DOC’s were fully retroactive. 28 C.F.R. § 85.3 (DOJ); 20 C.F.R. § 356.3 (RRB); 15 C.F.R. § 6.4 (DOC).

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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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  • 22
  • December
  • 2016

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Happy Holidays

LLB is taking next week off for the holidays. We will return refreshed and ready to continue sharing with you all the FCA statistics and FCA law you can handle. Until then, happy holidays and safe travels, LLB readers!

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Fifth Circuit Reaffirms that Speculative Penalty Exposure Does Not a "Reverse False Claim" Make

In the context of an environmentally-based FCA case, the Fifth Circuit held last week that a contingent penalty cannot create reverse false claim liability because it is not an “obligation” to pay the government. This holding marks at least the third time in as many months that a circuit court has addressed the FCA’s reverse false claim provision and is the second of those decisions construing the definition of “obligation” under the FCA as amended by the 2009 Fraud Enforcement and Recovery Act (“FERA”). The two decisions resulted in different outcomes, however: one handed the defendant a resounding victory, and the other breathed life back into the relator’s case. Is this yet another circuit-split and potential fodder for Supreme Court review? Not so fast.

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  • 20
  • December
  • 2016

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Silver Linings for FY16: DOJ FCA Stats Tough on Pharma and Banks, but Defense Pipeline Narrowing

The Department of Justice released its annual FCA recovery statistics on Wednesday, touting over $4.7 billion in settlements and judgments for fiscal year 2016. Just after the numbers were released, on Lincoln’s Law Blog (LLB) we explored how these results compared to our projections, noting where our numbers deviated from DOJ’s and why. Now that the data sets have been updated and we have had a few days to reflect, today’s post takes a closer look at the numbers as a whole, how they fit into the big picture of FCA recoveries over the years, and what it could mean for FCA enforcement going forward.

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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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  • 15
  • December
  • 2016

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How Could Something So Wrong Be So Right: LLB vs DOJ FCA Stats

Released just yesterday evening, DOJ’s annual FCA brag sheet for recoveries proclaimed a whopping $4.7 billion in civil FCA recoveries for FY 2016. That’s a full $1 billion more than LLB’s count in our inaugural year. How could our “polling” have been so wrong? Well, it turns out, it wasn’t. Despite first appearances, LLB’s stats were mostly on track with the DOJ reports – with one major exception that made all the difference.

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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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