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False Claims Act Statistics, News & Analysis

False Claims Act Cert. Monitor: Attorneys’ Fees, Reverse False Claims, Public Disclosure Bar, and Government Employees as Relators Feature in Three New Petitions

Three new FCA relator cert. petitions have landed in the past few weeks, covering the gamut of FCA legal issues.

First, the relator in U.S. ex rel. Harper v. Muskingum Watershed Conservancy District16-1278, takes us back to 1L Property, alleging that the Army in 1949 granted the defendant water district a “determinable fee simple estate subject to a possibility of reverter interest retained by the United States.” In other words, the government gave the water district government land to keep so long as the land was used for recreation, conservation, etc. The relator contends that when the defendant entered into oil and gas leases on the land but kept the land and the lease income, it knowingly and improperly avoided an obligation to return the property and income to the government—i.e., a conversion reverse false claim. The question presented to the Court is whether, for a reverse false claim, the relator needed to plead that the defendant subjectively knew that it was violating the terms of the deed and had not committed a mistake of law. A potential difficulty for this petition, however, is that neither Sixth Circuit’s majority nor the dissent focused on the question of subjective knowledge of mistake of law, but rather on whether the relator pleaded sufficient facts from which the court could infer that the defendant “knew or should have known” of the requirement to return the property. The response is currently due June 26, 2017.

In U.S. ex rel. Prather v. AT&T, 16-1355, the relator, a former New York Deputy Attorney General and Deputy Inspector General for the New York MTA, alleges that several telecommunications companies were overcharging the government for their technical support of government wiretaps. The relator asks the Court to take up the question of whether and when a government employee can be an original source, arguing that the circuits have split over whether a government employee can ever “voluntarily” disclose information about a fraud to the government, given their duties as employees to report fraud to the government. The relator argues that because his duties did not involve overseeing procurement, he had no duty to disclose and thus his disclosures were voluntary. The relator’s petition likely faces a vehicle problem, however, as the issue at the heart of his petition was only an alternative ground for dismissal. The Ninth Circuit also held the relator was not an original source because he simply contributed no original facts based on first-hand knowledge; only an inference that the publicly disclosed facts amounted to a fraud. The response is currently due June 8, 2017.

Another relator, in U.S. ex rel. Grynberg v. Agave Energy Co., No. 16-1354, had alleged that a number of oil and gas transporters underpaid royalties owed to the United States. After two cases and two decades of litigation, the court concluded that the relator’s actions were barred by the public disclosure bar and that the relator was not an original source, and thus that the court lacked jurisdiction under the pre-FERA FCA. The court also awarded about $17 million in attorneys’ fees to defendants because it concluded the relator had no basis to believe he was an original source. The relator asks the Court to resolve the question of whether the court, having concluded it lacked jurisdiction under the public disclosure bar, had jurisdiction to award attorneys’ fees. The relator also asks the Court to overturn the legal fees because relator relied on his “legal dream team” to vet and bring his case, and an advice of counsel defense should be available. The response is currently due June 8, 2017.

In old news, U.S. ex rel. ABLE v. U.S. Bank, 16-130, addressing the public disclosure bar, has finally received the Solicitor General’s brief and has been set for the May 18, 2017, conference of the Court. ABLE is the one to watch, however, because as a statistical matter, “a petition . . . is over 46 times more likely to be granted” if the Court calls for the views of the Solicitor General.   And in U.S. ex rel. Jackson v. University of North Texas, 16-1098, about the FCA statute of limitations, one defendant has filed a response, another defendant has waived the right to file a response, and the Court has extended the time to file a response to May 23, 2017.

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