False Claims Act Cert. Monitor: Who Is the State? Solicitor General Asked to Weigh in on FCA Liability of State-Affiliated Medical and Education Entities
There's a strong chance the Supreme Court will grant certiorari on the fourth FCA issue in the past few years. This time, the most likely candidate for review is an important question for state-affiliated universities and hospitals facing FCA claims: When are state-affiliated entities liable under the FCA? With three petitions on this issue, coming from both the defense and relators’ bars, and the Court calling for the views of the Solicitor General (CVSG) in one case, the chances look decent for a grant on this issue in the upcoming term. Also before the Court are two petitions related to the public disclosure bar, the latest petition on whether Rule 9(b) requires relators to plead specific false claims with particularity, and a pro se petition about the relationship between restitution for criminal charges and damages under the FCA.
On the question of FCA liability for state-affiliated entities, the most likely of the three petitions to receive a grant of certiorari is Pennsylvania Higher Education Assistance Agency v. U.S. ex rel. Oberg, No. 15-1045. In Oberg, the defendant, an entity created by the state of Pennsylvania and tasked with providing students financial aid, asks the Supreme Court to reverse the Fourth Circuit’s determination that the agency was an “independent political subdivision” of the state and not afforded immunity from the FCA. The Court has issued a CVSG in this case, which one study found makes a grant of cert. forty-seven times more likely. Relators petition in two similar cases, but where the courts of appeals concluded the state-affiliated entity was immune from the FCA, in the contexts of a state-affiliated university in Michigan, coming out of the Sixth Circuit, U.S. ex rel. Kreipke v. Wayne State University, No. 15-1419; and a state-affiliated medical school in Massachusetts, coming out the First Circuit, U.S. ex rel. Willette v. University of Massachusetts, No. 15-1437.
The public disclosure bar is also before the Court in two petitions by relators. In U.S. ex rel. Advocates for Basic Equality, Inc. v. U.S. Bank, N.A., No. 16-130 (July 25, 2016), the relator, an advocacy group for low income individuals, asks the Court to decide whether an FCA claim can be barred by a public disclosure if the public disclosure does not identify the specific fraud asserted in the relator's complaint, but instead only describes the same general type of conduct. The relator claims that U.S. Bank falsely certified compliance with Federal Housing Administration (FHA) pre-foreclosure requirements in order to receive government mortgage insurance. The Sixth Circuit held the action was barred by public disclosures showing violations of different, non-FHA foreclosure rules. Relator asserts that this holding splits with the Seventh and Ninth Circuits.
The relator in U.S. ex rel. Cause of Action v. Chicago Transit Authority, No. 16-131, another advocacy organization, ambitiously seeks certiorari on four separate purported splits in the public disclosure bar. Most notable of these is whether there has been a public disclosure if the disclosure is only to the government in a non-public audit. The Seventh Circuit said yes, but noted other circuits disagree. Perhaps causing a bit of a vehicle issue for relator’s petition on this question, however, the Seventh Circuit said it might reconsider its precedent in a different case where the issue would control the result. The relator also claims three other splits are worthy of review: (1) Whether a document is a public disclosure if it does not disclose all of the elements of a false claim; (2) Whether public disclosure of past false claims bars FCA claims based on newer false claims, and (3) Whether a relator can overcome the public disclosure bar as an original source by disclosing elements of a false claim not previously disclosed.
Rule 9(b), which requires relators to plead fraud with particularity, returns to the Court, despite the fact that previously filed petitions on the rule have been denied, in U.S. ex rel. Walterspiel v. Bayer AG, No. 16-8. This time, relator frames the question as whether the Fourth Circuit should have applied a “relaxed” standard of particularity since the documents showing the alleged fraud were in the hands of the defendant. Relator takes particular issue with the Fourth Circuit’s focus on his inability to plead with specificity “what claims [defendant] made to the Government, the amount of the claims, or the extent to which [defendant] benefited from the alleged fraud.” Viewed in a different light, relator’s petition could be seen as asking the Supreme Court to address whether specific false claims have to be plead with specificity (or at all) in the FCA—the same question posed in previous Rule 9(b) petitions. Bayer has waived its response.
Lastly, a pro se petition coming out of the Eleventh Circuit appears to raise the
question of whether it was appropriate for the district court to assess FCA damages when, in a related criminal
proceeding, the court had denied the government restitution because “no actual
loss” to the government “ha[d] been established.” Anghaie
v. United States, No. 15-1456. The Court has requested a response from
We will be keeping tabs on these cert. petitions to see whether the Court decides to hear its fourth FCA case in the past few years.