Welcome to Original Source: The Sidley Austin False Claims Act Blog


The False Claims Act (FCA) has long been a key enforcement tool for the federal government in matters involving government contracts or other expenditures of government funds. FCA enforcement has traditionally focused primarily on two industries receiving a substantial amount of government funds: healthcare and defense and other government contractors. Recently, however, FCA enforcement has expanded to other industries, including financial services. Through the False Claims Act Blog, lawyers in Sidley’s White Collar, Healthcare, FDA, Government Contracting, Financial Services, Appellate, and other practices will provide timely updates on new and interesting developments relating to FCA enforcement and litigation.

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December 19, 2014 11:08 AM | Posted by Scott Stein | Topic(s): State/Local FCA

The front page of this morning’s New York Times contains an article titled “Lawyers Create Big Paydays by Coaxing Attorneys General to Sue.” The article reports on the growth of a “flourishing industry that pairs plaintiffs’ lawyers with state attorneys general to sue companies,” and the serious concerns this raises when states effectively delegate their police powers to investigate and sue to private firms with a financial interest in the outcome of investigations they are seeking State-granted authority to conduct. We have observed this trend extending into municipal False Claims Act cases.

The article is worth a read by anyone concerned about this troubling trend.

December 17, 2014 12:15 PM | Posted by Scott Stein and Brenna Jenny | Topic(s): Overpayments, NY-SD
The parties in a closely watched reverse false claims case, United States v. Continuum Health Partners, continued their dispute over when an “obligation” to repay the government arises under the FCA’s reverse false claim provision. (For previous coverage, see here, here, and here). Continuum’s reply brief in support of its motion to dismiss focuses on the government’s assertion that a “potential” overpayment creates an obligation to repay sufficient to trigger the FCA. read more
December 12, 2014 6:29 PM | Posted by Jaime L.M. Jones and Brenna Jenny | Topic(s): Discovery
Yet another district court has joined recent opinions (as reported here and here) permitting relators and the government to proceed to trial on the basis of extrapolations of FCA liability from a sample of submitted claims. See United States v. AseraCare Inc., No. 12-cv-00245 (N.D. Ala. Dec. 4, 2014). Following the government’s intervention in a suit against hospice care provider AseraCare, it submitted an expert witness opinion based on a review of a sample of 233 claims. The expert concluded that the patients in 124 of the claims failed to meet the criteria for medically indicated hospice care. The government then sought to extrapolate this finding to the full universe of 2,181 claims submitted by AseraCare. read more
December 10, 2014 3:32 PM | Posted by Nicole Ryan and Sarah Hemmendinger | Topic(s): Public Disclosure, D.C. Circuit
In a December 2, 2014 opinion in United States ex rel. Doe v. Staples, Inc., No. 13-7071 (D.C. Cir. Dec. 2, 2014), the D.C. Circuit affirmed the dismissal of a relator’s FCA action under the public disclosure bar because the facts underlying the claim were already in the public domain through an online database and administrative reports. read more
December 5, 2014 12:26 PM | Posted by Scott Stein | Topic(s): Original Source, 9th Circuit
On December 3, the Ninth Circuit ordered rehearing en banc in two consolidated False Claims Act cases addressing the FCA’s “original source” exception to the public disclosure bar. The district court dismissed the relators’ complaints on the ground (in part) that their claims were based on publicly disclosed information, and that the relators were not original sources. The district court, relying on the Ninth Circuit’s opinion in U.S. ex rel. Wang v. FMC Corp., 975 F. 2d 1412 (9th Cir. 1992), held that to qualify as an original source, the relator must have “played a part in publicly disclosing the allegations and information on which their suits were based.” The relators argue that this “hand in the disclosure” requirement was abrogated by the Supreme Court’s decision in Rockwell Int’l Corp., v. United States, 549 U.S. 457 (2007), in which the Court stated that the information about which the relator must have “direct and independent knowledge” to qualify as an original source is the information on which his or her claims are based. Relators contend that Rockwell abrogates Wang’s requirement that original source status be linked to the public disclosures at issue, i.e., that so long as a relator has direct and independent knowledge of the information on which his or her claims are based, it is irrelevant that the relator played no role in the public disclosure of those allegations. It is this issue which the Ninth Circuit is posed to consider en banc. If the Court concludes that Wang is no longer good law, it will be easier for relators to establish original source status in the Ninth Circuit.
read more
December 5, 2014 9:59 AM | Posted by Kristin Graham Koehler and Brian P. Morrissey | Topic(s): First-to-File, 1st Circuit
Earlier this week, the First Circuit held that the FCA’s first-to-file provision barred a qui tam action against a pharmaceutical manufacturer that was premised on the same “essential facts” as an earlier-filed qui tam complaint, even though the second complaint provided “far more detail[ed]” allegations than the first. United States ex rel. Ven-A-Care of the Florida Keys, Inc. v. Baxter Healthcare Corp., Nos. 13-1732, 13-2083, 2014 WL 6737102, *6 (1st Cir. Dec. 1, 2014). This decision, paired with the First Circuit’s recent ruling in United States ex rel. Wilson v. Bristol-Myers Squibb, Inc., 750 F.3d 111, 117 (1st Cir. 2014)—which we previously have discussed—emphasizes that the First Circuit will rigorously enforce the FCA’s first-to-file bar to preclude qui tam complaints that allege the same fraudulent scheme as a previously-filed action, even if the second complaint contains different, and more detailed, supporting allegations. read more
December 4, 2014 3:29 PM | Posted by Kristin Graham Koehler and Brian P. Morrissey | Topic(s): Attorney’s Fees, NY-SD
A federal district court in the Southern District of New York has ordered a qui tam relator to pay attorneys fees to a pharmacy servicer that it accused of defrauding the Medicare program based on a legal theory that had “no reasonable chance of success.” United States ex rel. Fox, Rx, Inc. v. Omnicare, Inc., No. 12-cv-275, 2104 WL 6750277, *4 (S.D.N.Y. Dec. 1, 2014). read more
December 2, 2014 11:09 AM | Posted by Kristin Graham Koehler and Monica Groat | Topic(s): First-to-File, Statute of Limitations, U.S. Supreme Court
As we previously have written about, the Supreme Court has agreed to decide two important issues relating to the FCA in Kellogg Brown & Root v. Carter: (1) whether the Wartime Suspension of Limitations Act (WSLA) applies to toll the statute of limitations in civil FCA cases, and (2) whether the first-to-file bar ceases to apply once a first-filed case is settled or dismissed. Earlier this month, petitioners KBR Inc. and Halliburton Co. (collectively, KBR) filed their reply brief. read more
December 1, 2014 4:10 PM | Posted by Kristin Graham Koehler and Monica Groat | Topic(s): Enforcement, Medicare/Medicaid, Health Care Providers, Government Contracts, Financial Services, Pharmaceuticals, Relators
On November 20, Acting Associate Attorney General Stuart F. Delery and Acting Assistant Attorney General Joyce R. Branda announced that the Department of Justice recovered a record $5.69 billion in settlements and judgments from civil cases involving alleged fraud against the Government in fiscal year 2014. This figure represents the highest annual total recovery and an increase of nearly $2 billion over the Government’s recovery in fiscal year 2013. read more
November 13, 2014 4:38 PM | Posted by Scott Stein and Brenna Jenny | Topic(s): Overpayments, NY-SD
As we previously reported, the Department of Justice (“DOJ”) recently filed its first FCA suit premised solely on the untimely return of overpayments. DOJ’s November 10, 2014 memorandum in opposition to defendants’ (“Continuum’s”) motion to dismiss (which we discussed here), confirms that DOJ seeks to stake out an expansive argument for such claims. read more
 
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