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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January 29, 2015 12:00 PM | Posted by Scott Stein and Jessica Rothenberg | Topic(s): Procedure, Relators, OH-ND
A recurring problem in qui tam cases, particularly when the relator is or works for a competitor of the defendant, is the issue of relators’ access to confidential and other competitively-sensitive information produced or created during a government investigation preceding unsealing or once a case is being actively litigated. Recently in one such case, a federal district court in the Northern District of Ohio entered an order limiting the relators’ access to the defendant’s competitively-sensitive information. read more
January 22, 2015 11:23 AM | Posted by Jonathan Cohn and Annemarie Hillman | Topic(s): Public Disclosure, 11th Circuit
Last week, the Eleventh Circuit reached a decision in United States ex rel. Osheroff v. Humana, Inc., No. 13-15278 (11th Cir. 2015), which provides important guidance regarding the scope of the public disclosure bar following its amendment by the Patient Protection and Affordable Care Act (PPACA). read more
January 21, 2015 12:17 PM | Posted by Ellyce Cooper and Collin Wedel | Topic(s): Successor Liability, VA-ED
Late last month, in a closely watched False Claims Act case (about which we have previously written here, here, and here), a federal judge in the Eastern District of Virginia rejected the government’s argument that Government Logistics NV (“GovLog”) should be held liable for a $100 million FCA judgment against Belgian shipping company Gosselin World Wide Moving NV (“Gosselin”) under a theory of successor liability. read more
January 21, 2015 11:39 AM | Posted by Scott Stein and Allison Reimann | Topic(s): Settlement, MO-ED
A recent case provides an interesting example of one company citing a business partner’s settlement of an FCA case, without admitting liability, as a basis for terminating the parties’ contract for cause. CareMed Pharmaceutical Services (“Caremed”), a specialty pharmacy, filed a complaint against pharmacy benefit managers Express Scripts, Inc. and MedCo Health Services, Inc. (collectively, “Express Scripts”). The complaint alleges that Express Scripts improperly cited CareMed’s recent settlement of a qui tam action as a pretext to cancel CareMed’s participation agreement with Express Scripts for the purpose of diverting CareMed’s business to Express Scripts’s own specialty pharmacy. CareMed asserts claims under federal and state antitrust law, ERISA, and common law, including a breach of contract claim. read more
January 20, 2015 11:25 AM | Posted by Scott Stein | Topic(s): Procedure, U.S. Supreme Court
Though we wrote last week to summarize our take on the oral argument in Carter, this post focuses on a particular exchange in which the Assistant Solicitor General arguing on behalf of the United States conceded a key point that DOJ has, in the lower courts, resisted. When it comes to non-intervened qui tam cases, DOJ routinely argues that while it is entitled to any financial benefits accruing from such litigation, the United States is not bound by any judgment on the merits against the relator. In our experience, whenever DOJ files a Statement of Interest in a non-intervened case, it requests that if the district court dismisses the case against a relator on any grounds that such dismissal be without prejudice to the United States, theoretically allowing DOJ to pursue the same claims against the same defendants notwithstanding even a dismissal on the merits of the relator’s claims. Defendants are typically loathe to challenge the government’s request, perhaps due to a desire not to engage the United States any more than necessary in a non-intervened case, or the recognition that as a practical matter the odds of the government deciding to intervene in any particular case once an adverse ruling has been rendered against a relator are fairly small. read more
January 15, 2015 11:34 AM | Posted by Ellyce Cooper and Collin Wedel | Topic(s): 4th Circuit, Implied Certification
On January 8, 2015, in United States ex rel. Badr v. Triple Canopy, Inc., No. 13-2190, -- F.3d -- (4th Cir. 2015), the U.S. Court of Appeals for the Fourth Circuit revived a False Claims Act suit brought by the U.S. Government and a qui tam relator against security firm Triple Canopy, Inc., explicitly recognizing for the first time the implied certification theory of FCA liability. read more
January 14, 2015 12:15 PM | Posted by Scott Stein and Monica Groat | Topic(s): First-to-File, Statute of Limitations, U.S. Supreme Court
Yesterday, the Supreme Court heard oral argument in Kellogg Brown & Root v. Carter, a case which raises two important issues under the False Claims Act: (1) whether the Wartime Suspension of Limitations Act (WSLA) applies to toll the statute of limitations in civil FCA cases, and (2) whether a first-filed case is still deemed to be “pending” within the meaning of the FCA, barring any subsequently-filed suit, even after the first-filed case is settled or dismissed. We have previously written about this case here, here, and here. Though it is always precarious to predict the outcome of a case based on oral argument, the questioning at the argument suggests that while many of the justices were receptive to KBR’s argument that the WSLA does not apply to civil FCA claims, the relators and DOJ appeared to have the upper hand with regard to the scope of the first-to-file bar. read more
January 8, 2015 1:11 PM | Posted by Jaime L.M. Jones and Brenna Jenny | Topic(s): Pharmaceuticals, Worthless Services, GMP, Implied Certification, CA-ND
In a remarkable opinion sure to be cited by FCA defendants facing FCA claims premised on alleged regulatory non-compliance, on January 7 the Northern District of California granted defendant Gilead’s motion to dismiss FCA claims premised on alleged violations of current Good Manufacturing Practices regulations (“cGMPs”), holding that fraudulent conduct directed at FDA standing alone cannot render subsequent Medicare or Medicaid reimbursement requests false under the FCA. See U.S. ex rel. Campie v. Gilead Sciences, Inc., No. 11-cv-00941 (N.D. Cal. Jan. 7, 2015). The ruling expands on the reasoning of the Fourth Circuit’s decision last year in Rostholder (as reported here) and reiterates the judiciary’s hesitancy to permit the FCA to displace FDA’s institutional capacity to enforce its own regulatory scheme. read more
December 22, 2014 11:32 AM | Posted by Scott Stein and Brenna Jenny | Topic(s): Health Care Providers, Overpayments, Stark Law, Successor Liability, GA-SD
On December 8, 2014, a district court in the Southern District of Georgia dismissed FCA claims brought against the corporate parent and affiliates of a hospital, rejecting the government’s attempt to hold these associated corporations liable for the hospital’s alleged reverse false claims violations. See U.S. ex rel. Schaengold v. Mem’l Health, Inc., No. 11-cv-0058 (S.D. Ga. Dec. 8, 2014). read more
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.

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