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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April 17, 2015 12:01 PM | Posted by Gordon Todd and Adam Farra | Topic(s): Discovery, LA-ED
In a recent, sharply worded order, E.D. La. Magistrate Judge Joseph Wilkinson recently rejected the U.S. Justice Department’s objections of undue burden and expense, and ordered the Department to undertake a voluminous document review and production in response to FCA defendants’ discovery and motion to compel. read more
April 15, 2015 12:22 PM | Posted by Jaime L.M. Jones and Brenna Jenny | Topic(s): Anti-Kickback Statute, Public Disclosure, Rule 9(b), Off-Label, Release, PA-ED
A court in the Eastern District of Pennsylvania recently ruled that, despite a relator’s publication during an employment retaliation suit of allegations relating to the defendant’s alleged off-label promotion and payment of kickbacks, such allegations were not publicly disclosed, nor was the relator’s execution of a release of liability effective. U.S. ex rel. Gohil v. Sanofi-Aventis U.S. Inc., No. 02-cv-02964 (E.D. Pa. Mar. 30, 2015). This case demonstrates the way policy arguments regarding a perceived congressional intent in favor of private enforcement of the FCA can impact legal arguments in FCA litigation. read more
April 13, 2015 9:22 AM | Posted by Scott Stein and Amy Deline | Topic(s): Settlement, DC-D
As we have written about on this blog previously, Lance Armstrong’s former teammate, Floyd Landis, filed a qui tam suit alleging that Armstrong’s and his team’s use of performance enhancing drugs and practices violated their sponsorship agreement with the United States Postal Service and thereby defrauded the government of approximately $40 million over six years. Landis brought suit against Armstrong individually, as well as Armstrong’s management company, Tailwind Sports, and his talent agent, Capital Sports & Entertainment Holdings (CSE). The government joined in the claims against Armstrong and Tailwind Sports in February 2013, but declined to intervene against CSE. read more
April 10, 2015 3:02 PM | Posted by Scott Stein and Emily Van Wyck | Topic(s): Original Source, Public Disclosure, IL-ND, Materiality
A recent decision by a federal court in the Northern District of Illinois highlights a significant difference in how courts treat disclosures to responsible government officials under the FCA’s public disclosure bar. read more
April 10, 2015 10:15 AM | Posted by Scott Stein and Jessica Rothenberg | Topic(s): Government Contracts, Damages, 6th Circuit
In the latest decision in litigation that spans 17 years and relates to conduct that occurred 32 years ago, the Sixth Circuit reversed a $664 million judgment in favor of the government against United Technologies Corp. and remanded the case, for a second time, for a recalculation of damages. A copy of the Sixth Circuit’s opinion in United States v. United Techs. Corp., No. 13-4057 (6th Cir. Apr. 6, 2015) can be accessed here. read more
April 3, 2015 12:58 PM | Posted by Scott Stein, Sarah Konsky and Natalie Chan | Topic(s): Enforcement, Relators
The Securities and Exchange Commission made good on its promise to crack down on employment-related agreements that it believes improperly restrict protected whistleblowing. The agency broke new ground yesterday, when it issued a cease-and-desist order against a company for using confidentiality agreements with allegedly “improperly restrictive language” that could potentially stifle the whistleblower process. This is a first-of-its-kind enforcement action by the SEC, as it was based solely on the language of the confidentiality agreement. In fact, the SEC specifically stated in its order that it was unaware of any instance in which the agreement had prevented any employee from communicating with the SEC, or in which the company had enforced the agreement against any employee. read more
April 2, 2015 12:11 PM | Posted by Scott Stein and Brenna Jenny | Topic(s): Anti-Kickback Statute, Rule 9(b), Off-Label, Retaliation, OH-SD
On March 27, 2015, a federal court in the Southern District of Ohio granted in part and denied in part a motion to dismiss a qui tam suit alleging that Bristol-Myers Squibb Co. (“BMS”) and Otsuka America Pharmaceutical (“Otsuka”) had promoted Abilify for off-label uses and violated the AKS through grants, speaker, and similar programs offered to physicians. See United States ex rel. Ibanez v. Bristol-Myers Squibb Co., No. 11-cv-00029 (S.D. Ohio Mar. 27, 2015). The court’s ruling reiterates that regardless of the particularly with which a scheme is pled, complaints will be dismissed if they fail to, at a minimum, include particular allegations that support a strong inference that a false claim was submitted. However, the court’s partial denial of the motion to dismiss also demonstrates the weight of the expanded protections relators now enjoy when bringing retaliation claims under the FERA-amended definition of protected conduct. read more
March 31, 2015 11:48 AM | Posted by Nicole Ryan and Christopher Rendall-Jackson | Topic(s): Procedure, Privilege Issues, FL-SD
On March 9, 2015, in United States ex rel. Bumbury v. Med-Care Diabetic & Medical Supplies, Inc., a court in the Southern District of Florida disqualified the relators’ counsel for having a conflict of interest in violation of the Florida Rules of Professional Conduct. read more
March 30, 2015 11:23 AM | Posted by Scott Stein | Topic(s): Rule 9(b), U.S. Supreme Court, 11th Circuit

As we previously reported, the Supreme Court last year declined an invitation to resolve a circuit split regarding how much detail about particularized false claims must be pleaded in an FCA case in order to satisfy Rule 9(b)’s particularity requirement. A new cert petition filed this month asks the Court to take up the issue this term. Last year, in an opinion we wrote about here, the 11th Circuit affirmed in part and overruled in part the dismissal of an FCA complaint under Rule 9(b). The court held that while the relator had not pleaded, and was not required to plead facts regarding specific false claims, he had pleaded other facts that provided sufficient “indicia of reliability” with respect to his claims based on conduct allegedly occurring during his employment by the defendants. By contrast, the court held, the relator had failed to plead sufficient “indicia of reliability” that the conduct continued after his employment ended, and therefore affirmed the dismissal of the post-employment claims. It is the latter ruling with which the cert petition, filed by the relator, takes issue. The question presented in the cert petition is “[w] hether, under Rule 9(b), it is sufficient for a relator under the False Claims Act to plead "particular details of a scheme to submit false claims paired with reliable indicia that lead to a strong inference that claims were actually submitted" to the government, or whether Rule 9(b)'s particularity requirement precludes the drawing of reasonable inferences that claims were actually submitted”

In the petition considered last year, the Supreme Court requested the Solicitor General’s views. The SG’s brief, while recognizing a circuit split, encouraged the Court to deny cert, and the Court did just that. It remains to be seen whether the Solicitor General will, or will be asked to by the Court, weigh in on the petition. In any event, we will continue to monitor this case and report on important developments.

March 24, 2015 11:49 AM | Posted by Carol Lynn Thompson and Paul Belonick | Topic(s): Public Disclosure, 9th Circuit
On Tuesday, March 17, 2015, the Ninth Circuit Court of Appeals heard two consolidated False Claims Act cases en banc, US ex rel. Hartpence v. Kinetic Concepts, Inc. (12-55396) and US ex rel. Godecke v. Kinetic Concepts, Inc. (12-56117). As discussed here, the challenged district court ruling dismissed the Relators’ cases under the public disclosure bar. In Tuesday’s argument, the Relators urged the court to overturn its holding in U.S. ex rel. Wang v. FMC Corp., 975 F. 2d 1412 (9th Cir. 1992), upon which the district court relied in ruling that an original source must have “played a part in publicly disclosing the allegations and information on which their suits were based” to escape the FCA’s public disclosure bar. The Relators argued that the Supreme Court’s decision in Rockwell Int’l Corp., v. United States, 549 U.S. 457 (2007) abrogated Wang’s “hand in the disclosure” requirement when it held that the “direct and independent knowledge” that a relator must have to qualify as an original source is the information upon which his or her complaint is based, not the information underlying the public disclosure. Defendant-Appellee countered that Rockwell did not disturb Wang’s test, and asked the court not to upset its long-standing precedent. read more
 
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