We previously reported on the federal district court’s decision in U.S. ex rel. Shea v. Verizon Business Network Services, Inc. (“Verizon II”), which held that the FCA’s first-to-file rule barred a relator from filing a qui tam action based on his filing of an earlier related qui tam (“Verizon I”), despite the fact that the first-filed suit was no longer “pending.” Shea contended on appeal that the district court erred in dismissing Verizon II with prejudice since Verizon I was no longer pending when Shea filed his operative second amended complaint. read more

An April 14 article on Reuters.com titled “Lawyers start mining the Medicare data for clues to fraud” explains how plaintiffs’ lawyers are eagerly mining newly-released Medicare data showing provider-specific billings to support existing FCA claims and identify new ones. read more

On February 26, 2014, the Departments of Justice and Health and Human services released the annual Health Care Fraud and Abuse Control Program report (HCFAC Report). A copy of the report is available here. read more

^{Posted by Jaime Jones and Nirav Shah}

Today, the Supreme Court denied certiorari in U.S., ex rel. Nathan v. Takeda Pharmaceuticals, et al. As we previously reported, this case involved the pleading requirements for qui tam cases brought under the FCA. Earlier this month, the Solicitor General filed a brief urging the Court not to grant certiorari.

At issue is whether Rule 9(b) requires a complaint to “allege with particularity” that certain claims false claims were submitted for payment. Circuits are split on the issue, with the Fourth, Sixth, Eight, and Eleventh Circuits requiring stricter pleading while the First, Fifth, Seven, and Ninth adopting a more permissive approach. The Court’s denial of certiorari means that the Fourth Circuit’s ruling that the relator’s complaint “failed to plausibly allege that any false claims had been presented to the government for payment” will stand.

In Lawson v. FMR LLC, 571 U.S. ___ (2014), the Supreme Court held that the whistleblower protections in the Sarbanes-Oxley Act of 2002 extend to the employees of a public company’s private contractors and subcontractors. SOX provides that “[n]o [public] company … , or any officer, employee, contractor, subcontractor, or agent of such company, may discharge, demote, suspend, threaten, harass, or in any other manner discriminate against an employee in the terms and conditions of employment” because of whistleblowing activity. 18 U.S.C. § 1514A(a). read more

The Second Circuit recently ruled that the Southern District of New York improperly dismissed without prejudice a False Claims Act lawsuit brought by Magdy M. Youssef, against his former employers Tishman Construction Corporation (“Tishman Corp.”) and Turner Corporation (“Turner Corp.”). The ruling clears the way for Youssef to pursue his claims against his former employers in the Eastern District of New York. read more

Under certain federal laws, as well as those of a number of states and cities, minority-owned business are often afforded preferential treatment in securing certain government contracts. These laws typically set aside a certain number of contracts for minority-owned businesses, or require the winning bidder to utilize minority-owned subcontractors for a certain percentage of the contract’s work. These laws are designed to address the racial disparity in business ownership by ensuring minority business owners are given the opportunity to succeed. read more

A. Brian Albritton at the False Claims Act and Qui Tam Law blog has an interesting post titled “Limiting Discovery and Preventing Claim Smuggling in False Claims Act Cases.” The post discusses a recent opinion in U.S. ex rel. Rigsby v. State Farm Fire and Casualty Co., Civil No. 1:06CV433-HSO-RHW (S.D. Miss. Feb. 21, 2014), in which relators who had succeeded at trial on their FCA claims sought post-verdict discovery to look for evidence of other false claims. As the post explains, “the court refused to permit the relators additional discovery in order to expand their claims into areas where they did not have knowledge and when it was unclear whether other claims really existed. . . .[T]he Court noted that satisfying Rule 9(b) with ‘sufficient detail’ and defeating a motion to dismiss permits a relator access to the discovery process, but discovery should be ‘targeted’ only to ‘the claims alleged, avoiding a search for new claims.’”

Sidley is pleased to welcome Jack W. Pirozzolo, former First Assistant United States Attorney for the District of Massachusetts, as a partner in Sidley’s Boston office and member of the firm’s White Collar: Government Litigation & Investigations practice. Prior to joining Sidley, Mr. Pirozzolo served for more than 10 years in the U.S. Attorney’s Office, first as an Assistant U.S. Attorney and then, since late 2009, as the First Assistant U.S. Attorney. As First Assistant, Mr. Pirozzolo was a principal litigator for the United States in the District of Massachusetts overseeing hundreds of criminal and civil matters handled by the U.S. Attorney’s Office, including matters of national and international significance, such as the investigation, apprehension and still ongoing prosecution of the Boston Marathon Bombing defendant, Djokhar Tsarnaev; the apprehension and prosecution of James J. “Whitey” Bulger; and the largest health care fraud resolution in U.S. history. While First Assistant, Mr. Pirozzolo also directly prosecuted various matters involving white collar offenses. He attended the University of Chicago Law School, where he was Comment Editor of the University of Chicago Law Review, graduated with honors and was elected to the Order of the Coif. He also clerked for Chief Judge Sandra L. Lynch on the United States Court of Appeals for First Circuit and Judge Edward R. Becker on the United States Court of Appeals for the Third Circuit.

A recent decision by the California Court of Appeal could significantly expand liability for government contactors under the California False Claims Act (“CFCA”). See San Francisco Unified School Dist. ex rel Contreras v. First Student, Inc., No. A136986, Cal. Court. App. (1st Dist. Mar. 11, 2014). In Contreras, the Court held that a “vendor impliedly certifies compliance with express contractual requirements when it bills a public agency for providing goods or services,” even when the vendor has not expressly represented that it is in contractual compliance. Under the rule articulated in Contreras, once a relator has established a false implied certification, he or she need only show that the false certification was “material” to the government’s payment decision and that the defendant acted with scienter (i.e., knowledge or reckless disregard). This decision represents a substantial departure from jurisprudence holding that a breach of contract in and of itself does not give rise to liability under the federal FCA. read more