By

Kristin Graham Koehler

05 August 2019

Minnesota District Court Orders Government to Identify Specific False Claims and Provide Witness Interview Materials

A recent decision from the District of Minnesota denied the government’s appeal of a federal magistrate judge’s order requiring that, as part of discovery, the government detail specific false claims and turn over notes and reports of witness interviews.  The underlying case is a qui tam alleging that Precisions Lens and its founder provided kickbacks to physicians to induce the use of its eye surgery products.

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21 May 2019

First Circuit Changes Course and Finds First-to-File Rule Is Not Jurisdictional

On May 6, 2019, the U.S. Court of Appeals for the First Circuit overturned its own precedent, holding that the first-to-file rule is not jurisdictional. United States v. Millennium Labs., Inc., No. 17-1106, 2019 WL 1987249, at *1 (1st Cir. May 6, 2019).  The First Circuit now joins the D.C. Circuit and the Second Circuit in treating the first-to-file requirement as merely a matter of adequate pleading (see United States ex rel. Hayes v. Allstate Ins. Co., 853 F.3d 80, 86 (2d Cir.) (per curiam), cert. denied, 138 S. Ct. 199 (2017); United States ex rel. Heath v. AT&T, Inc., 791 F.3d 112, 120-21 (D.C. Cir. 2015)), widening an existing circuit split on the issue. See, e.g., United States ex rel. Wilson v. Bristol-Myers Squibb, Inc., 750 F.3d 111, 117 (1st Cir. 2014) (first-to-file rule is jurisdictional).

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20 May 2019

Tenth Circuit Offers New Guidance On “Original Source” Exception to the Public Disclosure Bar

The U.S. Court of Appeals for the Tenth Circuit weighed in on the “public disclosure bar” under the False Claims Act (“FCA”) that relators must pass for their qui tam suits to proceed. For the first time, the Court provided guidance on when a relator’s allegations can be deemed to “materially add” to public disclosures related to an alleged false claim, such that the original source exception to the public disclosure bar applies. United States ex rel. Reed v. KeyPoint Gov’t Solutions, No. 17-1379, (10th Cir. Apr. 30, 2019).

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08 May 2019

DOJ Announces New Guidance to Prosecutors on FCA Investigations

On May 7, 2019, the Department of Justice (DOJ) announced the release of formal guidance to its False Claims Act (FCA) prosecutors that provides a path for leniency for defendants in FCA investigations. More specifically, the guidance which is formalized in Section 4-4.112 of the DOJ’s Justice Manual, explains the manner in which the DOJ will award credit to defendants who voluntarily self-disclose misconduct that could serve as the basis for FCA liability, take other steps to cooperate with FCA investigations, or implement adequate and effective remedial measures in the FCA context. And significantly, the guidance provides that a defendant can receive a reduction in the damages multiplier and civil penalties under the FCA, which is the typical form of “credit” described in the guidance.

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03 May 2019

DOJ Publishes New Guidance on Evaluating Corporate Compliance Programs

On April 30, the Criminal Division of the U.S. Department of Justice (DOJ) released a new guidance document titled “The Evaluation of Corporate Compliance Programs,” which updates a prior version of the guidance first issued in February 2017 (previously analyzed here). The new guidance provides additional insights into how DOJ will assess the effectiveness of a company’s overall compliance program in an enforcement action, focusing on the program’s design, implementation and effectiveness.

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19 February 2019

8th Circuit Reaffirms FRCP 9(b)’s Demanding Pleading Standard

The U.S. Court of Appeals for the Eighth Circuit joined a growing trend among courts in tightening False Claims Act (“FCA”) pleading requirements, affirming the dismissal of a qui tam action brought against a nonprofit hospital because the relators failed to meet the “particularity” standard set forth under Rule 9(b) of the Federal Rules of Civil Procedure. In doing so, the court reminded FCA litigants that Rule 9(b) requires either “representative samples” of false claims plead with adequate specificity, or particular details of a scheme to submit false claims paired with reliable indicia that they were submitted. United States ex rel. Strubbe v. Crawford Cnty. Mem’l Hosp., No 18-1022, 2019 WL 512190 (8th Cir. Feb. 11, 2019).  (more…)

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18 February 2019

Court Affirms Government’s Unfettered Right to Dismiss a Qui Tam Action

When the government moves to dismiss a qui tam action, it must satisfy two procedural requirements: it must first notify the relator that the government has filed a motion to dismiss, and second, it must provide the relator an opportunity for a hearing on the motion.  31 U.S.C. § 3730(c)(2)(A).  In the year since the issuance of the Granston Memo, which we have written about, here, here, here, and here, both relators and courts have grappled with the breadth of the government’s discretion to dismiss qui tam actions.

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19 October 2018

Sidley Lawyers Publish Article On Second Circuit Decision Require Dismissal For First-to-File Violations

Sidley lawyers Kristin Graham Koehler and Josh Fougere have authored an article as a part of the Washington Legal Foundation’s Counsel’s Advisories series, entitled “Appeals Court Holds That First-To-File Violations Require Dismissal Of False Claims Act Suits.”  The article examines the Second Circuit’s recent ruling in United States ex rel. Wood v. Allergan, Inc., 899 F.3d 163 (2d Cir. 2018).  The Second Circuit joined a growing majority view in holding that a violation of the False Claims Act’s “first-to-file bar cannot be remedied by amending or supplementing the complaint” but, instead, requires dismissal.  In reaching that conclusion, the court of appeals made two important points.  First, the Second Circuit rejected the relator’s contention that the earlier-filed suits did not trigger the first-to-file bar because they were deficiently pled and were not as detailed as the current complaint.  Second, the Second Circuit held that, if a “related action” is “pending” when the relator initially files the complaint, the relator cannot “cure” the violation through amendment after the earlier action is dismissed.  The only remedy is dismissal.  This emerging consensus has important consequences for statutes of limitations and for how parallel courts handle multiple qui tam suits making similar allegations.

The article is available for download on the Washington Legal Foundation’s website: https://www.wlf.org/2018/10/18/publishing/appeals-court-holds-that-first-to-file-violations-require-dismissal-of-false-claims-act-suits/.

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29 June 2018

U.S. Solicitor General Agrees That First-to File Violations Require Dismissal

The Solicitor General recently filed a brief in the United States Supreme Court stating that “the required remedy for a first-to-file violation is dismissal.”  U.S. Br. 10 (emphasis added).

The brief was filed in the context of the long-running case that produced the Court’s opinion a few years ago in Kellogg Brown & Root Servs., Inc. v. United States ex rel. Carter, 135 S. Ct. 1970 (2015).  On remand, the petitioner, Benjamin Carter, maintained that the intervening dismissals of two earlier-filed cases “cured” any first-to-file defect with his case, such that dismissal and re-filing of Carter’s complaint was unnecessary.  The district court and the Fourth Circuit disagreed.  Carter then sought certiorari, and the Supreme Court invited the Solicitor General to weigh in.  (The government recommended against certiorari, and the Court denied the petition on June 25, 2018.)  (more…)

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10 April 2018

Sidley Lawyers Publish Article On Third Circuit Decision Regarding The Necessary Link Between Alleged Anti-Kickback Statute Violations And Actual Claims for Payment

Sidley lawyers Kristin Graham Koehler and Josh Fougere have authored an article as a part of the Washington Legal Foundation’s Legal Opinion Letter series, entitled “Third Circuit Confirms that False Claims Act Liability Requires Actual Evidence of a False Claim.” The article examines the Third Circuit’s recent ruling in United States ex rel. Greenfield v. Medco Health Sols., Inc., 880 F.3d 89 (3d Cir. 2018), an FCA suit premised on alleged violations of the Anti-Kickback Statute that was previously covered on this blog here.  Reaffirming the importance of showing an actual false claim for government payment, the Third Circuit held that, to prevail at summary judgment, relators must “point to at least one claim” rendered false or fraudulent by the alleged kickback scheme.  In doing so, moreover, the Third Circuit roundly rejected the relator’s arguments that a defendant “necessarily” violates the FCA by certifying that it did not pay illegal kickbacks, or that “the taint of a kickback renders every reimbursement claim false.”  Instead, the relator needed evidence of at least one “particular patient [who was] exposed to an illegal recommendation or referral and a provider [who] submits a claim for reimbursement pertaining to that patient.”  This decision should prove particularly significant for pharmaceutical manufacturers as more relators gravitate towards Anti-Kickback Statute allegations rather than off-label contentions.

The article is available for download on the Washington Legal Foundation’s website: http://www.wlf.org/publishing/publication_detail.asp?id=2706.

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