Since last year’s Granston Memo (discussed recently here and here), DOJ has actively sought dismissal of FCA cases that it believes do not serve the interests of the federal government. DOJ’s power to do so derives from Section 3730(c)(2)(A) of the FCA, which provides that the Government “may dismiss” a relator’s action if the realtor “has been notified by the Government of the filing of the motion and the court has provided the person with an opportunity for a hearing on the motion.” In United States ex rel. Davis v. Hennepin County, the court considered two questions about the scope of that statutory power: (1) whether the government must first intervene in a case before moving to dismiss the action, and (2) whether the government must show a valid purpose and a rational relationship between dismissal and the accomplishment of its stated purpose. The district court answered “no” to both questions and dismissed the relator’s suit. In so doing, the court signaled its view that the Eighth Circuit would side with the D.C. Circuit in the split over the standard that applies when the government seeks dismissal under Section 3730(c)(2)(A) (the circuit split is discussed here and here).
Scott Stein (Chicago), Doreen Rachal (Boston), and Naomi Igra (San Francisco) authored an article for Bloomberg Law about Attorney General nominee William Barr’s testimony on the qui tam provisions of the False Claims Act. As discussed in the article, Barr questioned the constitutionality of the qui tam provisions earlier in his career but took a softer stance at his confirmation hearing. The article, a copy of which can be accessed here, explains how Barr acknowledged a Supreme Court decision upholding the qui tam provisions but left open the possibility that a Barr-led DOJ would continue moving to dismiss whistleblower actions that do not advance the federal government’s interests.
Scott Stein (Chicago), Doreen Rachal (Boston), and Naomi Igra (San Francisco) have authored an article for Bloomberg Law regarding Attorney General nominee William Barr’s views on the qui tam provisions of the False Claims Act. As discussed in the article, Barr has previously called the qui tam provisions “patently unconstitutional.” The article, a copy of which can be accessed here, discusses the basis for Barr’s views and how his confirmation may amplify DOJ’s recent efforts to move for dismissal of qui tam cases that do not serve the federal government’s interests.
Last week, the Sixth Circuit again resurrected the relator’s case in United States ex rel. Marjorie Prather v. Brookdale Senior Living Communities, Inc. (a discussion of the Sixth Circuit’s previous opinion is available here. In a 2-1 decision, the majority held that the relator’s materiality and scienter allegations sufficed under Universal Health Services, Inc. v. United States ex rel. Escobar, 136 S. Ct. 1989 (2016). The majority issued the decision over a vigorous dissent by Judge McKeague. The gulf between the majority and the dissent reflects persistent questions about how Escobar applies at the pleading stage (see discussion here). (more…)
Last week’s oral argument in U.S. ex rel. Rose et al. v. Stephens Institute highlighted the Ninth Circuit’s continuing struggle with the Supreme Court’s decision in Escobar.
Stephens Institute involves allegations that the Academy of Art University (AAU) paid bonuses to recruiters in violation of an incentive compensation ban in Title IV of the Higher Education Act. According to the relator, AAU violated the False Claims Act because it implicitly and falsely certified compliance with the ban when it requested federal funds for its students under Title IV.
The Ninth Circuit took up the case on interlocutory appeal after the district court denied summary judgment to the defendants. Oral argument focused on two fundamental questions of law:
- Did Escobar establish a mandatory two-part test for claims brought under an implied false certification theory of FCA liability?
- Does a government’s practice of paying claims despite its knowledge of noncompliance render a defendant’s noncompliance immaterial as a matter of law?
The latest edition of the Food and Drug Law Institute’s Top Food and Drug Cases 2016 & Cases to Watch 2017 contains an article by Sidley lawyers Mark E. Haddad and Naomi A. Igra about the Supreme Court’s decision in Universal Health Services, Inc. v. Escobar. The article explains the underlying facts of the case, explains the importance of the Supreme Court’s decision, and discusses the evolution of the case law on implied certification in the lower courts seeking to apply Escobar. The article is available here.