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.
Court Holds Lack of Knowledge Defense Waives Attorney-Client Privilege
A District of Nevada magistrate judge has ruled that an FCA defendant’s assertion that it complied with “all applicable legal requirements” constitutes a “good faith” defense that waives the attorney-client privilege. The opinion highlights the thin line between a mere denial of scienter (which should not waive the privilege) and an affirmative good faith defense (which may), and illustrates the difficult choices FCA defendants face when deciding how best to respond to an allegation that they knowingly attempted to commit fraud.
Fifth Circuit Affirms Dismissal of Attorney-Relator’s Qui Tam Suit For Violation of Ethical Obligations
Last year, we wrote about a district court decision disqualifying an attorney from serving as relator in a False Claims Act (“FCA”) action that he initiated against his client’s adversary in pending litigation (see here and here). The attorney and would-be-relator, Donald Holmes, was retained by an insurance company, Munich Re, in connection with arbitration against Northrop Grumman, who had submitted claims for damage to its shipyards allegedly resulting from Hurricane Katrina. Holmes, on behalf of the insurance company, filed a complaint in federal court to obtain certain documents from the Navy allegedly relevant to the arbitration. He eventually obtained the documents subject to a protective order that forbade their disclosure outside of the arbitration. However, Holmes promptly filed an FCA complaint against Northrop, alleging Northrop improperly used government funds allocated to compensate for Hurricane Katrina damage to instead cover cost overruns that occurred before the storm, based on the documents obtained from the Navy —in clear violation of the protective order.
Court Holds That Relator’s Review of Disclosure Statement to Prepare for Deposition Results in Limited Waiver
A qui tam relator’s disclosure statement may be discoverable if it is used to refresh the relator’s recollection for a deposition or other testimony. In United States ex rel. Bingham v. HCA, Inc., a False Claims Act case before the U.S. District Court for the Southern District of Florida, the defendant moved to compel production of the relator’s written disclosure statement to DOJ. The parties disputed whether the relator’s statement constitutes work product and, if so, whether the work product protection was waived. In an order issued earlier this week, the district court bypassed the first question and ruled that any work product protection was waived when the disclosure statement was used to refresh the relator’s recollection prior to his deposition. The court relied on “long-established principles” that privilege in these circumstances must give way to Federal Rule of Evidence 612, which entitles an adverse party “to have the writing [used to refresh the witness’s recollection] produced at the hearing, to inspect it, to cross-examine the witness about it, and to introduce in evidence any portion that relates to the witness’s testimony.” The court reasoned that fairness to the defendant requires that the disclosure statement be turned over for effective cross-examination.
Court Denies Disqualified Attorney-Relator’s Motion to “Correct” His Noncompliance with a Protective Order
Earlier this year, we wrote about a case in which a district court disqualified an attorney, Donald Holmes, from serving as a relator based, in part, on his use of information in violation of a protective order in a related case in another district court. See “Court Disqualifies Attorney Relator for Ethical Violations” (June 15, 2015). With Holmes’s appeal of that decision pending in the Fifth Circuit, he filed a motion in the District Court for the District of Columbia—the court that originally issued the protective order that Holmes violated—requesting that the court sanction him $1,000 and modify the protective order to permit disclosure of the confidential information to the DOJ and the qui tam court. The court characterized Holmes’s motion as “a likely attempt to show the Fifth Circuit that he has already been sanctioned by this Tribunal in the hopes of having the dismissal there overturned” but explained that it had no power to alter sanctions levied by another court.
Recent Decisions Highlight Ethical Pitfalls Of Former In-House Counsel’s Involvement In FCA Actions Involving Former Employer
Two recent decisions add to the growing body of case law addressing the tension between attorneys’ ethical obligations to current and former clients and the qui tam provisions of the False Claims Act.
Barko Round 2: D.C. Circuit Again Steps In to Protect FCA Defendant’s Privilege Over Internal Investigation
The D.C. Circuit recently issued another opinion in a case that we have followed closely, In re Kellogg Brown & Root, Inc., No. 14-5319 (D.C. Cir. Aug. 11, 2015). For the second time, the D.C. Circuit granted a writ of mandamus to address the district court’s ruling that the defendant had waived privilege—and for the second time, the D.C. Circuit has vacated the district court’s orders to produce documents in connection with the results of an internal investigation into potential FCA claims because the orders “would erode the confidentiality of an internal investigation in a manner squarely contrary to the Supreme Court’s guidance in Upjohn and [the Court’s] prior decision in this case.” Slip Op. at 23.
Court Sides with Armstrong in Document Dispute Involving Defendants’ Prior Counsel
On July 13, 2015, the District Court for the District of Columbia sided with cyclist Lance Armstrong and his former attorneys, Williams & Connolly, LLP, in their efforts to oppose relator Floyd Landis’ attempt to compel Williams & Connolly to comply with a subpoena for communications among the firm, Armstrong, and Armstrong’s agents, Capital Sports and Entertainment Holdings Inc. (CSE). A copy of the court’s order can be found here.
Document Dispute in Armstrong Litigation Raises Privilege and Burden Concerns for Defendants’ Prior Counsel
Posted by Kristin Graham Koehler, Monica Groat, and Hilary Hoffman (Summer Associate)
In June 2010, relator Floyd Landis (Lance Armstrong’s former cycling teammate) brought a False Claims Act lawsuit against Armstrong, Armstrong’s agents Capital Sports and Entertainment Holdings Inc. (CSE), and Tailwind, Armstrong’s former employer. We have previously discussed the Armstrong litigation on this blog here, here, here, here, and here.
Court Disqualifies Attorney Relator for Ethical Violations
Posted by Scott Stein and Emily Van Wyck
Whether and under what circumstances an attorney can act as a whistleblower is one of the most controversial subjects under the False Claims Act. We wrote previously about a Second Circuit case in which the court dismissed an FCA case brought against a company by its former general counsel on the ground that the attorney had violated his ethical obligations to his former client. See “Second Circuit Affirms Dismissal of False Claims Act Suit Brought By Clinical Laboratory Defendant’s Former General Counsel”. Now another district court has disqualified an attorney whistleblower who sued his client’s adversary, holding that, in doing so, the attorney had violated duties of confidentiality and loyalty to his own client. See United States ex rel. Holmes v. Northrup Grumman Corp., No. 1:13-cv-00085-HSO-RHW (S.D. Miss. June 3, 2015).