Category

Procedure

09 August 2021

Proposed FCA Amendments Blocked from Senate Infrastructure Bill

The recently proposed amendments to the False Claims Act have stalled out for now.  As discussed here and here, these bipartisan proposed amendments—led by Senator Grassley—would have made four changes to the FCA, and most notably, would have radically altered the burden of proof for establishing materiality.

But after making a sudden appearance on Friday in the Senate infrastructure bill, last night those amendments were excluded.  This means that the amendments’ proponents will need to consider other vehicles, particularly “must pass” bills such as the budget resolution.  The Senate is expected to consider amendments to the budget resolution later this week.

We will continue to monitor developments regarding this proposed legislation.

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06 August 2021

FCA Amendments Resurface in Senate Infrastructure Bill

As discussed further here, a bipartisan group of senators, led by Senators Grassley (R-IA), Leahy (D-VT), Wicker (R-MI), Durbin (D-IL), and Kennedy (R-LA), recently introduced proposed amendments to the False Claims Act. Those amendments have now been incorporated into the infrastructure bill currently being debated in the Senate. (more…)

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26 July 2021

Bipartisan Legislation Introduced To Overhaul FCA To Further Hamstring Defendants

A bipartisan group of senators, led by Senators Grassley (R-IA), Leahy (D-VT), Wicker (R-MI), Durbin (D-IL), and Kennedy (R-LA), has introduced the False Claims Amendments Act of 2021.  This legislation is worth watching not just because it would significantly amend the FCA, but because Senator Grassley has a successful track record of shepherding through to passage legislation reversing gains made by defendants in FCA cases.

(more…)

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02 March 2021

District Court Issues Rare Rebuke Denying DOJ’s Belated Motion to Intervene

A federal district court recently issued a rare order denying the Department of Justice’s (DOJ) motion to intervene in a qui tam suit after the government’s initial declination months earlier.  See United States ex rel. Odom v. Southeast Eye Specialists, PLLC, 3:17-cv-00689 (M.D. Tenn. Feb. 24, 2021).  The False Claims Act allows the government to intervene in a case in which it previously declined to intervene upon “a showing of good cause.”  Although DOJ does so not frequently seek to intervene after previously declining to do so, courts are generally deferential to the government’s shift in position.  This decision provides important precedent for defendants in the position of arguing that a late intervention by DOJ is not appropriate.

(more…)

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23 September 2019

Third Circuit Holds That A Live Hearing Is Not Required When Government Seeks To Dismiss FCA Complaint Over Relator’s Objection

The Third Circuit recently held that relators are not automatically entitled to an in-person hearing when the government moves to dismiss a qui tam suit over the relator’s objection. U.S. ex rel Chang v. Children’s Advocacy Center of Delaware, No. 18-2311 (3d Cir. Sept. 12, 2019). Weih Chang filed qui tam lawsuit in 2015 alleging the Children’s Advocacy Center of Delaware had misrepresented material information when applying for governmental funding. After a lengthy investigation, the United States declined intervention and moved to dismiss under the statutory provision that allows dismissal, “notwithstanding the objections of the person initiating the action if the person 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.” 31 U.S.C. § 3730(c)(2)(A). The district court granted the motion to dismiss, holding that the government had shown a legitimate interest in dismissing the suit and Chang had not met the burden of showing that the move to dismiss was arbitrary or capricious. Chang appealed, arguing that he had a statutory right to an in-person hearing prior to dismissal and that at the hearing he could have introduced evidence to show that the dismissal was arbitrary and capricious. Id. at *5-6. The Third Circuit affirmed the district court opinion, holding the court had not erred in granting dismissal without conducting an in-person hearing. Id. at 8.

(more…)

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24 January 2019

District Court Rejects Relators’ Pursuit of Independent Claims After Government Intervention, and Finds Government’s Allegations of Knowledge Insufficient

When a relator brings a civil action for a violation of the FCA, the Government “may elect to intervene and proceed with the action,” and, thereafter, the Government “shall have the primary responsibility for prosecuting the action.”  31 U.S.C. 3730(b)(2), (c)(1).  In United States ex rel. Brooks, et al. v. Stevens-Henager College, Inc., et al., No. 2:15-cv-00199, 2019 WL 186663 (D. Utah Jan. 14, 2019), a judge in the District of Utah addressed the issue of “whether a relator retains an independent right to maintain the non-intervened portion of an action” in which the Government only partially intervened.  The district court held that, under the plain language and legislative history of the statute, the relator has no right to litigate the non-intervened portions of the case. (more…)

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20 November 2018

Court Compels Medicare Advantage Plan to Comply With CID for Testimony in Diagnosis Coding Investigation

On November 13, 2018, a magistrate judge issued a report to the United States District Court for the Southern District of New York recommending that the Department of Justice’s (“DOJ”) petition to compel deposition testimony from Anthem regarding its procedures and processes for verifying diagnoses for Medicare Advantage payments be granted and that a date be set for Anthem’s witness to testify.  DOJ is seeking the testimony in connection with its investigation of Anthem as part of its broader enforcement efforts under the FCA focused on the Medicare Advantage program.  (more…)

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05 November 2018

How Long Under Seal is Too Long?

On October 16, a Philadelphia federal district court rejected the government’s eleventh request for an extension of the seal so that it could continue to investigate five-year-old allegations brought under the False Claims Act qui tam provisions.  See United States ex rel. Brasher v. Pentec Health, Inc., No. 13-05745, 2018 U.S. Dist. LEXIS 177118 (E.D. Pa. Oct. 16, 2018).  The suit, first filed by relator in 2013, alleges that Pentec Health defrauded Medicare when it submitted fraudulent bills to the government health insurance program.  In denying the request, U.S. Judge Eduardo C. Robreno of the Eastern District of Pennsylvania determined the government had failed to show good cause for an eleventh extension of the seal period and ordered it to decide within 30 days if it will intervene in the suit. (more…)

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13 August 2018

Massachusetts Prohibits Entities From Being Relators

We are increasingly seeing the use of entities as relators, in lieu of individuals.  In some instances these relator entities are actual businesses, though frequently they are special purpose entities formed for the sole purpose of pursuing qui tam litigation.  There are a number of reasons for this trend, including that the use of an entity may be used to keep secret the names of individual relator-plaintiffs secret even after unsealing, and the belief that by using a corporate entity, individual whistleblowers can be added or replaced in the event of jurisdictional problems. (more…)

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09 July 2018

District Court Dismisses Original Source’s FCA Claims as Barred by Government’s Pursuit of Penalty in Bankruptcy Proceeding

The government action bar provides that a relator may not bring a False Claims Act (FCA) lawsuit “based upon allegations or transactions which are the subject of a civil suit or an administrative civil money penalty proceeding in which the Government is already a party.”  31 U.S.C. § 3730(e)(3) (emphasis added).  Recently, in Schagrin v. LDR Industries, LLC, No. 14 C 9125, 2018 WL 2332252 (N.D. Ill. May 23, 2018), a district court held that the relators’ lawsuit was barred by the “government action bar” because LDR Industries had already been subject to administrative penalties by U.S. Customs for the same alleged conduct. (more…)

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