In a victory for government contractors, the U.S. Court of Appeals for the Tenth Circuit held that vendors and their suppliers cannot knowingly submit false claims under the False Claims Act where the knowing falsity is premised on lack of compliance with government regulations that are subject to differing, good-faith interpretations. The case, U.S. ex rel. Smith v. Boeing, No. 14-3247, 2016 WL3244862 (10th Cir. 2016), involved an appeal by relators, three former Boeing employees, of summary judgment for Boeing and Ducommun, Inc.
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.
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.
Suppose you’re a relator who files a qui tam case against your former employer only to see your case dismissed on the grounds that you released the claims as part of accepting a severance package from your employer. Can your wife or another former employee who didn’t sign the release subsequently retain the lawyer who represented you in your qui tam case and file her own lawsuit making identical claims against your former employer? Not in the Fourth Circuit, as a result of a January 29, 2016 panel decision in U.S. ex rel. May v. Purdue Pharma L.P., No. 14-2299.
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.
On December 1, the New York Times reported on the confidential settlement of unfair labor practices and retaliation claims lodged with the NLRB by two former attorneys with the National Whistleblowers Center in Washington, D.C. According to the article, the whistleblowers were fired shortly after the Center had helped secure a $104 million whistle-blower award against a Swiss bank, a portion of which some thought might have gone to the Center. Additionally, the NYT reports, the firings coincided with the fired attorneys’ efforts to unionize the Center’s workforce. The details of the settled case were themselves sealed, until someone blew the whistle.
Last month, the Eighth Circuit, sitting en banc, overturned a district court’s decision to grant two qui tam relators a share of an FCA settlement that resolved multiple claims, including some claims allegedly unrelated to the relators’ complaint. Rille v. Pricewaterhouse Coopers LLP, et al., No. 11-3514, 2015 WL 5778810 (8th Cir. Oct. 5, 2015). Joining the Sixth Circuit, the Eighth Circuit held that the FCA only entitles a relator to share in the portion of the settlement attributable to the claims that he or she brought. Id.
On October 6, 2015, the U.S. District Court for the District of Columbia allowed relator Stephen Shea to refile his case against Verizon in order to avoid the False Claims Act’s first-to-file bar. See U.S. ex rel. Shea v. Verizon Business Network Services et al., No. 09-1050-GK (D.D.C. Oct. 6, 2015). By allowing Shea to refile, the District Court took an important stance on the FCA’s public disclosure bar that may make it more difficult for future defendants to advance the bar.
On July 16, 2015, the Ninth Circuit held that a relator convicted criminally for his role in a fraud against the government must be dismissed from a qui tam action related to the fraud, even if he played only a minor role in the underlying misconduct.
In U.S. ex rel. Schroeder v. CH2M Hill, relator Carl Schroeder, who worked for a U.S. Department of Energy (“DOE”) contractor, submitted false time cards to his employer and was paid over $50,000 in unearned overtime. Many of Schroeder’s colleagues had engaged in similar conduct. DOE’s Office of Inspector General (“OIG”) launched an investigation in 2008. In an OIG interview conducted in December 2008, Schroeder admitted to over-billing for his time.
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.