DOJ’s Blue Book Partially Unsealed

A judge recently unsealed portions of the Department of Justice’s criminal discovery manual that provides Department policy for investigating and prosecuting criminal cases. As the DC Circuit explained two years ago, “[i]t contains information and advice for prosecutors about conducting discovery in their cases, including guidance about the government’s various obligations to provide discovery to defendant.” It was developed in large part in response to the horribly flawed prosecution of the late Sen. Ted Stevens – a case in which the judge threw out the conviction because the federal prosecutors hid evidence from the defense team, including contradictory statements by a key witness.    Continue Reading

DOJ Formalizes Guidance for Government Dismissal of Unmeritorious Qui Tam Suits

Memorandum dated January 10, 2018 and authored by Michael Granston, Director of the Commercial Litigation Branch of the Fraud Section of the U.S. Department of Justice, was published on January 24, 2018 (the “Memorandum”). The Memorandum, addressed to DOJ attorneys, describes the factors that government attorneys should consider in deciding whether the government should voluntarily dismiss unmeritorious qui tam suits pursuant to 31 U.S.C. § 3730(c)(2)(A). This policy guidance, which was picked up by the legal press just yesterday, comes after a three-month period in which the DOJ, the relator’s bar, and the defense bar alike have paid more than customary attention to the circumstances under which DOJ might dismiss an unmeritorious qui tam suit. Continue Reading

FCA Materiality: It’s One thing to Proclaim but It’s Another Thing to Prove

In United States, et al., ex rel. Ruckh v. Salus Rehabilitation, LLC, et al., Case No. 8:11-cv-1303-T-23TBM (M.D. Fl. Jan. 11, 2018), a federal district court judge offered a thoughtful, cogent analysis of both the letter and spirit of the Supreme Court’s decision in Universal Health Services, Inc. v. Escobar, 136 S. Ct. 1989 (2016) to reverse a jury’s $350 million verdict in favor of the United States and Florida (as well as the relator). The decision provides valuable guidance concerning how the Escobar holding should be applied to analyzing the actual evidence established under a False Claims Act (“FCA”) case, as distinguished from mere allegations. The lesson is that while Escobar will undoubtedly affect the standard of pleading required in motions to dismiss, its greater potential impact is on motions for summary judgment, where mere allegations without substantiating evidence will be insufficient to survive dismissal. Continue Reading

MWI Lives On One Year After the Supreme Court Denied Certiorari

On January 9, 2017, the Supreme Court denied certiorari in United States ex rel. Purcell v. MWI Corp., No. 16-361, ending one of the longest running False Claims Act cases in history—18 years and 136 days, to be exact. We followed this case closely in previous blog posts here, and here. The case is significant because it held that there is no False Claims Act liability for a contractor’s objectively reasonable interpretation of an ambiguous contract provision. On the one year anniversary of the Supreme Court’s denial of certiorari, this objectively reasonable D.C. Circuit opinion remains good law. Continue Reading

Materiality Part II: Government Knowledge

Editor’s Note: This is the second in a five-part series on how U.S. district courts and courts of appeal have applied the materiality standard set forth in Universal Health Services, Inc. v. United States ex rel. Escobar, 136 S. Ct. 1989 (2016).

In the context of implied certification cases brought under the False Claims Act (FCA), materiality is simply whether an alleged statutory, regulatory, or contractual violation has some bearing on the government’s decision to pay claims. It follows that when the government knows of an alleged statutory, regulatory, or contractual violation and pays a claim anyway, then that violation could not possibly have been material to the government’s payment decision. For this reason, the government’s knowledge of alleged violations and its subsequent behavior in the face of that knowledge have tremendous implications for false certification defendants. Continue Reading

DOJ Releases its 2017 False Claims Act Recovery Statistics

On December 21, 2017, the United States Department of Justice (DOJ) released its annual False Claims Act (FCA) recovery statistics for fiscal year (FY) 2017. The press release measures the DOJ’s total haul at $3.7 billion. Although this is a significant piece of news in its own right, we analyze these statistics each year for any potential trends. (See our post on the 2016 statistics, here, and our full analysis of the 2016 statistics in Robert T. Rhoad’s West Year-In-Review conference brief, available here.) And this year, like the years before it, the trendlines have been far from uninteresting. Continue Reading

Change in Policy or Same Old Story? DOJ Suggests it Will Dismiss Unmeritorious Qui Tam Suits

An early report from the Health Care Compliance Association’s Health Care Enforcement Compliance Institute states that DOJ will be moving to dismiss False Claims Act cases that it concludes lack merit. DOJ has not yet posted the speech on its website but RACmonitor, an online news and information source for healthcare providers, reports that:

In announcing a significant policy change, the U.S. Department of Justice (DOJ) said that when it concludes that a qui tam case lacks merit, it will file a motion to dismiss the case rather than allowing the relator to continue.

The surprise announcement was made by Michael Granston, director of the commercial litigation branch of the fraud section in the DOJ’s civil division, during the Health Care Compliance Association’s Health Care Enforcement Compliance Institute in Washington, D.C. on Monday. Continue Reading

Head on Collision: 5th Circuit Crashes Into Massive $663M Guard Rail Jury Verdict on Materiality Grounds

The story behind the Trinity Industries False Claims Act (FCA) litigation is one that is becoming too familiar for companies that do business with federal and state governments. Luckily, that story now has some silver lining, after the Fifth Circuit recently overturned a massive $663 million jury verdict against the company. Continue Reading

Materiality Part I: Distinguishing Important Representations from the Minor or Insubstantial

Editor’s Note: This is the first in a five-part series on how U.S. district courts and courts of appeal have applied the materiality standard set forth in Universal Health Services, Inc. v. U.S. ex rel. Escobar.

In Escobar, the Supreme Court described several factors that a district court should consider in assessing whether a particular contractual, regulatory, or statutory violation was material to a government’s decision to pay. One of those factors was whether a “reasonable man [acting on the Government’s behalf] would attach importance to [the representation] in determining his choice of action in the transaction.” at 2003.  It follows that a reasonable person would not attach importance to a violation that is “minor or insubstantial.” Universal Health Servs., Inc. v. U.S. ex rel. Escobar, 136 S. Ct. 1989, 2003 (2016) (emphasis added). So how have the district courts handled this “reasonable man” objective standard? And what types of violations are minor or insubstantial? This article explores the answers to those questions. Continue Reading

Another One Bites The Dust – False Claims Act Complaint Based On The Trade Agreements Act Is Dismissed With Prejudice For Relator’s Failure To Allege Fraud With Particularity

Opportunistic relators have made a cottage industry of filing claims under the False Claims Act (FCA) alleging that contractors are violating the Trade Agreements Act (TAA) by misrepresenting the country of origin of products being sold to the government. Many of these relators are not company insiders and, as a result, lack detailed information regarding the sales practices of their targets. Instead, these relators cobble together publicly available information and often base their claims of fraud on inferences and innuendo. Courts, however, have steadfastly required relators to allege their claims of fraud with particularity – i.e., pleading details regarding the who, what, when, where and how of the alleged fraudulent conduct. As a result, many unsupported FCA claims have been dismissed. The most recent example is the FCA lawsuit filed by Jeffrey Berkowitz against nine government contractors in the U.S. District Court for the Northern District of Illinois in U.S. ex rel. Berkowitz v. Automation Aids, et al., No. 13-C-08185.[1]  Continue Reading