False Claims Act

Earlier this month, the United States Court of Appeals for the Tenth Circuit issued a decision that provided further clarity on the False Claims Act’s standard for materiality.  The decision, United States ex rel. Janssen v. Lawrence Memorial Hospital, further demonstrated that materiality should be viewed through the eyes of the government customer rather than an hypothetical bystander.  The decision also reconfirmed that the FCA is not a “general antifraud statute” and that contractual or regulatory language conditioning payment on compliance will not necessarily prove that noncompliance was material.  Lawrence therefore serves as an important reminder to government contractors, practitioners, and other stakeholders about the significance of the materiality element in FCA litigation.
Continue Reading Tenth Circuit Provides New Material on FCA’s Materiality Standard

As previously discussed on this blog, the Supreme Court announced last year that it would resolve a circuit split over when a relator needed to file a qui tam action under the False Claims Act (“FCA”).  Earlier this month, the Court decided in Cochise Consultancy Inc. v. United States ex rel. Hunt, that relators can — in limited circumstances — take advantage of the FCA’s 3-year “alternative” statute of limitations, which means they may file their complaints up to four years after the default 6-year period has expired.

Now that the dust has settled, it is worth stepping back to take stock of the ruling’s practical effect.  We believe that Cochise will have limited impact on most qui tam actions, although it leaves some important questions open.  For FCA aficionados, the ruling by Justice Thomas also foreshadows a plain-reading, textual approach to future questions that may arise.
Continue Reading Supreme Court Extends Statute of Limitations for Relators in FCA Cases, in Limited Circumstances

This week, the Department of Justice (“DOJ”) released formal guidelines (“the Guidelines”) for awarding credit to entities that cooperate in False Claims Act (“FCA”) investigations. Frequently hinted at by DOJ officials in recent speeches and public statements, the Guidelines have been eagerly anticipated by practitioners in the FCA space.

Despite the build-up, the Guidelines are hardly revolutionary in many respects, as they largely memorialize existing discretionary practices for awarding cooperation credit that are well familiar to practitioners in the area. Nonetheless, the codification of the Guidelines in the Justice Manual may prove to be a significant development, especially if this more formal policy statement results in greater transparency and consistency in settlement discussions with DOJ. Unfortunately, the Guidelines leave unresolved certain key questions, and whether DOJ ultimately achieves its objective of promoting increased disclosure and cooperation will depend substantially on the manner in which the Guidelines are implemented.
Continue Reading New DOJ Cooperation Credit Guidelines a Welcome Sign, but Key Questions Remain Unresolved

The motivating force behind the False Claims Act, 31 U.S.C. §§ 3729-3733 (“FCA”) is its provision for qui tam enforcement, which authorizes private parties (aka relators) to initiate FCA cases on behalf of the United States. Id. § 3730(b)(1). Immediately after re-invigoration of the FCA in 1986, scholars and litigants questioned the constitutional validity of statutory authorization for relators to sue on behalf of the U.S. government. After 15 years of litigation, this debate withered, but has been recently re-invigorated.

This post summarizes four principal challenges to the constitutionality of qui tam enforcement, and then discusses two recent events in which these challenges have reappeared: the confirmation hearings for Attorney General nominee William Barr and a cert petition that asks the Supreme Court to rule on qui tam constitutionality.
Continue Reading Debate Over Qui Tam Constitutionality Resumes After 20-Year Hiatus

When does a private party need to file a qui tam action under the False Claims Act (“FCA”)?  Such a seemingly simple question has resulted in three different answers from six different courts.  This past Friday, November 16, 2018, the Supreme Court announced it would resolve that circuit split — by granting a request to review the Eleventh Circuit’s decision in United States ex rel. Hunt v. Cochise Consultancy, Inc.  The case will merit close attention, as the ultimate outcome could help protect government contractors from intentional and prejudicial delay in litigation.
Continue Reading Time to Resolve a Question About Time: Supreme Court to Consider FCA’s Statute of Limitations

Last year, we wrote about a trial court’s decision to dismiss a False Claims Act (“FCA”) complaint regarding alleged Trade Agreements Act (“TAA”) non-compliances because the relator failed to plead fraud with “particularity” under Rule 9(b).  That decision offered a sweeping rebuke of speculative FCA claims, and emphasized why it can be difficult to present a valid FCA claim based on a potential violation of a complex regulatory scheme like the TAA.

Last month, the United States Court of Appeals for the Seventh Circuit unanimously affirmed that decision in United States ex rel. Berkowitz v. Automation Aids, Inc., — F.3d — , 2018 WL 3567836 (7th Cir. July 25, 2018).  In doing so, the Seventh Circuit provided additional guidance about various topics, including the Rule 9(b) standard for implied certifications and the power of the materiality defense.  Our takeaways are below.
Continue Reading Alleged Sales of Non-TAA-Compliant Products Under GSA Schedule Contracts Are Not False Claims, 7th Circuit Holds

Due to the government’s increased focus on domestic preference requirements – for example, through President Trump’s formal policy and action plan for agencies to “scrupulously monitor, enforce, and comply” with the so-called “Buy American Laws,” and Congress’s proposed legislation to make certain Buy American requirements more robust – contractors should…
Continue Reading Takeaways From Recent FCA Decisions On Buy American Act and Trade Agreements Act Compliance

[A modified version of this blog post was published in Law360.]

Last month, Senators Dan Sullivan (R-AK) and Maria Cantwell (D-WA) introduced legislation to “improve the requirement to purchase domestic commodities or products” under the National School Lunch Program (the “NSLP”) and the School Breakfast Program (the “SPB”).  Even if this legislation fails to make it out of Committee, it signals a continued trend to strengthen the “Buy American” requirement under these programs.Continue Reading Bipartisan Legislation Aims To Strengthen “Buy American” Requirement Under National School Lunch Program

Last year, the Supreme Court’s watershed Escobar ruling altered the landscape of False Claims Act litigation when it declared that the FCA’s materiality requirement presented a “demanding” barrier to plaintiffs alleging contractual non-compliance. In the 15 months since that time, lower courts have issued a steady stream of rulings interpreting and refining this standard. In the latest—and perhaps most consequential—of these rulings, the Fifth Circuit overturned a $663 million FCA jury award on materiality grounds in the bellwether case of U.S. ex rel. Harman v. Trinity Industries, Inc. While the outcome may not be a surprise given the trend in recent decisions addressing the FCA’s materiality requirement—not to mention an earlier Fifth Circuit ruling involving a strikingly similar issue—Trinity serves as a forceful reminder of the formidable barrier to recovery presented by the materiality requirement.
Continue Reading Trinity: Divine Fifth Circuit Ruling Gives FCA Defendants Reason for Praise