This past May, a Cook County Associate Judge dismissed 201 Illinois False Claims Act (IFCA) cases at the request of Illinois Attorney General Lisa Madigan. The state’s action is an encouraging, albeit overdue, development in a long-running legal saga where one enterprising lawyer has harnessed the state’s enforcement power to pursue personal financial gain that provides little or no benefit to the public.
Much like its federal equivalent, the IFCA allows private citizens (relators) to file fraud claims on behalf of the state. The fraud must be based on a false claim, typically a violation of a law or regulation. If successful, relators can collect up to 30% of the award plus attorneys’ fees. Continue reading
The U.S. Supreme Court: October 2015 Term Review
Speakers: The Honorable Jay Stephens, Kirkland & Ellis LLP; Andrew J. Pincus, Mayer Brown LLP; Elizabeth P. Papez, Winston & Strawn LLP; Jeffrey B. Wall, Sullivan & Cromwell LLP
Our speakers discussed Court rulings in the areas of class actions, arbitration, the federal False Claims Act, intellectual property, federal regulation, and property rights.
The U.S. Supreme Court’s June 16, 2016 decision in a closely watched False Claims Act (FCA) case, Universal Health Services, Inc. v. United States ex rel. Escobar, had a little bit in it for everyone. It held (as had most of the federal appeals courts) that a contractor can be held liable under the FCA for making a fraudulent claim for payment from the federal government, even if the claim was never expressly made but was merely implied. On the other hand, Universal Health unanimously vacated a First Circuit ruling that had reinstated the plaintiffs’ claims, concluding that the First Circuit applied an insufficiently rigorous test for determining whether the defendant’s allegedly false claims were “material.”
So which side really “won” the case? If the correct answer to that question turns on whether the Court’s decision will make it more difficult for private relators to prevail in future FCA cases, then the decision was a win for FCA defendants. For example, the Court unequivocally rejected assertions—frequently raised by FCA plaintiffs—that an FCA claim is proven any time a contractor submits a claim for payment of a contractual claim despite awareness that it has breached a significant provision of its contract. Continue reading
The US Court of Appeals for the Sixth Circuit recently dealt qui tam plaintiffs and their lawyers a setback in their campaign to expand federal False Claims Act (FCA) liability in the healthcare industry. Addressing an issue of first impression, the court affirmed the dismissal of a relator’s claim that non-compliance with the Health Information Technology for Economic and Clinical Health Act (HITECH Act) gives rise to FCA liability. U.S. ex rel. Sheldon v. Kettering Health Network not only found the relator’s complaint deficient on several grounds, but it also held that a dismissed state-court action that Ms. Sheldon filed subsequent to bringing the FCA suit precluded the federal action. Continue reading
Attorney General Pam Bondi
A Florida court of appeals recently held that the state’s attorney general could unilaterally dismiss a qui tam action filed under the Florida False Claims Act (FCA) at any time even though the office originally declined to intervene. Though mostly based on Florida law, Barati v. State of Florida merits the attention of companies doing business in other states that have enacted laws similar to the Florida FCA. Arguments that succeeded in the Florida courts regarding Attorney General Pam Bondi’s authority to dismiss qui tam suits could very well prevail in other states if her counterparts take similarly aggressive action to dismiss baseless false-claims suits. Continue reading
The Hon. Jay B. Stephens, Kirkland & Ellis LLP and Chairman, WLF Legal Policy Advisory Board
Gregory G. Katsas, Jones Day
Melissa Arbus Sherry, Latham & Watkins LLP
Ashley C. Parrish, King & Spalding LLP
by Greg Brower and Brett W. Johnson, Snell & Wilmer LLP*
Government contractors won another round in a long-running battle over the discoverability of internal investigation documents. On August 11, the United States Court of Appeals for the D.C. Circuit found, for a second time in the same case, that the district court erred in ordering the production of documents, concluding that the district court’s decision was contrary to both the circuit’s own precedent and the United States Supreme Court’s holding in Upjohn v. United States.
Back in March of 2014, in United States of America ex rel. Harry Barko v. Halliburton Company, et al., defendant Halliburton’s subsidiary, Kellogg, Brown & Root (“KBR”) and other defendants filed a petition for writ of mandamus seeking to reverse a district court’s order that certain reports created as part of an internal investigation were not privileged and should be produced in discovery. A three-judge panel of the D.C. Circuit reversed the decision, but remanded the matter back to the district court to consider other potential arguments in favor of production. For more on this decision by the circuit court, see our June 30, 2014 WLF Legal Pulse commentary here. Continue reading