A Material Change: FCA Defendants Confront Altered Pleading Standard in Ninth Circuit after Rose and Campie

Featured Expert Contributor, False Claims Act

Stephen_Wood_03032014Stephen A. Wood, Chuhak & Tecson, P.C.

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In 2016 the U.S. Supreme Court handed down its decision in Universal Health Services, Inc. v. United States ex rel. Escobar, 136 S. Ct. 1989 (2016), a watershed in False Claims Act jurisprudence.  The Petitioner asked the Court to decide whether the statute permitted liability for falsely certifying compliance with federal requirements where that certification was not expressly stated, but implied by a defendant’s conduct.  On that issue, the High Court held unanimously in the affirmative, resolving a conflict among the courts of appeals.

In response to defense arguments that the theory would dramatically expand the scope of False Claims Act liability, the Court sought to reassure government contractors that certain pleading and proof principles applicable to these cases would constrain post-Escobar expansion of False Claims Act liability.  Expansive liability “‛can be effectively addressed through strict enforcement of the Act’s materiality and scienter requirements.’ Those requirements are rigorous.”  Escobar, 136 S. Ct. at 2002 (citations omitted).  The Court’s statements regarding the element of materiality in particular have spawned significant litigation in federal courts throughout the country over what type and quantum of evidence bears on the question of whether a claimed violation is material. Continue reading “A Material Change: FCA Defendants Confront Altered Pleading Standard in Ninth Circuit after Rose and Campie

End the Endless Extensions of the Seal Period in False Claims Act Qui Tam Cases

Featured Expert Contributor, False Claims Act

Stephen_Wood_03032014Stephen A. Wood, Chuhak & Tecson, P.C.

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The False Claims Act’s qui tam provisions permit private persons or entities to bring suit in the name of the government against defendants who are claimed to have violated the law.  An action is commenced by filing a complaint under seal and serving upon the government “substantially all material evidence and information the person possesses.”  31 U.S.C. § 3730(b)(2).   Once filed, the government has 60 days to investigate the case.  Id.  At the end of its investigation, the government must make an election—either take over the case or decline to intervene.  31 U.S.C. § 3730(b)(4).  The government may also move to dismiss the action or attempt to settle with the defendant during this time period.  See 31 U.S.C. § 3730(c)(2).

Neither the statute itself nor the legislative history of the FCA contemplates that the government should have an indefinite period of time in which to investigate a potential False Claims Act violation.  Yet, that has been an unfortunate reality in many qui tam cases, where the proceedings have remained under seal at the request of the government for years.  This practice is not only contrary to the statutory language and legislative history, it is abusive and potentially threatens a defendant’s fundamental right to due process.  It is incumbent upon both courts and defendants to put a stop to this abuse and require the government to live within the statutory dictates and Congress’ stated intent. Continue reading “End the Endless Extensions of the Seal Period in False Claims Act Qui Tam Cases”