If you are part of a heavily regulated—or heavily litigated—industry, at some point, you or your company are likely to receive a third-party subpoena. Continue Reading False Claims Act Fundamentals: How to Respond to a Third-Party Subpoena
As we have previously covered in a blog post dated August 25, 2021, the Senate is currently considering Senate Bill 2428, the False Claims Amendments Act of 2021 (FCAA), which would cause several significant changes that would make it more difficult for defendants in False Claims Act (FCA) cases. On October 28, 2021, Senate Judiciary Committee (Committee) considered the bill originally introduced by Senator Chuck Grassley (R-IA) in July of this year.
Continue Reading False Claims Act Amendments Take More Direct Attack at Escobar and Pass Senate Judiciary Committee
On July 26, Senator Chuck Grassley (R-IA) introduced a long-promised bill to amend the False Claims Act (FCA). Not-so-creatively entitled the False Claims Act Amendments Act of 2021 (S.B. 2428), the proposed legislation is notably co-sponsored by a prominent—and bipartisan—group of senators. The text of the bill, available here, would most importantly bring changes to the analysis of the FCA’s materiality element while also affecting the process through which defendants may obtain discovery from the government.
According to a press release issued by Senator Grassley, the legislation is mainly intended to “clarif[y] the current law following confusion and misinterpretation of the Supreme Court decision in United Health Services v. United States ex rel. Escobar.” As we have previously covered at length (in blog posts dated June 23, 2016; March 20, 2020; April 8, 2020; and June 25, 2021) the U.S. Supreme Court’s 2016 decision in Escobar confirmed that the FCA’s materiality element is “rigorous” and “demanding,” and that it cannot be satisfied simply by showing that the government would have had the “option” to decline payment had it known the facts underlying an allegedly fraudulent claim.
Instead, Escobar focuses the materiality inquiry on the government’s actual or likely response to alleged fraud: if the government regularly pays similar claims with knowledge of the facts, that is “strong evidence” that the alleged misrepresentations are not material; on the other hand, if the government often denies payment under similar circumstances, that supports a finding of materiality.
In Senator Grassley’s view, however, Escobar has given way to “confusion” and “misinterpretation” that “has made it all too easy for fraudsters to argue that their obvious fraud was not material simply because the government continued payment.” Consistent with that view, the proposed legislation appears calculated to make materiality-based dismissals—as well as other kinds of dismissals—more difficult for FCA defendants to obtain. Whether it would succeed in that aim, however, is open to debate.Continue Reading Changes Coming to the FCA? Proposed Amendments Would Impact Materiality Analysis, Government Discovery, Among Other Issues