The False Claims Act (FCA) is just one of the handful of federal laws that government contractors must adhere to or they run the risk of prosecution by a federal agency, such as the DOJ or SEC. As cited in an article I recently co-authored, “[t]he civil penalty for FCA violations can be significant, with payments ranging from three times the damages incurred by the government, plus fines of $5,500, to $11,000 for each false claim that is filed or caused to be filed.”

In the article written with Bryan King and Robert Platt that was published by Westlaw Journal – Government Contracts, we outline the best practices a government contractor should follow during an internal investigation to obtain reliable findings and maintain credibility with government enforcement agencies.

The full article, “Contractors in the Crosshairs: Investigations Passing Government Scrutiny,” was published June 22 by Westlaw Journal – Government Contract and is available in the PDF.

Last month, the Sixth Circuit affirmed sanctions imposed by a district court against a relator and his counsel for bringing a frivolous False Claims Act (“FCA”) action. The ruling in United States ex rel. Jacobs v. Lambda Research, Inc., No. 14-3705, 2015 WL 1948247 (6th Cir. May 1, 2015) is a positive development for companies that have faced an increase in FCA actions in recent years. It also illustrates the use of a sanctions provision that is specific to FCA claims. Read the full analysis on the GovCon blog post “Relators Beware – Sanctions Upheld for “Vexatious” False Claims Act Suit.”

In a long-awaited ruling, the Supreme Court held that the Wartime Suspension Limitations Act (WSLA) does not toll the statute of limitations in civil FCA actions, as the WSLA applies only to criminal actions.  After lying dormant for more than 40 years, the WSLA had threatened to upend the FCA’s limitations period and expose defendants to open-ended and extensive liability for otherwise stale FCA claims.

Amended in 2008, the WSLA provides that the statute of limitations applicable to any offense involving fraud against the United States during a time of war or when Congress has enacted a specific authorization for the use of military force is suspended until five years after the termination of hostilities.  In a number of recent cases, relators had begun relying on the WSLA as a means to avoid dismissal of claims brought outside of the FCA’s limitations period.

Continue Reading Supreme Court Limits WSLA to Criminal Offenses

Employee severance packages and settlement agreements often include a broad waiver of any claims, known or an unknown, which an employee may have against the company.  Although such broad pre-filing releases are highly recommended, companies doing business with the government should be cautioned that these waivers do not always protect against False Claims Act (FCA) litigation.  A line of federal cases has established that these so-called “pre-filing releases” are sometimes unenforceable against suits filed by whistleblowers, or qui tam actions, for public policy reasons.

Continue Reading Enforceability of Employee Releases on Qui Tam Actions

Is late package delivery considered an FCA liability for government contractors? Bass, Berry & Sims attorneys analyzed the recent settlement between United Parcel Service Inc.’s (UPS) and the Department of Justice (DOJ) resolving allegations that UPS submitted false claims to the federal government related to the timeliness of package delivery. This case shows the range of conduct that can be considered when not satisfying the terms of a government contract. Read the full analysis on the GovCon blog post “UPS Settles Alleged FCA Violations for Failing to Deliver (On Time).”

Matt Curley, John Kelly and Shuchi Parikh authored an article outlining the dangers of data misreporting for Medicare Advantage organizations and Medicare prescription drug plans. The article identifies areas of potential liability to help organizations avoid enforcement activity related to fraud and abuse allegations.

The article, “Data Misreporting Risks for Medicare Advantage and Prescription Drug Plans,” was published by Managed Healthcare Executive.

The U.S. District Court for the Middle District of Florida issued yet another opinion endorsing the use of statistical sampling in FCA cases. In its April 28, 2015 opinion in United States ex rel. Ruckh v. Genoa Healthcare, LLC., the district court held that the relator could use expert testimony of statistical sampling to establish FCA violations concerning claims submitted by defendants’ skilled nursing facilities.

The relator alleged that the defendants violated the FCA by falsifying reports summarizing patients’ medical conditions and the treatment provided to those patients. Relator further alleged fraud by the defendants who allegedly allowed unauthorized individuals to submit reports to CMS. After the defendants’ motions to dismiss the complaint were denied, the relator moved to admit expert testimony on statistical sampling due to the “voluminous discovery” and the impossibility of “producing and processing the relevant medical records at the fifty-three medical facilities and some fifty-three off-site storage locations within a reasonable time.” DOJ, which did not intervene in the case, filed a statement of interest in support of statistical sampling.

Continue Reading Another District Court Endorses Statistical Sampling

On April 6, 2015, the Sixth Circuit delivered a costly blow to the United States government to the tune of $657 million when it issued its opinion in United States v. United Technologies Corporation and remanded the case back to the district court to review the damages award, yet again.

This was the second time that the Sixth Circuit heard arguments deriving from the United States False Claims Act case against Pratt & Whitney (“Pratt”), now owned by United Technologies, for false statements the company made when competing against GE Aircraft for contracts to build F-15 and F-16 jet engines. In 1983, in an attempt to outbid GE Aircraft and make it hard for the government to issue a split-award contract, Pratt misstated its projected costs and certified that the company’s bid included its “best estimates and/or actual costs.” After uncovering Pratt’s overstated costs projections, the government filed both an administrative action against the company in the Armed Services Board of Contract Appeals (“ASBCA”) under the Truth in Negotiations Act and a lawsuit in district court alleging violations of the False Claims Act.

Continue Reading United Technologies is Saved from $657 million False Claims Act Verdict by the Sixth Circuit

In recent months, relators’ qui tam complaints have been subject to increased scrutiny by criminal prosecutors. In addition to civil FCA liability, individuals doing business with the federal government face potential criminal liability under various criminal fraud-related statutes. Potential charges for fraudulent activities are not limited to a criminal fraud charge, but also include bribery, false statements, conspiracy to defraud, wire fraud, mail fraud, and identity theft, among others. Most of these crimes are felonies and carry substantial penalties, including fines, freezing of assets and imprisonment. Especially in the healthcare industry and defense procurement space, many criminal investigations originate as civil qui tam filings only later adopting a criminal component. These parallel investigations typically involve the DOJ and may include other enforcement agencies.

Recent DOJ rhetoric encourages an increased use of such parallel investigations. In September 2014, Assistant Attorney General for the Criminal Division of the DOJ, Leslie Caldwell, announced that the Criminal Division would be “stepping up” its review to look for potential criminal liability in qui tam complaints, noting that such complaints “are a vital part of the Criminal Divisions’ future efforts.”[1] Consistent with this message, Caldwell encouraged the relator’s bar to notify the Criminal Division directly when a complaint is filed instead of coordinating only with the local U.S. Attorney’s Office. As part of the new process, the Criminal Division will receive and review new complaints so that prosecutors may determine the nature and extent of any criminal exposure.

Continue Reading New DOJ Qui Tam Protocols Likely to Lead to Increased Parallel Criminal Investigations

On March 31, 2015, in United States v. Robinson, the U.S. District Court for the Eastern District of Kentucky issued the latest opinion approving the use of statistical sampling by the government and relators to establish FCA liability.  In Robinson, the government has asserted that an optometrist provided medically unnecessary optometric services to nursing home residents over a five-year period and subsequently billed Medicare for these services.  As support for its medical necessity argument, the government submitted an expert witness opinion based on an examination of a sample of 30 of the 25,779 claims at issue.

In moving for summary judgment, the defendant argued in part that the government should not be permitted to utilize statistical sampling to extrapolate FCA liability and damages to the 25,779 claims at issue.  The government contended that requiring a claim-by-claim review in FCA cases involving this magnitude of claims would enable many defendants to evade prosecution and that other courts have found statistical sampling appropriate in establishing FCA liability in similar cases.

Continue Reading Trend of Using Statistical Sampling to Support FCA Liability Continues

From the Bass, Berry & Sims Blog Network
From the Bass, Berry & Sims Blog Network

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