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Qui Tam 2019 is the second annual conference of the Federal Bar Association's Qui Tam Section, for which TELG's Scott Oswald serves as chair. The two-day event will tackle some of the hottest topics in False Claims Act litigation, with panels featuring attorneys from both sides of the aisle, along with government prosecutors, agency representatives, and subject-matter experts.
Here Scott discusses the question of materiality under the FCA with Kate Seikaly of Reed Smith LLP, who'll be leading a panel on the topic on Day One of the conference.
This video interview by TELG managing principal R. Scott Oswald was published by The Employment Law Group, P.C. on January 17, 2019.
Qui Tam 2019 Panel Preview: Materiality Issues
» Click here for registration and full details on Qui Tam 2019
(Transcribed and edited lightly by The Employment Law Group)
R. Scott Oswald: [Addressing camera] So we’re here with Kate Seikaly and we’re here to talk about materiality. During our annual conference on February 28 and March 1, 2019 — at the Federal Bar [Association] Qui Tam Section’s annual conference — we will have a panel on materiality.
Kate, tell us a little bit about your panel, your panelists, and maybe some of the topics that you’d like to cover.
Katherine J. Seikaly: Sure. So we are going to cover as much as we can about materiality in the time we have allotted. We’ve got representatives of the defense bar, the relator’s bar, and [the U.S. Department of Justice]. We’re going to start with pleading materiality and what relator’s counsel can do to build up their complaint on that point. And then [we’ll] talk a little bit about motions to dismiss and arguments that can be made by the defense bar early.
But I think the bulk of our panel will talk about discovery process, summary judgment, and trial on those issues — with a real focus on discovery, because I think that’s becoming a big area and somewhat a new area for a lot of the practitioners. So we’re going to give them some practical tips on where to go, what to look for, and what to get on materiality.
Oswald: So if I’m in the audience and I’m there to see the panel on materiality, what can I expect? Maybe something new that I wouldn’t have expected going in?
Seikaly: Well, I think one thing that just happened recently and [that] I expect to talk a lot about on our panel is the Department of Justice’s amicus brief in the Gilead case that they filed a couple weeks ago with the Supreme Court. That touches on materiality in every possible way: On how it should be pled in a complaint, and then their statement that the discovery process [in that case] would be expected to be burdensome and that they don’t want to proceed in that fashion.
So I expect that to be a theme that we carry through and use as a guide for the panel and these very important issues.
Oswald: Why has materiality become such a hot topic?
Seikaly: After the Escobar decision I think that everybody needs to address it in every case. And I think the defense bar recognized that, now that the Supreme Court has said it’s a rigorous standard and it’s got to be pled with particularity, … they’ve got a new defense to raise both on motions to dismiss and on motions for summary judgment.
And I think the relator’s bar recognized that, and they’re now doing more to plead it upfront and discover it up front. And then, you know, if we get into discovery, then it’s got to be addressed there, too — which, even in an unintervened case, brings the government back into it.
So I think all sides of the bar are at the table on this one. And it’s very complicated, particularly in cases that have been under seal and the government has investigated for a long time. I think that presents very unique issues that people are going to have to deal with. The Escobar decision was a groundbreaking moment for our bar and we’re still feeling the effects of it in all phases of these litigations now.
Oswald: Give us a sense of the advice you’re giving to your clients at Reed Smith. You know, when you’ve got a client and you’re talking about materiality, what kind of advice are you giving to them right now?
Seikaly: It’s interesting. I’m not sure we can give much advice in terms of what they can be doing. But it’s certainly impacting how we’re handling these investigations.
If we get a new [investigative demand], or a new request from the government, years ago we would proceed with the basic facts: Who was involved, where are the documents, what are we looking for? But now I think we hone in on materiality right away and we have a different perspective on it — that it’s not just an obvious, “Is it in the contract or is it not in the contract?”
[Instead,] it’s very much, “We have to look at the conduct of the parties throughout their interactions.” We have to look at any regulations, the contract terms. So it really is impacting how we deal with these cases upfront — and then that could impact, if there is a suit filed, how we deal with it in the litigation phase.
Oswald: So [if] the government continues to pay [a defendant], whether it’s in the healthcare context or it’s in the procurement context, what effect does that potentially have on the issue of materiality?
Seikaly: Well I think we in the defense bar would say it has a huge impact — and that certainly if the facts are known and the government continues to pay, I think you have a strong materiality argument there.
I think there is a very attractive materiality argument when the government learns of the allegations, either through a sealed qui tam or some other reporting, and conducts a very long investigation, and during the course of that very long investigation continues to pay. I think that — there are some cases on that, going both ways, but that’s exactly what we’re looking at.
So [it’s] not just, “What does the contract say?” but “What has the government been doing in the time that these allegations have been known to them?”
Oswald: Does it matter how the government is treating other contractors in terms of paying over [this] time — does that matter?
Seikaly: I think it does. Because I think it colors whatever this breach or violation is that’s being alleged: Do they really think it impacts their payment decision?
I know in a case I handled a few years ago, the government took the position in discovery that they would not be producing documents or information relating to other participants in the industry. And frankly there was enough discovery out there about our client specifically that it wasn’t really a fight we were willing to have.
But I think it’s possible that, in a different context, that’s somewhere the defense bar should push a little bit. And frankly, even the relator’s bar: I mean, I think there’s stuff out there that if they are denying other contractors claims and something happened with this contract for whatever reason, it shouldn’t be on different footing but appears to be — I think that could certainly argue in favor of finding materiality for that violation.
Oswald: So it really sounds like the Department of Justice is between a rock and a hard place, in dealing with this.
Seikaly: I think so, I absolutely think so.
And, you know, one thing I think we’ll talk about on our panel is the difference in this context between an intervened case and a non-intervened case. Because when you’re in the intervened case, discovery’s a little bit easier: At least you can go through the Department of Justice. The United States is there at the table. [In] unintervened cases, you’ve got to go to the agencies. The [DOJ] takes the position they’re not — you know, while they’re the real party in interest, they are not a party to this litigation. You can’t just issue Rule 45 subpoenas, and you can’t serve them on the [DOJ].
So I do think the department is in a tough spot here between two very aggressive bars, and we’re all feeling each other out and figuring out the right way to go with it. Those are exactly the issues that I hope to flesh out a little bit in our panel.
Oswald: So Kate, tell us a little about you. When you’re not lawyering, representing clients in False Claims Act matters, where are you spending your time?
Seikaly: Well, I have two small children, three and four — two little girls — so mostly I look forward to sleep when I can find it. But on the weekends, I do try to spend a lot of time with them. And we do live here in the D.C. area, so we’re spending a lot of time trying to enjoy that part of our lives.
Oswald: Kate, thank you.
Oswald: [Addressing camera] We want to thank each of you who’ve already registered for the Qui Tam Conference. For those who have not, you can register at fedbar.org/quitam19.
We look forward to seeing you on February 28 and March 1, 2019.