Recent Developments in Qui Tam Litigation – The Rocket Docket News
How do the recent 2009 and 2010 amendments to the False Claims Act (“FCA”) affect litigating qui tam suits today? What should relators’ counsel and Government attorneys know in order to navigate the differing judicial application of the implied false certification theory? When can defense counsel raise public disclosure and proper pleading defenses? What factors does the Government consider when deciding whether to intervene, and when? On March 7, 2012, from 12:00 p.m. to 2:30 p.m. at the Westin Alexandria, the Northern Virginia Chapter of the Federal Bar Association will be hosting a presentation and discussion panel to address these, and other, hot
topics related to the current environment of qui tam litigation.
On May 20, 2009, Congress passed the Fraud Enforcement and Recovery Act of 2009 (“FERA”). The impetus was to clarify the provisions of the FCA so that they would reflect the original intent of the law and correct court misinterpretations of Congress intent in passing the FCA, in decision such as United States ex rel. Totten v. Bombardier Corp., 380 F.3d 488 (D.C. Cir. 2004) and Allison Engine v. United States ex rel. Sanders, 128 S. Ct. 2123 (2008). FERA clarifies that, contrary to the decision in Totten, a relator need not show that a claim is presented directly to an officer or employee of the Government in order to meet the FCA’s presentment requirement. FERA defines a “claim” as any request to Government contractors and grantees. In Allison Engine, the Supreme Court held that FCA liability is predicated on the fact that a government contractor intends that the Government pay a claim, rather than on a false statement resulting in the use of Government funds to pay a false or fraudulent claim. FERA defines the terms “knowing” and “knowingly” under the FCA to include a person who acts in deliberate ignorance of the truth or in reckless disregard of the truth. Thus, FERA’s 2009 amendments explain that no proof of specific intent to defraud is necessary to establish FCA liability is predicated on the fact that a government contractor intends that the Government pay a claim, rather than on a false statement resulting in the use of Government funds to pay a false or fraudulent claim. FERA defines the terms “knowing” and “knowingly” under the FCA to include a person who acts in deliberate ignorance of the truth or in reckless disregard of the truth. Thus, FERA’s 2009 amendments explain that no proof of specific intent to defraud is necessary to establish FCA liability.
On March 23, 2010, President Barack Obama signed the Patient Protection and Affordable Care Act (“PPACA”). PPACA amends both the FCA and the Anti-Kickback Statute (“AKS”). Specifically, PPACA
changes the language of the AKS to provide that claims submitted in violation of the statute automatically constitute false claims under the FCA and that a person need not have actual knowledge or specific intent to commit a violation of the AKS. PPACA expands the definition of “original source” under the FCA to include anyone who has “knowledge that is independent of and materially adds to the publicly disclosed allegations or transactions.” Finally, it gives the Government the final word on whether a court may dismiss a case based on the public disclosure bar.
The jurisprudence regarding the implied false certification theory of FCA liability has evolved and changed grounded in the notion that the act of submitting a claim for reimbursement itself implies compliance with governing federal rules and regulations that are a precondition to payment. A majority of federal Courts of Appeals, including those in the First, Second, Third, Sixth, Ninth, Tenth, Eleventh, and District of Columbia Circuits, have recognized that there can be implied false certification liability under the FCA. The Fifth Circuit has not officially recognized the theory, and recent district courts have held that this silence means it is unavailable. Neither the Seventh nor the Eighth Circuits have addressed implied false certification liability under the FCA.
The Fourth Circuit, too, has raised concerns with the implied false certification theory. In 1997, the Fourth Circuit held that there can be no FCA liability for an omission without an obligation to disclose, thus questioning the viability of implied certification claims. See U.S. ex rel. Berge v. Bd. of Trustees of the Univ. of Alabama, 104 F.3d 1453, 1461 (4th
Cir. 1997). Since then, the Fourth Circuit and the Eastern District of Virginia have continued invalidating it. PPACA made AKS violations per se false claims, so the Government and qui tam relators need not rely upon the implied false certification theory when prosecuting such claims. However, implied false certification remains an important, and controversial, tool in qui tam litigation for all other types of FCA claims.
In 2011, the public disclosure bar to FCA liability took center stage before the Supreme Court. In Schindler Elevator Corp. v. U.S. ex rel. Kirk, 131 S. Ct. 1885, 1893 (2011), the Court held that Government responses to Freedom of Information Act (“FOIA”) requests constitute public disclosures and bar qui tam suits. However, in U.S. ex rel. Davis v. Prince, 753 F. Supp. 2d 569 (E.D. Va. 2011), the Eastern District of Virginia clarified that to constitute public disclosure, information must either reveal a fraud itself, or both a false statement and true statement
of facts from which fraud could be inferred. When deciding whether to file a FOIA request in order to gather support for a qui tam suit, a relator should determine whether the request will provide only peripheral information or uncover evidence of additional fraud. During the upcoming March 7, 2012, presentation and discussion panel, Blowing the Whistle in 2012: New Developments in Qui Tam Litigation, relators’ counsel R. Scott Oswald of The Employment Law Group; defense counsel Jonathan L. Diesenhaus of Hogan Lovells US LLP; Assistant U.S. Attorney Gerard J. Mene; and moderator N. Thomas Connally from Hogan Lovells US LLP will discuss these and more topics central to litigating qui tam actions in this ever-changing environment.
“Recent Developments in Qui Tam Litigation” The Rocket Docket News.” The Newsletter of the Northern Virginia Chapter of the Federal Bar Association (Winter 2012)