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Relators Denied Permanent Seal on FCA Case Record after Voluntary Dismissal

On March 20, 2017, the US District Court for the Southern District of Mississippi denied a motion to permanently seal the record of previously dismissed False Claims Act (FCA) claims.  The three relators, who initially brought the claims in US v. Apothetech Rx Specialty Pharmacy Corp., claimed they would face potential reputational damage and retaliatory actions if the case was not permanently sealed. The court ultimately held, however, that such “generalized apprehensions of future retaliation” were not enough to overcome the strong public right of access to judicial proceedings. The underlying qui tam complaint was initially filed on August 14, 2015, and alleged the defendants engaged in a fraudulent scheme of improperly compensating independently contracted sales representatives for referrals. The relators voluntarily dismissed the complaint a year later in August 2016. Upon dismissal, however, the court temporarily sealed all case records related to the...

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Relying on Escobar, Ninth Circuit Tosses Implied Certification Case

On January 12, 2017, the US Court of Appeals for the Ninth Circuit affirmed a district court’s grant of summary judgment in favor of a government contractor, where a relator had asserted that the contractor had violated material contractual requirements. In United States ex rel. Kelly v. SERCO, Inc., defendant SERCO provided project management, engineering design and installation support services for a range of government projects to the US Department of Defense, Navy Space and Naval Warfare Systems Command (SPAWAR). The Federal Acquisition Regulation (FAR) requires that government contracts of this nature contain a clause requiring the contractor to implement a cost and progress tracking tool called an “earned value management system” (EVMS), which is “a project management tool that effectively integrates the project scope of work with cost, schedule and performance elements for optimum project planning and control,” 48 C.F.R. § 2.101, and that this EVMS...

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Seventh Circuit Rejects FCA Retaliation Claim

On October 11, 2016, a three-judge panel of the Seventh Circuit Court of Appeals issued a ruling in United States ex rel. Uhlig v. Fluor Corp., affirming summary judgment against the relator in an FCA action where the government had declined to intervene. See generally 2016 WL 5905714, No. 14-2815 (7th Cir. Oct. 11, 2016). The defendant had contracted with the US Army to perform electrical work at bases in Northern Afghanistan. It hired the relator, an electrician, as a foreperson for this work, but subsequently declined to renew his contract because he did not hold an electrician’s license. The relator then emailed the Defense Contract Management Agency, complaining that he was losing his job while other unlicensed electricians, who were Afghan nationals, were not. In a follow-up email, the relator alleged that the defendant company was committing fraud, and copied a website dedicated to “exposing . . . corporate greed among [defense] contractors.” The...

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Fifth Circuit Holds FCA Amendment Does Not Expand Retaliation Liability beyond Employers

The Fifth Circuit Court of Appeals recently affirmed a district court’s dismissal of a retaliation claim under the False Claims Act (FCA) as to several individual defendants. In Howell v. Town of Ball, a Ball, Louisiana police officer, Howell, sued the town and several town officials for employment retaliation in violation of the FCA (among other claims).  The officials moved to dismiss, arguing that the FCA creates a cause of action only against a plaintiff’s employer.  The district court agreed, citing the subsection of the FCA that creates a cause of action for those “discriminated against in the terms and conditions of employment . . .”  31 U.S.C. § 3730(h) (emphasis added). On appeal, Howell argued that a 2009 amendment to the FCA (which removed the reference to “employer” in § 3730(h)) “indicate[d] a legislative intent to broaden the class of viable defendants.” In a July 1 decision, a three-judge panel of the Fifth Circuit disagreed with Howell,...

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Fourth Circuit Affirms Dismissal of Ex-Employee’s Retaliation Suit

On August 22, 2016, the US Court of Appeals for the Fourth Circuit issued a decision in Carlson v. DynCorp International LLC, affirming the district court’s dismissal of an ex-employee’s retaliation suit under the False Claims Act’s (FCA) anti-retaliation provision, 31 U.S.C. § 3730(h).  While the Fourth Circuit concluded that the district court applied a standard “rendered erroneous by recent amendments to the statute,” the court nonetheless affirmed the district court’s decision dismissing the case. Scott Carlson (Carlson) was employed by private military contractor DynCorp International LLC (DynCorp).  Because DynCorp had substantial government contracts, it was subject to certain accounting and billing standards dictated by the Office of Federal Procurement Policy.  Carlson alleged that DynCorp engaged in improper billing practices on existing government contracts, including one with the US Agency for International Development (USAID), by hiding indirect...

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Another Court Rejects Claims Based on Differences of Clinical Judgment; Also Rejects Extrapolation Attempt

On June 20, 2016, the United States District Court for the Northern District of Texas granted summary judgment in defendants’ favor on all but her retaliation claims in relator’s False Claims Act (FCA) suit against defendants Vista Hospice Care, Inc. and VistaCare, Inc.  The court found that the relator, a former social worker at Defendants’ facility, failed to provide any evidence of a corporate scheme to admit Medicare beneficiaries before they were eligible.  The decision echoed principles announced by the United States District Court for the Northern District of Alabama in US ex rel. Paradies v. AseraCare, Inc., which we have been following on this blog (and which is now on appeal to the Eleventh Circuit). The relator relied on two types of evidence: (1) expert testimony that physicians incorrectly certified certain patients’ eligibility; and (2) Defendants’ implementation of corporate policies designed to incentivize improper admissions. The relator’s...

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District Court Dismisses FCA Claims Based on Fraudulent Off-Label Promotion for Lack of Particularity

On May 23, 2016, the US District Court for the District of Massachusetts dismissed several of the claims in a False Claims Act (FCA) whistleblower suit against Medtronic, Inc. and its wholly-owned subsidiary Medtronic MiniMed, Inc. (Medtronic) related to its insulin pumps and integrated diabetes management systems. In United States ex rel. Witkin v. Medtronic, Inc., the relator, Witkin (a former employee of Medtronic) alleged that certain of Medtronic’s promotional activities related to its insulin pumps and the pediatric use of its integrated diabetes management systems designed for adult use were false or misleading, resulting in false claims for reimbursement.  The district court held that Witkin failed to plead his claims with sufficient particularity pursuant to Fed. R. Civ. P. 9(b).  The district court emphasized the particularity requirement in this case, observing that “the alleged fraudulent promotional activity permits only a weak inference of...

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When Relators Steal Corporate Documents: Northern District of Illinois Dismisses Counterclaim for Breach of Contract

The issue is one that various courts have addressed over the years: what recourse does a corporation have when a relator steals confidential information and discloses it to his or her attorney and to the government?  The answer is . . . it depends.  It depends on the scope of the materials taken, their relationship to the relator’s claim, and the breadth of the disclosure. On May 13, 2016, the Northern District of Illinois added another to the list of cases on this issue when it dismissed a counterclaim filed by LifeWatch Services, Inc. (LifeWatch).  In its counterclaim, LifeWatch alleged that the relator stole confidential information and then disclosed it to the government and his lawyer.  United States ex. Rel. Cieszyski v. LifeWatch Services Inc., No. 13-CV-4052 (N.D. Ill. May 13, 2016).  In a brief, 11-page, opinion, the court dismissed LifeWatch’s counterclaim, holding that public policy protects whistleblowers from retaliation when they investigate and...

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Fifth Circuit Affirms Summary Judgment where Whistleblower Offered No Evidence of the Requisite Scienter

On March 7, the U.S. Court of Appeals for the Fifth Circuit affirmed a grant of summary judgment by the U.S. District Court for the Northern District of Texas in favor of Kaner Medical Group and its owner, David Kaner, in a qui tam suit brought under the False Claims Act (FCA).  United States ex rel. Johnson v. Kaner Med. Grp., 2016 WL 873816 (5th Cir. Mar. 7, 2016).  The suit was filed by a former employee of the group, who alleged that the group submitted false claims for reimbursement to Medicare and TRICARE, and that she was terminated in retaliation for raising concerns regarding the group’s billing practices. The relator’s FCA claims were based on the group’s practice of entering the National Provider Identifier (NPI) of the provider who referred a patient to the group’s allergy clinic on Medicare claims in a box that, according to instructions from the Centers for Medicare & Medicaid Services (CMS), should have contained the NPI of the provider who...

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District Court Dismisses FCA and Retaliation Claims Based on Allegations That Government Contractor Charged an “Unreasonable Price”

On February 25, 2016, the United States District Court for the Eastern District of Virginia dismissed a False Claims Act (FCA) case alleging that PAE Government Services (PAE) intentionally overcharged the Department of State (DOS) for bottled water supplied to various facilities in Iraq.  United States of America ex rel. Anthony Garzione, 2016 WL 775780 (E.D. Va. 2/25/2016).  Even though PAE allegedly chose the highest bidder when it awarded a subcontract for the water and terminated the relator, Anthony Garzione, when Garzione complained, the court dismissed claims that PAE violated the FCA and retaliated against Garzione.  According to the court, the Federal Acquisition Regulations (FAR) required only that PAE award the subcontract at a “reasonable price.”  Id. at *5-6.  Garzione came forward with nothing in his complaint to show that the highest bid was objectively “unreasonable.”  Id.  For the same reason, Garzione did not engage in protected activity...

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