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The Third Circuit Rejects the Anti-Kickback Statute “Tainted Claims” Theory

A key area of dispute in False Claims Act (FCA) cases based on Anti-Kickback Statute (AKS) violations is what degree of connection plaintiffs must allege between alleged kickbacks and “false claims.” The AKS states that “a claim that includes items or services resulting from a violation of this section constitutes a false or fraudulent claim for purposes of [the FCA].” The government and relators typically argue that the mere fact that claims were submitted during the period of alleged kickbacks is sufficient. Defendants argue that the law requires plaintiffs to specifically identify claims “resulting from” an alleged kickback – i.e., that there is proof that the alleged kickback caused the referral or recommendation of the item or service contained in the claim. The Third Circuit’s recent decision in United States ex rel. Greenfield v. Medco Health Systems, Inc. articulated a middle of the road approach.  In affirming summary judgment for the defendants, the...

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Motions in Limine Filed in Lance Armstrong/US Postal Service Litigation Raise FCA Damages, Government Knowledge and Relator Character Issues on Which Court’s Rulings May Have Widespread Impact

We reported back in March on the US District Court for the District of Columbia’s summary judgment decision in the Lance Armstrong/Floyd Landis/US Postal Service (USPS) False Claims Act (FCA) litigation, centered on Lance Armstrong’s use of performance enhancing drugs (PEDs) while he was leading a professional cycling team sponsored by the USPS. A pack of motions in limine (MILs) filed by the parties over the past few weeks suggest that the case may well be headed to trial this fall, and raise some notable legal issues to watch as it continues to unfold, including: As we previously reported, the key takeaway from the February summary judgment decision was the Court’s rejection of the government’s “tainted claims” theory of damages and associated ruling that, if liability is ultimately proven, the proper measure of (single) damages would be the $32 million the USPS paid in sponsorship, minus the actual value (if any) of the net benefits the USPS received from...

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In Calculating FCA Damages, Another Court Rejects Government Windfalls Based on Purportedly “Tainted Claims”

Last month, the US District Court for the District of Columbia delivered another blow to the “tainted claims” theory of False Claims Act (FCA) damages frequently espoused by the government and qui tam relators. From the 1990s through 2004, the US Postal Service sponsored a professional cycling team led by Lance Armstrong, who won the Tour de France seven consecutive times during that span shortly after surviving metastatic cancer. It was later revealed that Armstrong and his teammates had used performance enhancing drugs (PEDs) during the relevant time period. Armstrong ultimately was stripped of his titles and banned from the sport permanently. After years of denials, Armstrong publicly admitted his PED use in a 2013 interview with Oprah Winfrey. In 2010, former Armstrong teammate Floyd Landis filed a qui tam FCA suit under seal against Armstrong, the team’s owner (Tailwind Sports Corporation) and others. United States ex rel. Landis v. Tailwind Sports...

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