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Category: Procedure

Enforcement / Procedure / Relators / Scienter

10 Aug, 2023

Supreme Court’s Recent Decision on FCA’s Scienter Standard Potentially Raises Threshold for Government to Establish “Reckless Disregard”

On June 1, 2023, a unanimous Supreme Court decision sought to clarify the meaning of “scienter” in the FCA context, which deals with the defendant’s knowledge (or lack thereof) that a claim for payment was false and intent to submit the false claim.  See United States ex rel. Schutte v. SuperValu Inc., 143 S. Ct. 1391 (2023) (“SuperValu”).  There, the Court ruled that “[f]or scienter,...

Dismissal Standard / Pleading Standards / Procedure / Relators / Retaliation Claims

20 Dec, 2022

Third Circuit Confirms Expansion of Anti-Retaliation Standard Under the False Claims Act

On November 30, 2022, the Third Circuit Court of Appeals vacated dismissal of a retaliation action brought by Don Ascolese (“Ascolese”) under the False Claims Act (“FCA”).  See United States ex rel. Don Ascolese v. Shoemaker Constr. Co., No. 21-2899, ECF No. 30 (3d Cir. 2022) (“3d Cir. Opinion”). In the complaint before the lower court, Ascolese alleged that Shoemaker Construction Co., McDonough Bolyard Peck...

Healthcare / Pleading Standards / Procedure

4 Nov, 2022

Supreme Court Declines to Weigh In on Latest Dispute Over Pleading Standard for Causes of Action Brought Under the False Claims Act

The Supreme Court recently denied three petitions for writs of certiorari, opting not to clarify the heightened pleading requirements for allegations of fraud under the False Claims Act (“FCA”). The cases for which certiorari was denied are Molina Healthcare of Illinois v. Prose, No. 21-1145; United States ex rel. Owsley v. Fazzi Associates, Inc., No. 21-936; and Johnson v. Bethany Hospice LLC, No. 21-462. For...

Falsity / Healthcare / Intervention / Pleading Standards / Procedure / Relators

16 Jun, 2021

Eight Years Later: “Speculative” and “Straightforward” FCA Allegations Against Walmart Dismissed

Walmart successfully ended eight years of protracted litigation under the False Claims Act (“FCA”) on June 4, 2021, when the Sixth Circuit affirmed dismissal of Medicare and Medicaid fraud allegations against the major retailer.  The case was first filed in February 2013.  See United States ex rel. Sheoran v. Wal-Mart Stores E., No. 13-10568, 2019 U.S. Dist. LEXIS 140710, at *2 (E.D. Mich. Aug. 20,...

Civil Penalties / Determining Actual Damages / Penalties / Procedure

29 Dec, 2017

Early Resolution of FCA Civil Damages Under the Eighth Amendment’s Excessive Fines Clause? A Pending Case in Washington May Provide the Answer

The False Claims Act authorizes civil penalties between $10,781 to $21,563 per false claim, as well as three times the amount of damages which the government sustains (i.e. treble damages). The Eighth Amendment provides that “[e]xcessive bail shall not be required, nor excessive fines imposed, nor cruel and unusual punishments inflicted.” The Supreme Court of the United States has recognized that a statutory penalty constitutes...

Procedure / Relators

23 May, 2017

Court Rules that “Upon Information And Belief” Allegations of FCA Violations Leveled Against Competitor Fail to Withstand Pleading Requirements

A Federal court in Ohio recently dismissed a qui tam lawsuit brought under the False Claims Act by Kustom Products, Inc. against Hupp & Associates, Inc., a defense contractor, and in so doing provided judicial treatment of the common practice of alleging facts “upon information and belief.”  United States ex rel. Kustom Prods. v. Hupp & Assocs., No. 2:15-cv-03101, 2017 U.S. Dist. LEXIS 72814 (S.D. Ohio May...

Enforcement / Procedure

27 Dec, 2016

Jury Verdict in Declined Civil FCA Action Need Not Bar Criminal Prosecution for Same Conduct

The qui tam provisions of the False Claims Act allow private citizens to file FCA claims on behalf of the government.  The government may elect to intervene in the action—or it may not.  The United States District Court for the Western District of Virginia held earlier this month that when the government does not intervene, it is a party in interest, but not a party to...

Procedure / Seal

7 Dec, 2016

Supreme Court Concludes that Violation of FCA Seal Provision Does Not Necessarily Mandate Dismissal of Qui Tam Suits

The Supreme Court held yesterday that a violation of the False Claims Act’s seal provision does not mandate dismissal of a relator’s complaint.  Justice Kennedy authored the Court’s opinion in the unanimous 8-0 decision.  State Farm was accused of defrauding the government by falsely classifying wind damage caused by Hurricane Katrina as flood damage, which would allow State Farm’s costs to be covered by the...

Procedure / Standing

7 Jun, 2016

Second Circuit Finds FCA Claims about Night-Vision Goggles Lack Sufficient Particularity

On Wednesday, May 25, 2016, the Second Circuit affirmed the district court’s decision to dismiss FCA claims alleging that defendants supplied $1.5 billion worth of deficient night-vision goggles to the U.S. military.  United States ex rel. Ladas v. Exelis Inc. et al., No. 14-4155 (2d Cir. May 25, 2016).  The court found that the relator, Michael Ladas, failed to plead the fraud claims with sufficient...

First-To-File Rule / Procedure / Relators

31 Dec, 2015

First Circuit Permits Supplementation of Complaint to Cure First-to-File Jurisdictional Defects

The FCA first-to-file bar provides that if an action involving the same subject matter is already pending, “no person other than the Government may intervene or bring a related action based on the facts underlying the pending action.”  31 U.S.C. § 3730(b)(5).  Courts are thus deprived of jurisdiction to entertain opportunistic qui tam lawsuits based on facts similar to an already-filed lawsuit.  In May 2015, the...