What is it?
First passed by President Lincoln during the Civil War to penalize military suppliers for defrauding the Union Army, the False Claims Act (FCA) is now the civil weapon of choice used by the Department of Justice (DOJ) to combat suspected fraud on the United States. As states continue to enact their own false claims statutes − approximately 30 states now have statutes modeled after the federal FCA — state attorneys general are also aggressively pursuing potential FCA violations and coordinating their efforts to extract treble damages and civil penalties from defendants.
Why it Matters
The most recent statistics published by the DOJ confirm that the number of FCA suits and the size of monetary recoveries under the FCA continue to be significant. In 2015, the DOJ recovered more than $3.5 billion in FCA settlements and judgments, including a record $1.15 billion in FCA actions where the DOJ declined intervention. Health care fraud remained a focal point for DOJ fraud enforcement, with the DOJ obtaining just under $2 billion through settlements and judgments involving the Department of Health and Human Services. The DOJ also continued to hone in on procurement fraud, recovering a total of $1.1 billion in 2015, including nearly $259 million in settlements and judgements involving the Department of Defense, a steep increase from the approximately $69 million recovered in 2014.
The number of qui tam cases (i.e., FCA suits initiated by whistleblowers) filed in 2015 remained high at 632, with the DOJ recouping approximately $2.9 billion as a result of such actions. This continued trend is unsurprising, given that whistleblowers stand to obtain up to 30 percent of any monetary recovery and given the sheer size of whistleblower awards in recent years.
Recent statutory amendments have also expanded liability under the FCA and made it more difficult for defendants to get cases dismissed at the outset of the proceeding. When the Fraud Enforcement and Recovery Act was signed into law in May 2009, the range of parties potentially liable under the FCA was broadened, available defenses were narrowed, and the government’s most successful tool for fighting alleged fraud was otherwise strengthened. The passage of the Affordable Care Act in 2010 provided additional incentives for whistleblowers to file suit and, for the first time, expressly permitted certain FCA suits in the health care industry to proceed based on predicate violations of the federal Anti-Kickback Statute.
Who We Are
Led by a cross-office and cross-practice group of attorneys — composed of former federal prosecutors and seasoned defense attorneys from our award-winning Government Enforcement, Government Contracts, and White-Collar Groups — we have substantial experience handling FCA investigations and litigation, whether initiated by the government or by whistleblowers.
We have advised a wide range of clients, from privately held companies to Fortune 50 global brands. Our clients are companies doing business in numerous industry sectors, including pharmaceuticals, medical devices, aerospace, biotechnology, defense, information technology, telecommunications, health care, consumer products and services, higher education, and transportation. We also routinely represent individual defendants when separate counsel becomes necessary.
What We Do
Our objective is to resolve FCA matters at an early stage of the proceeding and in a cost-effective manner by convincing the government to decline intervention in the underlying qui tam action or to forgo its investigation altogether. When litigation is necessary, we have a history of success at every stage of an FCA proceeding, including obtaining dismissals under FRCP 9(b) and the FCA’s unique public disclosure and first-to-file bars and winning on summary judgment, at trial, or on appeal.
We also advise clients on the many legal issues and proceedings that often accompany FCA matters, including white-collar defense, suspension and debarment proceedings, civil and criminal subpoenas, employment and retaliation claims, and the shareholder derivative suits that are sometimes filed on the heels of an FCA settlement. In FCA matters arising in the health care and life sciences industries, we have negotiated nationwide FCA settlements with the National Association of Medicaid Fraud Control Units (NAMFCU) and successfully convinced the Office of Inspector General to the U.S. Department of Health and Human Services (HHS-OIG) to forgo the imposition of onerous Corporate Integrity Agreements. Clients also call upon us to assist them with due diligence in connection with mergers and acquisitions and establishing or revamping their compliance programs.
Where We Do It
We have assisted clients with federal FCA investigations and qui tam actions arising in federal districts throughout the country, working closely with AUSAs from the U.S. Attorney’s Office in each district and their colleagues at Main Justice in Washington, D.C. We also have experience handling matters arising under state false claims statutes and have represented clients in connection with investigations and litigation concerning alleged violations of state false claims statutes in the following states: Arizona, California, Florida, Hawaii, Illinois, Indiana, Kansas, Kentucky, Louisiana, Michigan, Mississippi, Montana, New Hampshire, New Jersey, New Mexico, New York, Oklahoma, South Carolina, Texas, Utah, Virginia, and Wisconsin.
In addition to a slew of nonpublic FCA-related investigations, the following is a representative sample of our FCA litigation work:
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