The government has reiterated in no uncertain terms its proposed standard for particularity under the FCA: “a qui tam complaint satisfie[s] Rule 9(b) if it contains detailed allegations supporting a plausible inference that false claims were submitted to the government, even if the complaint does not identify specific requests for payment.”  Brief for United States as Amicus Curiae, United States ex rel. Nathan v. Takeda Pharmaceuticals, Petition for Certiorari No. 12-1349 (U.S. 2013).  While opining at some length about the state of case law in the lower courts, the Solicitor General ultimately asked the Supreme Court not to hear the case.

Many of us thought that Nathan was a good opportunity for the Supreme Court to resolve an apparent split among the circuits (an issue we discussed in posts from February and March of last year).  The point of contention is the particularity required in an FCA complaint under Rule 9(b): is it enough to allege a fraudulent scheme, or must a plaintiff also furnish details about the claims themselves?  The government finds concerns about this circuit split to be somewhat overstated.  See Br. at 10 (“[T]hose circuits that initially endorsed the per se rule [requiring identification of specific claims] have issued subsequent decisions that appear to adopt a more nuanced approach.”).  The government thus finds the extent of inter-circuit disagreement to be “uncertain,” suggesting that it “may be capable of resolution without the Court’s intervention.”  Id. at 10, 14.
Continue Reading Solicitor General Addresses Standard for Rule 9(b) in FCA Cases, Asks Supreme Court Not to

In March, we published an article entitled “New Questions Regarding The Jurisdictionality Of The FCA’s Public Disclosure Bar: Potential Hurdles And Increased Costs In Defending Against Parasitic Qui Tam Actions,” The Government Contractor, Vol. 55, No. 12 (Mar. 27, 2013). We explored whether, given the 2010 amendments to the civil False Claims Act (FCA) under the Patient Protection and Affordable Care Act (PPACA), the public disclosure bar1 still implicated a federal court’s subject matter jurisdiction. See P.L. 111-148, title X, § 10104(j)(2), 124 Stat. 119 (2010); 31 USCA § 3729 et seq. (2012). Surveying the few cases to have addressed the issue, we concluded that it was largely an open question. The only opinion to have substantially analyzed the question at that time had concluded that the bar was still jurisdictional. See United States ex rel. Beauchamp v. Academi Training Ctr., No. 1:11-cv-371, 2013 WL 1189707, at *9 (E.D. Va. Mar. 21, 2013).2

Since then, several courts have reached the opposite conclusion. Two have made passing reference to the point in footnotes. See United States v. Chattanooga-Hamilton Cnty. Hosp. Auth., No. 1:10-cv-322, 2013 WL 3912571, at *7 n.6 (E.D. Tenn. July 29, 2013); United States ex rel. Fox Rx, Inc. v. Omnicare, Inc., No. 1:11-cv-962, 2013 WL 2303768, at *8 n.15 (N.D. Ga. May 17, 2013). Another has been more direct, comparing the two versions of the public disclosure bar and concluding that “[a]fter the 2010 amendment, the bar does is [sic] not described as jurisdictional in nature; instead, the statute simply directs that the action or claim be dismissed . . . .” United States ex rel. Paulos v. Stryker Corp., No. 11-0041-cv, 2013 WL 2666346, at *3 (W.D. Mo. June 12, 2013).
Continue Reading The Growing Split Over Whether the FCA’s Public Disclosure Bar is Still a Jurisdictional Limitation

The Department of Defense has recently issued a proposed rule to combat the counterfeit electronic parts, summarized here. Trying to preempt justifiable concerns on the part of small businesses at all tiers of the government contracts supply chain, DOD indicated that “the impact should be negligible as long as the small entity is not supplying counterfeit parts to the prime contractor.” That really understates the nature and scope of the impact to subcontractors and suppliers under this proposal. The proposed rule would require prime contractors (that are subject to the Cost Accounting Standards) to implement an entirely new avoidance and detection scheme within their purchasing system, which would undoubtedly impact subcontractors and suppliers all the way down the supply chain – big and small, counterfeiters and non-counterfeiters alike.

I attended the public meeting on this proposed rule on June 28, where these concerns were aired to representatives of the Defense Procurement and Acquisition Policy (DPAP) office and the Defense Contract Management Agency (DCMA). What follows is an analysis of some of the key points of concern for small businesses and suppliers coming from the meeting and the proposed rule.


Continue Reading What Subcontractors, Small Businesses and Suppliers Can Expect Under DOD’s Proposed Counterfeit Parts Rule

Crowell & Moring recently achieved two substantial victories for its client, Academi Training Center LLC (“ACADEMI”) in a qui tam False Claims Act case in the Eastern District of Virginia . The qui tam relators accused ACADEMI of billing for personnel who did not serve in the labor categories in which they were billed and for personnel who had not been qualified on belt-fed weapons as required under its contract. They also alleged that ACADEMI retaliated against them in violation of the FCA’s whistleblower protections, and sought to advance their claim in federal court instead of in arbitration. The court dismissed the false claim counts and referred the retaliation claims to arbitration.

The court dismissed the false labor billing allegations on two alternative grounds. First, the court held that the FCA’s first-to-file provision barred these allegations. That provision generally precludes a qui tam relator from bringing an action based on the facts underlying a pending case. Because the labor billing allegations had already been made in United States ex rel. Davis v. U.S. Training Ctr., No. 11-2180, 2012 WL 6052051 (4th Cir. Dec. 6, 2012), the court held that the first to file bar applied. Crowell & Moring won a jury verdict in the Davis case in 2011 and that outcome was recently affirmed by the Fourth Circuit. Second, the court also held that the FCA’s public disclosure bar precluded these claims. The court held that the public disclosure bar remained a jurisdictional one and found that the Davis complaint qualified as a public disclosure under the FCA, as did a witness declaration filed in that case. The court ruled that the relators’ knowledge did not materially add to the already disclosed allegations and that therefore they did not qualify under the “original source” exception to the public disclosure bar. The court dismissed the labor billing claims under both the first to file and public disclosure bars.Continue Reading Crowell & Moring Secures Two-Part Victory in Major False Claims Act Case

A False Claims Act (“FCA”) complaint filed by John McLain (not to be confused with the main character of the Die Hard series sharing the same name) was recently dismissed for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6) and failure to plead fraud with particularity under Rule 9(b). See United States ex rel. McLain v. KBR, Inc., No. 1:08-cv-499 (E.D. Va. Feb. 27, 2013).

The decision provides us an opportunity to build upon our recent blog post, in which we took stock of the increasingly contoured landscape of pleading requirements in FCA cases.Continue Reading FCA Complaint “Dies Hard” in the Eastern District of Virginia

Complaints alleging violations of the False Claims Act (“FCA”) must satisfy Federal Rule of Civil Procedure 9(b), which requires the government or qui tam relator to “state with particularity the circumstances constituting fraud.” In order to ferret out fishing expeditions, many courts have held that Rule 9(b) requires plaintiffs to allege the who, what, when,

At 2:00 p.m. EST on February 27, 2013, Crowell & Moring Attorneys Peter Eyre, Andy Liu, Rebecca Springer, and Jason Lynch will conduct a webinar on the implications of the FY2013 NDAA’s new whistleblower protections for government contractors. The webinar will offer analysis of the expanded protections, define and discuss “retaliation” as defined under the