In Universal Health Services, Inc. v. United States ex rel. Escobar, 136 S.Ct. 1989 (2016) (discussion by C&M attorneys here), the Supreme Court held that an implied false certification can be a basis for False Claims Act (FCA) liability, “at least where two conditions are satisfied:” (1) the claim makes specific representations about the goods or services provided and (2) the defendant’s failure to disclose noncompliance with material statutory, regulatory, or contractual requirements makes those representations misleading half-truths. (Emphasis added).
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Let’s Talk FCA: False Claims Act Investigations
In this episode, hosts Mana Lombardo and Jason Crawford talk with Gail Zirkelbach, partner in the firm’s Government Contracts Group and vice-chair of the Investigations practice, about practical tips for managing internal False Claims Act Investigations. “Let’s Talk FCA” is Crowell & Moring’s podcast covering the latest developments with the False Claims Act.
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Steel and Aluminum Tariffs: Recovery and Risk Reduction for Federal Contractors
On March 1, the President announced his intention to impose tariffs of 25% on all imported steel and 10% on all imported aluminum. A more formal announcement of the tariffs is expected in the coming week and, while many might have been surprised by the timing of the President’s initial statement, it came after a 10-month process of investigation by the U.S. Department of Commerce, culminating with its January 2018 recommendation for tariffs or quotas to protect U.S. producers. The Commerce Department reports are available here and here.
When finalized, these tariffs could have significant impacts on contractors across a range of industries, increasing costs of performance and restricting available supply. Domestic prices are expected to rise, and foreign suppliers may turn their focus to other markets. Supply disruptions are possible, particularly in the short term. To protect themselves, federal contractors who manufacture or use products with steel or aluminum should examine existing contracts, re-evaluate bids being developed, and consider revisions to standard contract terms.
OOPS 2017 Preview: Investigations
Although companies often conduct internal investigations in the normal course of business, recent developments suggest that companies need to reconsider certain aspects of how they structure their investigations to avoid potential new downfalls. On May 4, 2017 at the Renaissance Hotel in Washington, Crowell & Moring attorneys Gail Zirkelbach, Steve Byers, Jacintha Alves and Judy
Whistle(blowing) While You Work: GAO Recommends Improvements to Whistleblower Protections Pilot Program
On March 2, 2017, the U.S. Government Accountability Office (GAO) published a report highlighting necessary improvements to effectively implement the Whistleblower Protections Pilot Program (WPPP). The WPPP, introduced in the National Defense Authorization Act for Fiscal Year 2013, and made permanent by Congress in December 2016, expanded whistleblower rights against reprisal for employees of contractors, subcontractors, and grantees. That same year, the FAR was also amended to require contracting officials to include a contract clause requiring contractors to communicate to their employees their rights under the WPPP in contracts exceeding the simplified acquisition threshold and awarded after September 30, 2013. The WPPP also required agencies use best efforts to include the FAR clause in major contract modifications of existing contracts.
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Valentine’s Day Disappointment for FCA Practitioners Hoping for a Ruling on Stat Sampling
On February 14, the Fourth Circuit issued an opinion in United States ex rel. Michaels v. Agape Senior Cmty. Inc. addressing only the first of the two issues that the district court had certified for interlocutory appeal: (1) whether the Department of Justice (DOJ) possesses an unreviewable veto authority over proposed settlements and (2) whether statistical sampling, the analysis of data from a subset of the population of interest in order to make projections across the population of claims at issue, is an appropriate methodology for establishing liability and damages in False Claims Act (FCA) cases.
In its decision, the Fourth Circuit became the third circuit to affirm that the DOJ has absolute, unreviewable authority to veto settlements in qui tam cases where it has declined to intervene. However, notwithstanding that the name of the defendant corporation is derived from the Greek word for love, the Fourth Circuit’s decision (on Valentine’s Day) not to opine on the statistical sampling issue showed no love for those that hoped that the court would bring needed clarity on the permissibility of statistical sampling in FCA cases. Instead, as the authors predicted in a recent Law360 article, the Fourth Circuit dismissed the interlocutory appeal as “improvidently granted” because the panel viewed statistical sampling as an evidentiary issue, rather than a pure question of law.
Final FAR Rule on Internal Confidentiality Agreements: Considerations for Contractors Before Employees Sign on the Dotted Line
On January 13, 2017, the FAR Council released a final rule (available here) that: (1) prohibits agencies from contracting with entities that require employees/subs to sign internal confidentiality agreements or statements that restrict the lawful reporting of waste, fraud, or abuse; and (2) requires bidders on federal contracts to certify that they do not utilize such agreements. Starting on January 19, 2017, the rule will apply to all solicitations and contracts using fiscal year 2015 funds and subsequent fiscal year funds, unless the solicitation or contract already contains a comparable provision/clause.
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OGE Finalizes Rule Regarding Solicitation and Acceptance of Gifts for Executive Branch Employees
On November 18, 2016, the Office of Government Ethics (OGE) issued a final rule revising the Standards of Ethical Conduct for Employees of the Executive Branch (“Standards”) applicable to the solicitation and acceptance of gifts from outside sources. See 5 CFR § 2635. The final rule imposes a duty to decline otherwise permissible gifts when the appearance of impropriety is present, adds new examples of how to apply the rules, codifies previous interpretations of the gift rule, and retains the $20 de minimis exception (despite pushback in comments to the proposed rule to raise the standard commensurate with inflation. ) Although Government employees are the primary subject of the final rule, the changes will have a direct impact on how contractors, referred to as “prohibited sources” can interact with Government officials. It is important for government contractors to understand that being implicated by a Government official’s violation of these Standards can lead to various consequences, such as facing public embarrassment, a tarnished reputation in the marketplace, suspension and debarment, or penalties for violating the bribery or illegal gratuities statutes.
The rule becomes effective on January 1, 2017.
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DoD Issues Directive Mobilizing Agency Action on Climate Change
On January 14, 2016, the U.S. Department of Defense (DoD) issued Directive 4715.21 to organize comprehensive agency-wide action to address and mitigate the risks of climate change on U.S. military assets and operations. The Directive implements for DoD the requirement established by Executive Order 13653 (Preparing the United States for the Impacts of Climate Change)
Proposed Rule Would Nix Allowability of Congressional Investigation Costs
On February 17, the Federal Register published a proposed rule that would amend the FAR to implement section 857 of the National Defense Authorization Act, making unallowable any “costs incurred by a contractor in connection with a Congressional investigation or inquiry into an issue that is the subject of a proceeding resulting in a disposition