2021 was another busy year in False Claims Act enforcement and litigation. Significant decisions were issued across the circuits, spanning government dismissal authority, materiality, scienter, Rule 9(b) pleading standards, the Eighth Amendment’s Excessive Fines Clause, and more. The year also saw proposed amendments introduced by Senator Chuck Grassley aimed at strengthening the statute and overruling
Matthew Vicinanzo is an associate in the firm's Washington, D.C. office, where he practices in the Health Care and Government Contracts groups. Matthew represents and counsels health care entities and a variety of government contractors in litigation matters, including the False Claims Act, as well as in various regulatory and compliance matters.
Matthew’s recent representative matters include:
- Representing government contractors and health care entities in government investigations and internal investigations relating to the civil False Claims Act and criminal fraud statutes.
- Representing clients in responding to Civil Investigative Demands from federal and state agencies.
- Defending the owner of a small woman-owned radio station in a suit brought by the Department of Justice alleging that the owner violated the False Claims Act by improperly retaining a “new entrant” bidding credit.
- Providing fraud and abuse compliance counseling and regulatory counseling to a private-equity owned health system in the acquisition of two academically affiliated hospitals.
- Providing state-specific regulatory compliance advice for a Fortune 100 company regarding pharmaceutical distribution.
In U.S. ex rel. Foreman v. AECOM, the U.S. Court of Appeals for the Second Circuit confirmed that the materiality factors set forth by the Supreme Court in Universal Health Services, Inc. v. U.S. ex rel. Escobar apply to all types of False Claims Act claims and reinforced the relator’s heavy burden even at the pleading stage. This precedential opinion provides several key takeaways for defendants facing FCA liability where the significance of the allegations to the government’s payment decision is in doubt.
Foreman involved a contract to provide maintenance and management support services for the Army, including tactical vehicle and equipment maintenance, facilities management and maintenance, supply and inventory management, and transportation services. The alleged violations stemmed from the contractor submitting timesheets with improper labor hours, failing to properly log and track government property, and hitting a consistently low man-hour utilization (“MHU”) rate—the ratio of time personnel would spend actively engaged in maintenance projects. After the government declined to intervene, the district court dismissed the relator’s claims for failure to plausibly allege materiality.
On appeal, the Second Circuit largely affirmed the district court, while reversing only as to the allegations of labor overcharging due to the lower court’s improper reliance on a document not incorporated into the complaint. The Court’s discussion with respect to the other allegations provides important guidance as to the materiality analysis and the burdens that apply at the pleading stage.…