The Federal Circuit recently affirmed the ASBCA’s grant of summary judgment to the Government based on the Government’s affirmative defense that the court described both as a defense of fraud and a defense of prior material breach. In a case called Laguna Constr. Co. v. Carter, the court initially determined that the ASBCA had jurisdiction over the Government’s affirmative defense. It then affirmed the ASBCA’s grant of summary judgment to the Government because the contractor committed the first material breach. Along the way, the court rejected several arguments advanced by the contractor.
Continue Reading Federal Circuit Finds ASBCA had Jurisdiction over a Government Affirmative Defense of Fraud—Which the Court Also Characterized as a Defense of Prior Material Breach—and Affirmed the Board’s Grant of Summary Judgment to the Government Based on that Defense

The civil False Claims Act’s (FCA) public disclosure bar prohibits FCA suits based on allegations that have been disclosed publicly through certain enumerated sources, unless the relator meets the FCA’s definition of “original source.” Congress amended the bar in 2010, including replacing the phrase “no court shall have jurisdiction” with the phrase “[t]he court shall dismiss.”

Two recent Circuit Court decisions, issued within days of each other, have focused and elaborated on the public disclosure bar.
Continue Reading Two Recent Circuit Court Decisions Address the FCA’s Public Disclosure Bar

Although this blog focuses on numerous issues of interest to the Government contracts community, two types of disputes that get significant attention here are False Claims Act lawsuits and bid protests. Recently, DOJ and GAO issued their annual reports on the volume of activity with respect to such cases, and although these reports are a few weeks old, we wanted to briefly summarize the reports.
Continue Reading Recent Annual Reports on FCA and Bid Protest Activity

iStock_000035162090LargeThis week, the Supreme Court denied the qui tam plaintiff’s petition for certiorari in United States ex. Rel. Rostholder v. Omnicare, Inc., a False Claims Act (FCA) case from the Fourth Circuit. In Omnicare, the relator alleged that the defendants violated the FCA because certain of its practices violated Food and Drug Administration (FDA) safety regulations and Medicare and Medicaid beneficiaries subsequently presented claims for reimbursement for its products. The district court dismissed the relator’s complaint for failure to state a claim upon which relief can be granted, and the Fourth Circuit affirmed. The Supreme Court’s denial of a writ of certiorari sends a signal that there are limits on FCA claims rooted in regulatory violations. Namely, an FCA claim cannot be based on a violation of a regulation that is wholly unrelated to any condition or requirement for payment.
Continue Reading Supreme Court Denies Cert in Highly Watched FCA Case—Regulatory Violation Must Be Related to Claim for Payment

CMS Caregiver PicNursing home care and costs—and their connection to Medicare—are issues that sporadically receive media attention and, last weekend, were the subjects of a large expose and op-ed in the NY Times. A few days before those articles were published, the Seventh Circuit issued its anticipated decision in US ex rel. Absher v. Momence Meadows Nursing Center, which addresses nursing home care and Medicare payments in a context familiar to readers of this blog: the False Claims Act. In a decision of interest to nursing home and other healthcare providers—as well as other types of service providers to the federal Government—the appeals court reversed a dangerously expansive trial court interpretation of the “worthless services” theory of FCA liability. The Seventh Circuit’s decision leaves some important questions for another day, but it provides some good news for businesses contracting with the Government.
Continue Reading Seventh Circuit Pares Back Potential “Worthless Services” FCA Claims

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In an opinion issued last week, the Third Circuit added to a circuit split on an important issue concerning the False Claims Act—what a relator (or DOJ) must show at the pleading stage to satisfy Rule 9(b)’s “particularity” requirement. In United States ex rel. Foglia v. Renal Ventures Mgmt, LLC, the Third Circuit sided with three other circuit courts that applied a lower pleading standard that plaintiffs need not show “representative samples” of alleged fraudulent conduct, and instead need only allege particular details of a scheme to submit false claims paired with reliable indicia that lead to a strong inference that claims were actually submitted. The Supreme Court has recently declined to resolve the circuit split on this issue, so False Claims Act defendants in the Third Circuit should expect to address the lower pleading standard for some time to come.


Continue Reading Third Circuit Adds to Circuit Split on Rule 9(b)’s Particularity Requirement in the Context of an FCA Claim

FAR 52.246-2 is a fundamental clause governing inspection of supplies under fixed-price contracts, and it is ordinarily construed in the course of routine contract administration. A recent Fifth Circuit decision analyzed the clause in the context of allegations under the civil False Claims Act (“FCA”). In a significant holding, the Court concluded in United States ex rel. Spicer v. Navistar Defense, L.L.C., that the delivery of nonconforming vehicles by the contractor—which had been rejected by the Government under FAR 52.246-2 (and were then replaced)—could not be the basis for FCA liability under the facts of that case. This is a helpful ruling and demonstrates an appropriate limitation on relators’ attempts to transform ordinary contract issues/disputes into FCA claims.
Continue Reading Fifth Circuit Rejects Efforts To Base False Claims Act Liability On FAR Inspection of Supplies Clause