Presenting a live 90-minute webinar with interactive Q&A False Claims Act Litigation: Proof, Defenses, Individual Liability, and More WEDNESDAY, SEPTEMBER 27, 2017 1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific Today’s faculty features: Stuart F . Delery, Partner, Gibson Dunn & Crutcher , Washington, D.C. Jonathan M. Phillips, Gibson Dunn & Crutcher , Washington, D.C. The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions emailed to registrants for additional information. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 10 .
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False Claims Act Litigation: Proof, Defenses, Individual Liability, and More September 27, 2017
Today’s Panelists Stuart Delery is a partner in the Washington, D.C. office. He represents corporations and individuals in high-stakes litigation and investigations that involve the federal government across the spectrum of regulatory litigation and enforcement. Previously, as the Acting Associate Attorney General of the United States (the third-ranking position at the Department of Justice) and as Assistant Attorney General for the Civil Division, he supervised the DOJ's enforcement efforts under the FCA and FIRREA. sdelery@gibsondunn.com Jonathan Phillips is a senior associate in the Washington, D.C. office, where his practice focuses on FDA and health care compliance, enforcement, and litigation, as well as other government enforcement matters and related litigation. He has substantial experience representing pharmaceutical, medical device, and health care provider clients in investigations by the DOJ, FDA, and Department of Health and Human Services Office of Inspector General. Previously, he served as a Trial Attorney in the Civil Division, Fraud Section of the DOJ, where he investigated and prosecuted allegations of fraud against the U.S. under the FCA and related statutes . jphillips@gibsondunn.com 6
Agenda • FCA Basics • FCA Enforcement – By the Numbers • Recent FCA Enforcement • Recent FCA Legal Developments • Escobar & Implied Certification • Public Disclosure and First-to-File Bars • Other Notable Cases • Questions 7
FCA Basics 8
The False Claims Act (FCA) The FCA, 31 U.S.C. §§ 3729-3733, is the federal • government’s primary weapon to redress fraud against government agencies and programs. • The FCA provides for recovery of civil penalties and treble damages from any person who knowingly submits or causes the submission of false or fraudulent claims to the United States for money or property. “It seems quite clear that the objective of • Under the FCA, the Attorney General, through DOJ Congress was broadly to protect attorneys, investigates and pursues FCA cases. the funds and property of the Government from • DOJ is devoting more and more resources to pursuing fraudulent claims FCA cases — and considering whether qui tam cases ….” merit parallel criminal investigations. Rainwater v. United States , 356 U.S. 590 (1958) 9
FCA – History • Civil War profiteering prompted enactment of the “Lincoln Law” in 1863 For sugar [the government] often got sand; for coffee, rye; for leather, something no better than brown paper; for sound horses and mules, spavined beasts and dying donkeys; and for serviceable muskets and pistols the experimental failures of sanguine inventors, or the refuse of shops and foreign armories. R. Tomes, The Fortunes of War , Harper’s New Monthly Magazine 228 (July 1864). 10
FCA – Key Provisions 31 U.S.C. Statutory Prohibition Summary § 3729(a)(1) (A) Knowingly presents, or causes to be presented, a false or False/Fraudulent Claim fraudulent claim for payment or approval (B) Knowingly makes, uses or causes to be made or used, a False Record/Statement false record or statement material to a false or fraudulent claim (C) Conspires to violate a liability provision of the FCA Conspiracy (G) Knowingly conceals or knowingly and improperly avoids “Reverse” False Claim or decreases an obligation to pay or transmit money or property to the Government 11
FCA – Scienter • “Knowingly” requires scienter and is defined as: • Actual knowledge, • Deliberate ignorance, or • Reckless disregard. • Negligence is not actionable. • Specific intent to defraud is not required. 12
FCA – Overview of Key FCA Theories Factual Falsity Legal Falsity • False billing (e.g., services not • Express certification of compliance with provided) legal requirements • Overbilling (e.g., upcoding) Submission of claim with • representations rendered misleading as to goods / services provided Promissory Fraud / Fraud in Reverse False Claims the Inducement • Improper avoidance of obligation to pay • Obtaining a contract through false money to the government statements or fraudulent conduct • Retention of government overpayment U.S. ex rel. Marcus v. Hess , 317 U.S. • 537 (1943) (claims by contractors who colluded on bids) 13
FCA – Damages and Penalties • Simple Damages Calculation • Treble damages are traditionally calculated by multiplying the government’s loss by three (e.g., if defendant charged government $100 for goods not received, damages would be $300). • Complex, Contested Damages Calculation • Calculations are more complicated (and less certain) when the government receives goods or services it considers deficient or when there is a “false certification” or “promissory fraud.” • Civil Per Claim Penalty • Previously $5,500 to $11,000 • Nearly doubled effective August 1, 2016 • 2017 inflation adjustment increased to range of $10,957 to $21,563 per violation 14
FCA – Statute of Limitations • The statute of limitations is: • 6 years from the date of violation, or • 3 years from when facts material to the violation are known or reasonably should have been known to the government. • But not more than 10 years from the violation. • In January, HHS OIG finalized a rule that imposes a 10-year limitations period on HHS OIG exclusion actions, aligning exclusions and FCA statute of repose. 15
FCA – Qui Tam Provisions • Qui Tam Provisions Enable so- called “relators” to bring cases in the government’s • name and recover as much as 30% of favorable judgment or recovery • Allow government to intervene • An increasing number of whistleblower cases are pursued without “In short, sir, I have based government intervention (but often with government statement the [ qui tam provision] of interest). upon the old-fashioned • DOJ has virtually unlimited dismissal authority — but seldom idea of holding out a uses it. temptation and ‘ setting a rogue to catch a rogue ,’ which is the • FCA Whistleblower Protections (31 U.S.C. § 3730(h)) safest and most expeditious way I have • Protects employees and others (e.g., contract workers) ever discovered of • Relief may include double back pay and interest on back pay; bringing rogues to justice.” reinstatement (at seniority level); and/or costs and attorneys’ fees. Statement of Senator Howard, Cong. Globe, 37 th Cong. 955-56 (1863) 16
Government Players DOJ State Attorneys General DOJ is devoting more State AGs are and more resources to increasingly conducting pursuing FCA cases — investigations and and considering pursuing claims under whether qui tam cases state False Claims Acts. merit criminal investigation. Inspectors General U.S. Department of Health and Human Services: Office of Inspector General 17
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