January 8, 2014
$3.8 Billion—That is the approximate amount recovered by the federal government last year alone in settlements and judgments under the False Claims Act, 31 U.S.C. §§ 3729-33 (the “FCA” or the “Act”). This amount marks the second largest haul in history and the fourth consecutive fiscal year in which the government recovered more than $3 billion. All in, 2013 brings total recoveries under the FCA during the last five years up to $17 billion—the largest five-year total ever.
In this last year, there were more than 846 new cases filed under the FCA, with 752 (or 89%) of those filed by qui tam “whistleblowers”—individuals who sue on the government’s behalf looking for up to 30% of monies recovered. Indeed, 2013 saw over 100 more qui tam lawsuits filed than in 2012, and whistleblowers (called “relators”) earned more than $387 million in share awards. There were more whistleblower lawsuits filed last year than in any year of the FCA’s history.
Not surprisingly, as the number of FCA lawsuits rise, and as recoveries climb, both the Department of Justice (“DOJ”) and whistleblower counsel dedicate more resources, time, and effort to FCA cases. One need only search “whistleblower lawyer” on the Internet to see how many attorneys dedicate their practice to this area.
Lending to these increased recoveries has been courts’ expansion of the scope of the FCA, making virtually any violation of any rule or regulation that is a condition of government payment in any government program potentially actionable under the statute. Indeed, the FCA now covers conduct in almost every industry in which the government provides funding, often disrupting and threatening businesses in health care, education, defense contracting, financial services, and the like.
Behind the $3.8 billion in recoveries lie significant settlements and judgments, including one settlement by a household pharmaceutical company with the government for $2.2 billion ($1.7 billion of which was attributed to civil damages and penalties). Many cases went to trial in 2013—a rare occurrence given that the consequence of any adverse verdict includes (almost automatically) treble damages, forfeiture of up to $11,000 per false claim, and attorneys’ fees. And perhaps most troubling for some, an adverse verdict may also result in suspension or debarment from government programs. Indeed, a survey of FCA cases reveals that they are often “bet the company” cases. On the case law front, there were hundreds of decisions issued last year, many of which departed from historical precedent. Further, the Supreme Court expressed interest in reviewing at least two of these cases. Finally, states—like the federal government—continue to legislate and pursue their own false claims laws with great vigor. In response, for the first time in recent history, businesses and potential FCA defendants have joined together to advocate for amendments to the FCA.
$3.8 billion—a sign alone that 2013 was a dynamic year; and as discussed further below, 2014 begins poised to be just the same.
In this year-end update, as in years past, we first summarize the enforcement activity that has occurred under the FCA during the fiscal year ending September 30, 2013—in terms of total recoveries, the increasing percentage of lawsuits brought as qui tam lawsuits, settlements and judgments in the last six months, descriptions of significant trials, and industry breakdowns of FCA activity. Next, we discuss important judicial decisions and trends occurring during the second half of the year. And finally, we discuss legislative activity relating to the Act in the last six months. The first half of 2013 was discussed in our 2013 Mid-Year False Claims Act Update. A collection of Gibson Dunn’s recent publications on the FCA, including more in-depth discussions of the FCA’s framework and operation along with practical guidance to help companies avoid or limit liability under the FCA, may be found on our Website.
As mentioned above, in the 2013 fiscal year, the federal government secured nearly $3.8 billion in civil settlements and judgments under the FCA. This year’s recovery is the second largest annual recovery in history, surpassed only by last year’s nearly $5 billion in recoveries—a difference explained entirely by last year’s record settlement with GlaxoSmithKline— and marks the fourth year in a row where the DOJ has recovered more than $3 billion from defendants. Since January 2009, the DOJ has recovered $17 billion under the FCA—nearly half of all recoveries since 1986, when the Act was substantially amended.
Fiscal year 2014 shows no signs of letting up. The DOJ has already announced nine FCA settlements for the first quarter of fiscal year 2014 (October through December 2013), while intervening in at least another two FCA suits (against a background investigation service and a national hospitalist physician group), in addition to bringing its own suit against a construction company and its owner.
Keeping with recent history, whistleblowers were a key driver of 2013 FCA recoveries. Of the $3.8 billion in fiscal year 2013 recoveries, three-quarters—$2.9 billion—was recovered through lawsuits originally filed by whistleblowers. Whistleblowers also played a large role in the filing of new FCA cases in general, with 752 of the 846 new FCA matters opened in the 2013 fiscal year initiated under the FCA’s qui tam provisions by whistleblowers. This stands in stark contrast to fiscal year 1987, when relators initiated only 8% of new matters—30 of 373—and the government initiated the remainder.
In total, since 1986, whistleblower qui tam cases have led to more than $27.2 billion in government recoveries, with nearly half ($11.5 billion) of that amount recovered in the last four years. Further, for the 9,200 suits filed by whistleblowers since 1986, whistleblowers have been awarded $4.3 billion, with $387 million in awards in fiscal year 2013 alone. And overall, nearly 70% of all FCA recoveries since 1986 can be attributed to qui tam matters.
The chart below demonstrates both the increase in overall FCA litigation activity since 1986 and the distinct shift from largely government-driven investigations and enforcement to qui tam-initiated lawsuits.
Number of FCA New Matters, Including Qui Tam Actions
Source: DOJ “Fraud Statistics – Overview” (December 23, 2013)
The FCA authorizes the government not only to file its own lawsuit, but also to intervene in and take control over any qui tam whistleblower action. However, in practice, for every ten cases filed by relators, the government ultimately intervenes in only about 20% of these cases. But when the government appears, it matters. Indeed, the government’s decision whether to intervene in a qui tam matter remains the single biggest factor correlated with any subsequent recovery, with cases involving government intervention responsible for the lion’s share of FCA recoveries. Of the $27.2 billion in total recoveries between fiscal years 1987 and 2013, qui tam actions in which the government declined to intervene recovered only $991 million—a paltry 4%.
With the number of qui tam suits climbing to new heights this year, companies can expect to see increased investigation by the government, resulting in more subpoenas—including subpoenas issued under FIRREA (the Financial Institutions Reform, Recovery, and Enforcement Act), Civil Investigative Demands, and other investigative action by the DOJ and other government agencies. The data below confirms our constant refrain: companies facing whistleblower claims should not underestimate the importance of working proactively to persuade the government not to intervene.
Settlement or Judgments in Cases where the Government Declined Intervention as a Percentage of Total FCA Recoveries
Source: DOJ “Fraud Statistics – Overview” (Dec. 23, 2013)
In our 2013 Mid-Year False Claims Act Update we discussed a number of notable settlements and judgments announced during the first half of 2013, including a $500 million settlement—$350 million of which arose from alleged civil wrongdoing—with a pharmaceutical company accused of making false statements to the Food and Drug Administration (“FDA”) regarding the quality of its drugs; and a judgment against a provider of high-tech products and services to the global aerospace and building systems industries for over $473 million, of which $364 million constituted damages and penalties under the FCA, representing the biggest recovery obtained by the government in a case tried under the FCA. The second half of 2013 saw one very large settlement and a variety of other settlement activity. The following are significant settlements announced during the second half of the year (some of which are included in the government’s 2014 fiscal year):
In addition to federal recoveries under the FCA, several states also made significant recoveries under their own state false claims statutes. A few examples from 2013 include:
In addition to the settlements and judgments discussed above, 2013 saw a number of FCA cases brought to trial—a historically rare occurrence. Indeed, because the FCA contains what is effectively an automatic punitive damages provision—resulting in trebling of damages in most cases, doling civil penalties of up to $11,000 for each false claim allegedly submitted (which can order on the thousands), and awarding attorneys’ fees and costs to victorious plaintiffs—many defendants find that—even when they believe the allegations are completely unfounded—it is too risky to take a case to trial. Coupled with that is the fact that an adverse verdict against a defendant in an FCA case may result in suspension or debarment from government programs. The results of a number of FCA cases that were tried in 2013 are listed below.
As the above discussion of settlement and trials indicates, the FCA covers fraud in all government programs, and therefore any industry that interacts with the government can become a potential FCA target. Given the outsized role of the federal government in the health care/life sciences and defense/procurement industries, however, these industries continue to attract significant DOJ attention and serve as the chief source of recovered funds, as indicated by the chart below.
Annual FCA Recoveries by Industry (2000–2013)
As in years past, most recoveries in 2013 came from individuals and entities operating within the health care industry. These settlements and judgments generally involve fraud allegedly committed against federal health care programs, including Medicare, Medicaid, and TRICARE, which provides health care to members of the armed services and their dependents. Since January 2009, the DOJ has recovered $12.1 billion for health care fraud under the FCA. In fiscal year 2013, the DOJ obtained $2.6 billion in health care fraud recoveries, making this the fourth straight year that the department has recovered more than $2 billion in cases involving health care fraud. Some of the largest settlements involved fraud and false claims in the pharmaceutical and medical device industries, which accounted for $1.8 billion of the total $2.6 billion recovered in the health care industry. In its Spring 2013 Semiannual Report to Congress, the HHS OIG reported having commenced 240 civil actions in the first half of the 2013 fiscal year, which includes false claims actions. The HHS OIG also reported expected recoveries of approximately $3.8 billion, including about $3.28 billion in “investigative receivables.”
The Obama Administration has instigated many important changes in the fight against health care fraud over the past several years. Among other things, the Administration created a public-private partnership among federal and state governments, several private health insurance organizations, and other health care anti-fraud groups in an effort to “share information and best practices in order to improve detection and prevent payment of fraudulent health care billings.” The partnership operates alongside the existing Heath Care Fraud Prevention and Enforcement Action Team (“HEAT”), which was formed in 2009. These changes have created a system that allows for the DOJ to consistently secure substantial recoveries in the area of health care fraud, as evidenced by the substantial recoveries seen in the past four years.
Among the manifold recoveries from the health care industry this year, several themes have emerged. First, many judgments and settlements have involved the alleged use of unnecessary medical procedures. For example, one medical center settled allegations that it performed certain cardiac procedures on Medicare patients that were not required given the patients’ particular symptoms. Other examples include alleged unnecessary therapy, unnecessary ambulance care, and the use of hospice care for patients who did not require that level of care or did not have a qualifying condition.
Other FCA settlements and judgments in the health care industry arose from physicians allegedly taking prohibited kickbacks. The Obama Administration has made eliminating improper kickbacks a priority in the fight against health care fraud. “Kickback schemes subvert the health care marketplace and undermine the integrity of public health care programs,” said Assistant Attorney General Stuart Delery. “We will continue to hold accountable those who we allege are providing illegal incentives to influence the decision making of health care providers in federal health care programs.” A number of different types of prohibited kickbacks have been alleged by the DOJ. For example, several cases leading to civil recoveries arose from doctors allegedly receiving improper compensation for referring patients to certain medical facilities, companies, labs, or hospitals. In one case, the DOJ alleged that a company offered referring physicians’ spouses sham marketing positions with the company in order to induce the physicians to refer Medicare patients. Other allegations involved rewarding doctors for using certain products or for prescribing certain medications.
A number of settlements and judgments also involved allegations that pharmaceutical and medical device manufacturers caused the submission of false claims for reimbursement of drugs for unapproved uses. This means that pharmaceutical manufacturers allegedly promoted their drugs for uses not approved by the FDA—commonly known as “off-label marketing”—with the knowledge that such uses may not have been reimbursable by federal health programs. Although off-label promotion is most directly regulated under the misbranding provisions of the Federal Food, Drug, and Cosmetic Act (“FDCA”), the Administration has stressed using the False Claims Act to help combat this conduct. Indeed, Acting Assistant Attorney General Stuart Delery stated in a press release that “[t]he improper promotion of pharmaceuticals undermines the FDA’s important role in protecting the American public by determining whether a drug is safe and effective for a particular use before it is marketed.” He went on to state that “[s]uch improper conduct by pharmaceutical companies also causes the government to pay significant amounts for products for which it would not otherwise pay.” That the government continues to reap FCA recoveries based on allegations of off-label promotion is particularly notable in the wake of the Second Circuit’s December 2012 decision in United States v. Caronia, 703 F.3d 149 (2d Cir. 2012), in which the court held that pharmaceutical manufacturers and their employees cannot be criminally prosecuted under the FDCA for speech promoting the lawful, off-label use of an FDA-approved drug. With the continued settlements of cases involving allegations of off-label promotion leading to false claims, the potential application of Caronia to FCA cases remains unclear.
A number of other settlements and judgments in the health care industry in the last year involved allegations of improper billing for certain reimbursable procedures, either by inflating billings for services or by fabricating medical procedures. The Administration continues to actively pursue this type of fraud as well. “Physicians who participate in government health care programs must bill for their services accurately and honestly,” said Acting Assistant Attorney General Delery.
Finally, fiscal year 2013 also included a $26.1 million settlement against a Florida dermatologist who had allegedly been accepting illegal kickbacks from a pathology laboratory and been billing Medicare for unnecessary procedures. This settlement marks one of the largest ever with an individual under the FCA. In May, the HEAT Medicare Fraud Strike Force further announced a nationwide takedown that resulted in charges against 89 individuals for their alleged participation in Medicare fraud schemes involving approximately $223 million in false billing, indicating that the government is willing to invest significant resources in pursuit of anyone receiving government funds, including individual offenders and small practices or businesses as well as large companies.
The government procurement industry remained a ripe target for FCA enforcement activity as well. Overall in fiscal year 2013, the government secured $887 million in settlement and judgments from alleged procurement fraud, primarily related to defense contracts. This amount makes clear, as Assistant Attorney General Delery recently explained, that the “department will do everything it can to ensure that contractors comply with critical contract requirements and that contractors who don’t comply aren’t permitted to profit at the expense of our men and women in uniform and the taxpayers at home who support them.”
Most notably, and as discussed above, the DOJ scored a victory at trial this year with a $473 million award against a global aerospace and building company for allegedly inflating prices on aircraft engines sold to the Air Force. The District Court later added prejudgment interest to the award, increasing the overall judgment to over $664 million. While the company has appealed the judgment, if the appellate court affirms it, it will be the largest procurement recovery in history. As the Assistant Attorney General reiterated in his announcement of the award, “It is vital that companies who do business with the government provide full and accurate information, and if they do not, they will pay the consequences.”
While large defense contractors are always prime targets, any business that serves the Department of Defense is at risk. For example, a food distributor agreed to pay $4.2 million to settle allegations that it overcharged the Department of Defense for fresh fruit and vegetables. Even contracts within the secretive realm of the intelligence agencies are not immune, with three CIA contractors agreeing to pay $3 million to settle FCA and kickback allegations in the last year.
The DOJ also settled allegations of false claims with companies in connection with their contracts with the GSA to market their products through the Multiple Award Schedule (“MAS”) program. To be awarded a MAS contract, and thereby gain access to a large part of the broad government marketplace, contractors must provide GSA with complete, accurate, and current information about their commercial sales practices, including discounts afforded to their commercial customers. Over the last year, the government secured several settlements resulting from companies allegedly failing to disclose discounts given to their commercial customers, including: (1) a $60.9 million settlement from a construction products manufacturer; (2) a $70 million settlement from a national hardware distributor; and (3) a $5.65 million settlement with a large ceramic and glass manufacturer. The United States Attorney for the District of Columbia gave a stern caution to those in the procurement industry: “Companies that want to take advantage of federal contracts are obligated to deal openly and fairly with their government customers” and “[w]hen contractors fail to meet their obligations, we will hold them accountable and seek to make the taxpayer whole.”
In 2013, the Obama Administration also continued to make the pursuit of financial fraud schemes a priority. In 2009, President Obama established a Financial Fraud Enforcement Task Force to hold accountable the individuals who caused the financial crisis as well as those who would attempt to take advantage of the efforts at economic recovery. This year there was change in the leadership of the Financial Fraud Enforcement Task Force, as Executive Director Michael Bresnick stepped down on August 1, 2013. Bresnick had served as the Executive Director since October 2011 and under his direction, the Task Force’s Residential Mortgage-Backed Securities Working Group was established in 2012.
Despite the change in leadership, the DOJ continued to make the fight against fraud in financial and lending markets a priority. For example, in the last year, a Pittsburgh-based bank paid $7.1 million to settle claims under the FCA that it allegedly failed to engage in prudent underwriting practices in connection with the issuance of loans guaranteed by the Small Business Administration (“SBA”). When announcing the settlement, the Administration stressed the importance of preventing fraud in lending with SBA preferred lenders. “Banks that are SBA preferred lenders have a duty to prudently guard the public funds they commit to borrowers,” said Assistant Attorney General Stuart Delery. “The government will pursue vigorously lenders that fail to adequately safeguard public funds due to deficient lending standards.”
2013 also brought with it many developments of FCA case law. There were hundreds of decisions issued in FCA matters over the last year, and potential Supreme Court arguments and decisions are on the horizon. We highlight the key case law developments below.
Federal Rule of Civil Procedure 9(b), which requires plaintiffs to plead allegations of fraud with particularity, has long been applied to cases filed under the FCA. This has proven to be an especially important requirement for defendants in cases in which the government has declined to intervene, as all too often whistleblowers on their own cannot identify any particular false claims connected to the alleged fraudulent conduct. In our 2013 Mid-Year False Claims Act Update, we reported on the Fourth Circuit’s holding, in United States ex rel. Nathan v. Takeda Pharms. N. Am., Inc., 707 F.3d 451, 457 (4th Cir. 2013) [hereinafter Nathan], that Rule 9(b) requires relators to allege such specific false claims “when a defendant’s actions . . . could have led, but need not necessarily have led, to the submissions of false claims.” The Fourth Circuit upheld the dismissal of Nathan’s complaint for failing to meet that standard. Id. at 454.
After the dismissal of his case, Nathan filed a Petition for Writ of Certiorari to place squarely before the Supreme Court the question of whether Rule 9(b) requires FCA complainants to allege with particularity that specific false claims were presented to the government. Petition for Writ of Certiorari, Nathan, petition for cert. filed, 82 U.S.L.W. 3178 (U.S. May 10, 2013) (No. 12-1349). Nathan’s Petition argues that the Fourth, Sixth, Eighth, and Eleventh Circuits have articulated such a requirement, while the First, Fifth, Seventh, and Ninth Circuits have used a lesser standard requiring simply that relators allege the “particular details” of the scheme to submit false claims, together with “sufficient indicia” that false claims were submitted. See id. at 15. Perhaps in recognition of this circuit split, in October 2013, the Supreme Court requested that the Solicitor General file a brief expressing the views of the United States on this question, indicating that it may indeed take up Nathan’s case. See Nathan, petition for cert. filed 82 U.S.L.W. 3178 (U.S. Oct. 7, 2013) (No. 12-1349).
Two recent cases out of the First and Eighth Circuits appellate courts show the complexity of this issue and bring into further relief the need for a single clear standard and Supreme Court intervention. In December 2013, the First Circuit opted for the stricter approach to Rule 9(b), in United States ex rel. Ge v. Takeda Pharmaceutical Co. Ltd., 737 F.3d 116 (1st Cir. 2013). In Ge, the relator alleged that Takeda had violated the FCA by underreporting adverse events for four of its drugs, and thereby caused false claims for reimbursement of those drugs to be submitted to the government. Id. Declining to rule on whether the relator’s “fraud-on-the-FDA” theory was a proper basis for FCA liability, the First Circuit affirmed the District Court’s dismissal of the relator’s complaint on Rule 9(b) grounds based on her failure to identify any specific false claims that resulted from the misreporting of adverse events. Id. The court explained that the relator’s reference to expenditure data for one of the drugs did not meet Rule 9(b) standards, as she made “no effort to identify specific entities who submitted claims or government program payers, much less times, amounts, and circumstances.” Id. Notably, when the relator attempted to raise several new theories of liability on appeal that were deemed waived, the court also favorably cited the Fourth Circuit’s opinion in Nathan in expressing doubts that any of those theories could survive Rule 9(b). Id.
Conversely, the Eighth Circuit—which had previously applied the stricter standard of pleading false claims in FCA complaints—recently refused to require plaintiffs alleging a “fraud-in-the-inducement” theory to identify specific false claims. In United States ex rel. Simpson v. Bayer Healthcare, 732 F.3d 869, 872 (8th Cir. 2013), the relator alleged that Bayer downplayed the risk of serious side effects of its cholesterol-lowering drug Baycol, misrepresented the drug’s efficacy, and induced physicians to prescribe the drug using illegal kickbacks. This allegedly led to improper government payments for Baycol in two different ways: (1) Medicare and Medicaid reimbursement for prescriptions to third party health care providers that would not have been made or reimbursed had the company presented the information about the drug; and (2) payment by the Department of Defense (“DoD”) pursuant to two purchasing contracts with Bayer that were allegedly fraudulently induced by the company’s misrepresentation of the safety risks of Baycol as compared to competitor drugs. Id. at 872-74. The relator did not provide any examples of any specific false claims connected to either of these theories, and for this reason the District Court dismissed her complaint in its entirety. Id. at 874.
As to the relator’s federal health insurance program claims, the Eighth Circuit affirmed the dismissal, applying its own precedent that FCA relators must identify specific false claims to survive Rule 9(b) review. Id. at 878-79. But on the DoD contract claims, the court reversed the dismissal, and signaled a potential expansion of the FCA “fraud-in-the-inducement” theory. Id. at 877. The court reasoned that “when a relator alleges liability under a theory of fraud-in-the-inducement, claims for payment subsequently submitted under a contract initially induced by fraud do not have to be false or fraudulent in and of themselves in order to state a cause of action under the FCA.” Id. at 876 (emphasis added). As a result, the court did not require that the relator show any specific claims for payment of Baycol were false or fraudulent—for example, by showing that the drug was defective or overpriced, or caused actual patient harm in any specific case—because it reasoned that all claims resulting from the Bayer contract were made false by the initial contracting “taint.” Id.
The reasoning in Simpson has potentially huge implications, as whistleblowers and the government will argue that it suggests government contractors are liable for every claim submitted pursuant to a contract that was obtained on faulty premises, even without any defect in the price or quality of the products or services provided. Unfortunately, as the dissenting judge observed, while the Simpson majority was correct that other cases have held all claims can be “tainted” by a fraudulent contracting process, it overlooked that that need not necessarily be the case. Id. at 881 (Loken, J., concurring in part and dissenting in part). The cases cited by the Simpson majority, one might argue, involved fraudulent schemes that necessarily caused demonstrable harm to the government with each claim resulting from the contract. The Eighth Circuit’s failure to require such a showing of actual or potential harm resounding from the initial contract represents a troubling expansion of this line of cases for government contractors.
The Supreme Court now has a welcome opportunity to clarify whether FCA relators must identify specific false claims when they file qui tam suits and bring courts nationwide under the same standard. With the holding in Ge, defendants have a strong argument that, at least with respect to federal program reimbursement, a consensus is developing around a requirement that specific false claims must be pled to satisfy Rule 9(b). Government contractors, however, must be aware that this standard may be looser for plaintiffs alleging that a contract was fraudulently induced at the outset. The court’s opinion in Simpson is an important reminder that, as always, companies seeking government contracts must exercise great care with the information they provide to obtain that business, or else they risk exposure to potentially massive FCA liability.
For years, defendants have battled with the government and whistleblowers over which kinds of legal violations can render “false or fraudulent” any associated claims for payment under the FCA. Though all circuits have not clearly adopted it, a number of courts have found that a claim can be “legally false” under the FCA based on a defendant’s “implied certification” of compliance with a statutory, regulatory, or contractual provision that is a precondition to government payment. But this necessarily begs the question: which particular alleged violations meet this standard? The Fifth and Eighth Circuits recently answered this question by examining whether the provisions underlying alleged false claims were demonstrably and objectively legal conditions of payment.
First, in United States ex rel. Steury v. Cardinal Health, Inc., 735 F.3d 202, 204 (5th Cir. 2013), the Fifth Circuit was presented with a relator’s second appeal of the District Court’s repeated dismissal of her claim that defendant Cardinal Health had sold defective Signature intravenous fluid pumps to VA hospitals, in alleged violation of the FCA. By selling the purportedly defective IV pumps, the relator alleged—without textual evidence—that Cardinal had violated an implied “warranty of merchantability” in its contract with the government. Id. at 206. The Fifth Circuit refused to blindly follow the relator’s assertion that this warranty existed, instead requiring that she “reveal how the Signature pumps deviated from the government’s specifications[,]” such as by reference to an express statute or regulation. Id. Since the relator had not shown by such evidence that “the Government conditioned payment for the Signature pumps on a certification that the Signature pumps complied with the warranty of merchantability,” the court held that the relator had not stated a viable FCA claim. Id. at 206-07 (internal citations and quotation marks omitted).
Similarly, in United States ex rel. Ketroser v. Mayo Found., 729 F.3d 825, 826-27 (8th Cir. 2013), the Eighth Circuit affirmed the dismissal of a relator’s claims that the defendant Mayo Foundation failed to prepare a written report with each tissue sample analysis that was billed under Medicare codes for surgical pathology services. After engaging in a careful analysis of the Medicare reimbursement guidelines and the American Medical Association’s Codebook, the court found that the relator had failed to state an FCA claim because there was no “clear requirement that a written report must underlie or support each claim for surgical pathology services[.]” Id. at 830. That the preparation of such reports was standard industry practice was not enough, according to the Ketroser court, because the industry standard was “not evidence that Medicare expects written reports” for each analyzed sample. Id. (emphasis added).
Although Steury and Ketroser did not break new ground on the question of what alleged violations may support FCA falsity, they represent useful examples showing that courts will look for objective evidence of an alleged violation’s connection to payment, rather than just take the plaintiff’s claim of falsity at face value. This may be cold comfort, given the huge universe of requirements potentially bearing on government payment. As always, any company receiving government funds would be well served reviewing such provisions as part of their compliance efforts.
In addition to its treble damages provision discussed above, the FCA provides for the imposition of a civil monetary penalty in the amount of $5,500 to $11,000 for each statutory violation—which courts generally have interpreted in most cases to mean a penalty is imposed for each submitted false claim. As the scope and complexity of government spending programs have widened, so too have the number of claims for payment, sometimes amounting to thousands of separate claims on a single contract. That exposes modern businesses receiving government funds to potentially enormous FCA liability for systemic false or fraudulent conduct. At times, though, the Excessive Fines Clause of the Eighth Amendment has been applied to limit the amount of civil penalties where they were found to be “grossly disproportionate” to the demonstrated harm stemming from the submission of false claims.
But the Fourth Circuit recently indicated that the Eighth Amendment may not be the fail-safe against huge FCA awards that some had thought. In United States ex rel. Bunk v. Gosselin Word Wide Moving, N.V., 2013 U.S. App. LEXIS 25225, at *4 (4th Cir. Dec. 19, 2013), the Fourth Circuit reversed a District Court’s finding that FCA penalties could not be constitutionally imposed after a jury had found over 9,000 false claims, but the relators had not sought any damages. The Bunk case involved allegations of several schemes by defendant Gossselin World Wide Moving and its peer companies to fix prices and rig bids for contracts with the U.S. government to move military household goods to and from European bases. Id. at *5-*8. After trial, the government and relator sought $24 million in penalties, despite the fact that the FCA authorized an award of more than $50 million based on the number of adjudicated false claims. Id. at *20-*22. However, the District Court found that the FCA did not allow it discretion to award less than the minimum authorized amount of penalties, and the $50 million amount was grossly disproportionate to Gosselin’s alleged price fixing, which resulted in little, if any, demonstrated economic harm. Id. Accordingly, taking an “all or nothing” approach, the District Court declined to award any FCA penalties. Id. at *22.
On appeal, the Fourth Circuit first joined the Fifth and Tenth Circuits in holding that relators like Bunk have standing to sue for FCA penalties only. Id. at *30-*31. Notably, the court observed that civil monetary penalties, much like the FCA’s treble damages provision, were instituted to ensure that the government is made whole from the defendant’s fraud. Id. at *29. Preventing relators from bringing cases for civil penalties alone would frustrate that purpose and disrupt the government’s choice to forego intervention in a qui tam suit. Id. The Fourth Circuit went on to find that relators’ standing to sue on the government’s behalf does not violate the Appointments and Take Care clauses of the Constitution. Id. at *32.
Having found that relators have standing to bring cases for FCA civil penalties, the Fourth Circuit reversed the District Court’s Excessive Fines ruling and ordered the entry of judgment for relators and the government in the amount of $24 million. The court first observed that the FCA affords the government and relators substantial discretion in how to craft and direct their case, including the “virtually unbounded” ability to willingly accept a lesser recovery to avoid constitutional questions. Id. at *38. It then concluded that the requested $24 million in civil penalties was consistent with the Excessive Fines Clause. Id. at *47. The court explained that although the relators had not sought damages at trial, and the “economic harm” was apparent but debatable, this amount was sufficiently proportionate to the intangible harm of the public’s shaken faith in its government as well as the potential deterrence to other government contractors. Id. at *45-*56.
Unfortunately, the Fourth Circuit failed to draw a clear standard on when the imposition of FCA penalties will or will not cross constitutional limits. But its willingness to levy $24 million in penalties in the absence of any proven FCA damages is an eye opening reminder that contractors submitting large numbers of invoices to the government must be especially vigilant due to the potentially huge exposure to false claims liability.
The FCA’s “public disclosure” provision, 31 U.S.C. § 3730(e)(4), seeks to find a middle ground between encouraging whistleblowers and curbing parasitic litigation by barring qui tam relators from bringing suit based upon allegations or transactions that have been publicly disclosed in certain forums, unless they were an “original source” of the information. One of the statutory sources that can trigger the public disclosure bar is a prior civil or administrative hearing in which the government is a party. But the question remains, what level of disclosure in such prior litigation will bar subsequent relators from bringing actions “based on” or “substantially similar to” those cases?
The Third and Seventh Circuits recently came to opposite answers. In United States ex rel. Zizic v. Q2Adminstrators, LLC, 728 F.3d 228, 233 (3d Cir. 2013), the Third Circuit was presented with a relator who was a former CEO of a durable medical equipment company that submitted claims for Medicare reimbursement of its device. After consistent claim denials by Q2A and RTS, the contractor responsible for reviewing certain Medicare claims, relator’s company went into bankruptcy. Id. The bankruptcy trustee sued HHS to reverse the claims denials, and relator allegedly learned in discovery during the bankruptcy proceedings that the review contractors denied the claims without any meaningful review due to understaffing. Id. The relator then filed his FCA action against the two contractors for allegedly submitting claims to HHS for payment of review services it did not render. Id. at 234.
Despite the fact that the relator was allegedly directly affected by the purported wrongdoing and he allegedly suspected fraud prior to his company’s bankruptcy, the Third Circuit affirmed the District Court’s dismissal of his FCA claims on public disclosure grounds. Id. at 243. The Court found that the problematic conduct forming the basis of his FCA claims was discovered entirely from the bankruptcy proceedings. Id. at 238. Moreover, that the flaws in defendants’ review process were identified through the relator’s own work in those proceedings did not make him an “original source” of the information supporting his FCA claims, in the Third Circuit’s view. Id. at 242.
Conversely, in Leveski v. ITT Educ. Servs., Inc., 719 F.3d 818, 819 (7th Cir. 2013), the Seventh Circuit found that the public disclosure doctrine did not bar claims based on information obtained from prior legal actions. The relator in Leveski alleged that the defendant, a for-profit education service provider, had pegged recruiter compensation to the number of students enrolled by each recruiter, making it ineligible to receive financial assistance funds from the government. Id. at 821. The relator was inspired to bring this suit by a lawyer who had hired an investigator to contact former ITT employees like herself who might be willing to file suit against her former employer. Id. at 824-25. The District Court dismissed her complaint, observing that prior to filing she had researched several prior FCA suits brought against ITT alleging violations of the same incentive compensation regulations that formed the basis of her complaint and that she was not an original source as she had been spoon fed the information for her lawsuit by her lawyer. Id. at 827.
The Seventh Circuit reversed. Id. at 819. While the court recognized that one of the prior cases at issue was also brought by a former ITT employee with the same job title as Leveski and alleging violations of the same incentive compensation regulations, it found that dismissal on these grounds approached the public disclosure inquiry at “too high a level of generality.” Id. at 832. The court engaged in a detailed comparison of the relator’s complaint against the prior complaint, finding several purported factual distinctions that resulted in its conclusion that the public disclosure bar did not apply because the relator had pled different details about how the incentive compensation regulations were violated. Id. at 829-35.
Many have wondered when the public disclosure bar would ever apply if it did not apply in Leveski, where the relator had actually reviewed a prior lawsuit by a nearly identically situated relator against the same defendant and on the same legal theory. But while the Seventh Circuit’s opinion is undoubtedly concerning for defendants seeking to stave off parasitic relators, its comparison with Zizic suggests that the public disclosure bar will continue to require a very fact-intensive and careful analysis in each case.
Long-time observers of FCA actions know that qui tam relators filing suit against their current or former employers can come from all corners of a company. But one place they cannot originate, according to the Second Circuit, is the legal counsel’s office. In United States v. Quest Diagnostics Inc., 734 F.3d 154, 161 (2d Cir. 2013), several relators filed a qui tam action against defendants Quest Diagnostics and Unilab Corporation alleging violations of the federal Anti-Kickback Statute and FCA. The Second Circuit upheld the District Court’s sua sponte dismissal of the suit on the grounds that one of the relators, who formerly served as in-house counsel for Unilab, had violated state legal ethics rules by disclosing protected client information when he made his mandatory FCA disclosures to the government, among other disclosures. Id. at 159. The Quest relators had argued that the federal interests of the FCA effectively preempted application of the state rules at issue, but the Second Circuit emphasized that “[n]othing in the False Claims Act evinces a clear legislative intent to preempt statutes and rules that regulate an attorney’s disclosure of client confidences.” Id. at 163. Applying New York state ethics rules, the Second Circuit found that the former counsel’s disclosures were not necessary to prevent his former company from committing a crime, and thus were improper. Id. at 165.
Although a general counsel as relator is surely a rare occurrence, the Quest decision is an indicator of the limits of deference courts will give to the framework of the FCA. Without question, the FCA’s qui tam provisions are designed to encourage insiders to come forward with information about potential fraud against the government. That said, the FCA does not go so far as to trump a putative relator’s separate ethical duties to his or her client. As the plaintiffs discovered in Quest, relators that try to push these boundaries risk having their entire case thrown out.
In our Mid-Year Update, we reported on the Fourth Circuit’s application of the Wartime Suspension of Limitations Act (“WSLA”), 18 U.S.C. § 3729, to the FCA in United States ex rel. Carter v. Halliburton Co., 710 F.3d 171 (4th Cir. 2013) (hereinafter Carter). The WSLA, a provision of the criminal code, tolls the ordinary six-year statute of limitations for prosecuting charges relating to fraud against the United States while at war. In Carter, the Fourth Circuit found that (1) the WSLA applied to FCA claims because the United States was “at war” during the time of the claims, and a formal declaration of war was not required; (2) the WSLA applies to civil cases like those under the FCA; and (3) the WSLA applies even in actions brought by a relator. Id. at 178-81. Defendant Kellogg Brown & Root (“KBR”) filed a Petition for Writ of Certiorari from that decision, asking the Supreme Court to review whether the WSLA “applies to claims of civil fraud brought by private relators, and is triggered without a formal declaration of war, in a manner that leads to indefinite tolling.” Brief for Petitioner at I, Carter, 82 U.S.L.W. 3178 (June 24, 2013) (No. 12-1497). In October 2013, the Court asked the Solicitor General to file a brief with the United States’ views on these issues, thus indicating that it may grant KBR’s petition. See Carter, petition for cert. filed, 82 U.S.L.W. 3178 (Oct. 7, 2013) (No. 12-1497).
Supreme Court review of Carter would provide much needed clarity on how expansively the WSLA may be applied in FCA cases. As we observed in our Mid-Year Update, Carter raised important questions about whether the WSLA tolls the limitations period in perpetuity given the United States’ ongoing military engagements, and whether it extends to government spending unrelated to those engagements. Indeed, several courts have already extended the WSLA beyond defense procurement fraud claims. In United States v. BNP Paribas SA, 884 F. Supp. 2d 589, 593 (S.D. Tex. 2012), the United States alleged that defendant BNP Paribas (“BNPP”) submitted fraudulent claims for payment on Commodity Credit Corporation (“CCC”) guarantees that were assigned to the company from a group of exporters that were not eligible for the CCC guarantees. The claims at issue fell just outside of the FCA’s usual six-year limitations period, and they had no alleged connection to any military activities. Id. at 598. Nevertheless, the court denied BNPP’s motion to dismiss, finding that the United States was “at war” when the 2005 claims were submitted, and that the WSLA applied to the civil FCA. Id. at 601-08. The court offered no reasoning, however, as to why the WSLA should apply to claims unrelated to the execution of the “war” that triggers the suspension of the limitations period.
More recently, the government again successfully argued for the extension of the WSLA to cases involving alleged financial fraud. In United States v. Wells Fargo Bank, N.A., No. 12 Civ. 7527, 2013 WL 5312564 (S.D.N.Y. Sept. 24, 2013), the government filed a complaint in 2012 alleging that, between 2001 and 2005, the defendant recklessly underwrote Federal Housing Administration-insured loans that were not eligible for such federal insurance, in violation of the FCA, FIRREA, and other laws. The court denied the defendant’s motion to dismiss the government’s FCA claims on statute of limitations grounds, finding in relevant part that the WSLA, as amended in 2008, tolled the FCA’s statute of limitations as to claims going back to 2001. The court reasoned that there has been no presidential or congressional declaration suspending hostilities since the 2001 and 2002 authorizations for use of military force, and the WSLA therefore applies even in FCA cases of “fraud having nothing to do directly with the prosecution of war or the military.” Id. at *14.
The BNPP and Wells Fargo courts’ willingness to extend the WSLA to financial fraud cases is troubling. While this question is not directly before the Supreme Court in Carter, its review of that case would shed important light on the limits of the WSLA and whether it really can be applied to non-defense cases such as those involving other industries.
In terms of legislative activity relating to the FCA, most of the activity in 2013 occurred at the state level. However, there have been some interesting proposals, both at the federal level and by the U.S. Chamber Institute for Legal Reform. These are all discussed below.
An issue discussed in our prior alerts has been CMS’s proposed rules regarding the Medicare Incentive Reward Program and Medicare and Medicaid overpayments. There were no updates on these matters by the end of 2013. However, a recent bill introduced in the House raised interest and would represent a significant victory for FCA defendants if eventually passed:
On September 13, H.R. 2931 was referred by the House Judiciary Committee to the Subcommittee on the Constitution and Civil Justice. This may be an important piece of legislation to keep an eye on, and many of the limitations and modifications proposed are echoed in the U.S. Chamber report discussed further below. If adopted, this legislation would provide a much-needed curb on unnecessary subpoenas and other investigative activity disrupting the affected businesses.
As discussed in prior alerts, the 2005 Federal Deficit Reduction Act (“DRA”), 42 U.S.C. § 1396h, included a financial incentive designed to prompt states to adopt false claims acts “at least as effective” as the federal FCA in combating false or fraudulent Medicaid claims. States that enact qualifying laws, as adjudged by HHS OIG (in consultation with DOJ), may collect an additional 10% of any recovery of federal Medicaid funds recovered through a state action. A two-year grace period was also offered to states whose FCA laws previously complied with the DRA requirements, but whose laws were determined to no longer comply with the requirements after the amendments contained in the Fraud Enforcement and Recovery Act of 2009, the Patient Protection and Affordable Care Act, and the Dodd-Frank Wall Street Reform and Consumer Protection Act. That grace period has now elapsed for all states.
In the 2013 Mid-Year False Claims Act Update, we noted that several states had passed new false claims laws. Since that time, several other states have passed new laws and HHS OIG has made determinations about the DRA compliance of many state false claims laws. These states are listed below:
Various other bills to enact or amend existing false claims laws continue to proceed through state houses across the country. States with pending legislation include: Alabama (S.B. 183), Maryland (H.B. 509), Michigan (H.B. 4010), Mississippi (H.B. 1436), New Mexico (S.B. 133), Pennsylvania (H.B. 1493), and South Carolina (S.B. 73, H.B. 3945). In addition, North Dakota has adopted a concurrent resolution to study the use of qui tam actions in other states and to determine whether that approach is “feasible and desirable.” We expect to see continued interest in state FCA enactment and enforcement.
In a highly-publicized and well-received campaign, the U.S. Chamber Institute for Legal Reform (“ILR”) announced at its 14th annual Legal Reform Summit in October 2013 its intention to launch a “full-fledged” campaign to reform the FCA. ILR stated that this campaign would follow the model it used to campaign for FCPA reform since 2010, a campaign ILR credits with spurring the November 2012 release of the DOJ and SEC’s joint Resource Guide to the U.S. Foreign Corrupt Practices Act (analyzed in depth in Gibson Dunn’s Decoding FCPA Enforcement: The U.S. Government Issues Comprehensive Guidance on the Foreign Corrupt Practices Act). In conjunction with the summit, ILR released a white paper entitled Fixing the False Claims Act: The Case for Compliance-Focused Reforms, outlining its proposed reforms. The “lynchpin” of the plan, according to its authors, is to deputize businesses to serve as the first line of defense against fraudulent claims.
This white paper outlines four specific FCA reforms that would only apply to companies that voluntarily participate in industry-specific “gold standard” compliance programs:
Next, the white paper proposes eight reforms aimed at addressing current inefficiencies in the way the FCA is enforced. These changes would apply to all individuals and entities subject to the FCA, not just “gold standard” companies:
As its third general reform, the white paper proposes that the DOJ adopt internal policy guidelines to ensure that Civil Investigative Demands (“CIDs”) are issued only when necessary to a fraud investigation and when less burdensome alternatives are unavailable.
At the October 24 Legal Reform Summit, two of the proposal’s authors—David W. Ogden and Peter B. Hutt II—appeared on a panel to explain the reasoning behind the suggested reforms. In response to concerns that the proposed 180-day internal reporting rule could reduce relators’ incentives to report fraudulent behavior, Hutt cited studies indicating that a vast majority of qui tam relators had reported internally prior to filing the qui tam complaint, while Ogden reiterated that this rule would only be in place for companies independently accredited according to compliance standards established in cooperation with federal agencies such as HHS. On December 6, 2013, Ogden appeared on a panel hosted by the George Mason University School of Law’s Congressional Civil Justice Caucus Academy with Stephen M. Kohn, the executive director of the National Whistleblowers Center. While Kohn pointed to the $4.9 billion in FCA recoveries in 2012 as evidence of the law’s success in detecting fraud, Ogden pointed to the disparity between $4.9 billion and the estimated $72 billion the United States loses to fraud annually in arguing that the law is “profoundly flawed in several respects.” Although the United States has yet to officially comment on ILR’s proposal, we will continue to closely monitor this reform effort.
2013 confirmed the real dangers associated with the combination of increased government spending and the expanding breadth of the FCA. In response, it is more important than ever that companies be mindful of the FCA, have compliance programs in place to prevent violations of the FCA, and appropriately respond and react to internal or external inquiries alleging possible FCA violations. FCA claims can be extremely disruptive and expensive, even if they never reach litigation. Furthermore, as discussed above, studies show that most whistleblowers first report their concerns internally. Companies must therefore take seriously employee complaints and should consider further educating the workforce about the FCA, perhaps even beyond what some agencies already require, and establishing standard procedures for raising complaints and responding to them. Every well-designed response plan also should include a discussion with qualified outside counsel about the potential benefits and risks of self-disclosure to the government. It is important to be thoughtful and strategic about this decision and whether to avail oneself of the various voluntary self-disclosure regimes that now exist (e.g., HHS OIG). The factors leading to a determination about self-disclosure are complex and nuanced, and must be handled carefully and appropriately.
In conclusion, based on the ever-increasing and well-publicized FCA bounties, the staggering figures of fraud and abuse in government programs, and the intense demand for oversight and accountability on both sides of cases discussed in this and in our prior FCA updates, Gibson Dunn predicts that 2014 will be another dynamic and interesting year for FCA activity. As always, we will keep you posted.
 See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Justice Department Recovers $3.8 Billion from False Claims Act Cases in Fiscal Year 2013 (Dec. 20, 2013), http://www.justice.gov/opa/pr/2013/December/13-civ-1352.html [hereinafter DOJ FY 2013 Recoveries Press Release].
 See Fraud Statistics, U.S. Dep’t of Justice (Dec. 23, 2013), http://www.justice.gov/civil/docs_forms/C-FRAUDS_FCA_Statistics.pdf [hereinafter 2013 Fraud Statistics].
 See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, GlaxoSmithKline to Plead Guilty and Pay $3 Billion to Resolve Fraud Allegations and Failure to Report Safety Data (July 2, 2012), http://www.justice.gov/opa/pr/2012/July/12-civ-842.html.
 See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, US Government Intervenes in False Claims Lawsuit Against United States Investigations Services for Failing to Perform Required Quality Reviews of Background Investigations (Oct. 30, 2013), http://www.justice.gov/opa/pr/2013/October/13-civ-1158.html.
 See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Government Intervenes in False Claims Lawsuit Against Ipc the Hospitalist Co. Inc. Alleging Overbilling of Physician Services (Dec. 9, 2013), http://www.justice.gov/opa/pr/2013/December/13-civ-1294.html.
 See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Government Files Suit Against Canton, Ohio-based Tab Construction and Its Owner for Allegedly Defrauding the Historically Underutilized Business Zone Program (Dec. 5, 2013), http://www.justice.gov/opa/pr/2013/December/13-civ-1281.html.
 See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Acting Assistant Attorney General Stuart F. Delery Speaks at the American Bar Association’s Ninth National Institute on the Civil False Claims Act and Qui Tam Enforcement (June 7, 2012), http://www.justice.gov/iso/opa/civil/speeches/2012/civ-speech-1206071.html.
 See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Generic Drug Manufacturer Ranbaxy Pleads Guilty and Agrees to Pay $500 Million to Resolve False Claims Allegations, cGMP Violations and False Statements to the FDA (May 13, 2013), http://www.justice.gov/opa/pr/2013/May/13-civ-542.html.
 See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, United Technologies Corporation Liable for Over $473 Million for Inflating Prices on Aircraft Engines Sold to Air Force (June 20, 2013), http://www.justice.gov/opa/pr/2013/June/13-civ-696.html [hereinafter UTC Press Release].
 See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Johnson & Johnson to Pay More Than $2.2 Billion to Resolve Criminal and Civil Investigations (Nov. 4, 2013), http://www.justice.gov/opa/pr/2013/November/13-ag-1170.html.
 See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Fifty-Five Hospitals to Pay U.S. More than $34 Million to Resolve False Claims Act Allegations Related to Kyphoplasty (July 2, 2013), http://www.justice.gov/opa/pr/2013/July/13-civ-745.html.
 See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, North Carolina-Based Trans1 to Pay U.S. $6 Million to Settle False Claims Act Allegations (July 3, 2013), http://www.justice.gov/opa/pr/2013/July/13-civ-755.html.
 See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Tacoma, Wash., Medical Firm to Pay $14.5 Million to Settle Overbilling Allegations (July 3, 2013), http://www.justice.gov/opa/pr/2013/July/13-civ-758.html.
 See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Science Applications International Corporation Agrees to Pay $5.75 Million to Settle False Claims Act Allegations (July 3, 2013), http://www.justice.gov/opa/pr/2013/July/13-civ-757.html.
 See Press Release, U.S. Attorney’s Office, E. Dist. of Mich., U.S. Dep’t of Justice, United States Intervenes in Health Care Fraud Action and Obtains $4 Million in Settlement (July 10, 2013), http://www.justice.gov/usao/mie/news/2013/2013_7_10_jpatel_HCF.html.
 See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Contrack International Inc. Agrees to Pay $3.5 Million to Resolve False Claims Act Allegations (July 12, 2013), http://www.justice.gov/opa/pr/2013/July/13-civ-781.html.
 See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, The Gallup Organization Agrees to Pay $10.5 Million to Settle Allegations that it Improperly Inflated Contract Prices and Engaged in Prohibited Employment Negotiations with FEMA Official (July 15, 2013), http://www.justice.gov/opa/pr/2013/July/13-civ-786.html.
 See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Dubuis Health System and Southern Crescent Hospital for Specialty Care, Inc. to Pay U.S. $8 Million to Resolve False Claims Act Allegations (July 26, 2013), http://www.justice.gov/opa/pr/2013/July/13-civ-851.html.
 See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Wyeth Pharmaceuticals Agrees to Pay $490.9 Million for Marketing the Prescription Drug Rapamune for Unapproved Uses (July 30, 2013), http://www.justice.gov/opa/pr/2013/July/13-civ-860.html.
 See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, False Claims Act Judgment Entered Against Washington, DC, Health Care Provider for More Than $17 Million (July 30, 2013), http://www.justice.gov/opa/pr/2013/July/13-civ-864.html [hereinafter DC Health Care Provider Press Release].
 See Press Release, U.S. Attorney’s Office, N. Dist. of Ill., U.S. Dep’t of Justice, Northwestern University to Pay Nearly $3 Million to the United States to Settle Cancer Research Grant Fraud Claims (July 30, 2013), http://www.justice.gov/usao/iln/pr/chicago/2013/pr0730_01.html.
 See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Texas Businessman Agrees to Settle False Claims Allegations Involving the E-Rate Program (Aug. 6, 2013), http://www.justice.gov/opa/pr/2013/August/13-civ-884.html.
 See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Shands Healthcare to Pay $26 Million to Resolve Allegations Related to Inpatient Stays at Six Florida Hospitals (Aug. 19, 2013), http://www.justice.gov/opa/pr/2013/August/13-civ-936.html.
 See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Texas-Based School Chain to Pay Government $3.7 Million for Submitting False Claims for Federal Student Financial Aid (Aug. 22, 2013), http://www.justice.gov/opa/pr/2013/August/13-civ-953.html.
 See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, MRI Diagnostic Testing Company, Imagimed LLC, and Its Former Owners and Chief Radiologist to Pay $3.57 Million to Resolve False Claims Act Allegations (Aug. 27, 2013), http://www.justice.gov/opa/pr/2013/August/13-civ-958.html.
 See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, RPM International Inc. and Tremco Inc. Pay Nearly $61 Million for Failing to Provide Government Discounts Provided to Others (Aug. 28, 2013), http://www.justice.gov/opa/pr/2013/August/13-civ-968.html.
 See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Florida Doctors, Hospitals and Clinics to Pay $3.5 Million to Settle Allegations of Improper Medicare, Medicaid and TRICARE Billing (Sept. 13, 2013), http://www.justice.gov/opa/pr/2013/September/13-civ-1027.html.
 See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, California Mobile Lab and X-ray Provider, Diagnostic Laboratories and Radiology, to Pay $17.5 Million for Falsely Billing Medicare and Medi-CAL (Sept. 25, 2013), http://www.justice.gov/opa/pr/2013/September/13-civ-1068.html.
 See Press Release, U.S. Attorney’s Office, Dist. of Md.,U.S. Dep’t of Justice, Axway, Inc. Agrees To Pay $6.2 Million To Resolve False Claims Act Allegations Related To GSA Multiple Awards Contract (Oct. 28, 2013).
 See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Orlando, Fla., Area Hospice to Pay $3 Million to Resolve Allegations That It Billed Medicare for Patients Not Terminally Ill (Nov. 5, 2013), http://www.justice.gov/opa/pr/2013/November/13-civ-1179.html.
 See Press Release, U.S. Attorney’s Office, W.D. of Tex., U.S. Dep’t of Justice, Baptist Health Systems Settles Federal False Claims Act Civil Lawsuit (Nov. 18, 2013), http://www.justice.gov/usao/txw/news/2013/Baptist_Hospital_SA_civil_settlement.html.
 See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Nursing Home Operator to Pay $48 Million to Resolve Allegations That Six California Facilities Billed for Unnecessary Therapy (Nov. 19, 2013), http://www.justice.gov/opa/pr/2013/November/12-civ-1235.html.
 See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, CVS’ Caremark Will Pay $4.25 Million for Allegedly Denying Medicaid Claims for Reimbursement of Prescription Drug Costs (Dec. 2, 2013), http://www.justice.gov/opa/pr/2013/December/13-civ-1267.html.
 See Andrew Scurria, Texas Physical Therapy Clinics Reach $4.3M FCA Deal, Law360 (Dec. 2, 2013), http://www.law360.com/articles/492490/texas-physical-therapy-clinics-reach-4-3m-fca-deal.
 See Ama Sarfo, Upsher, Forest Ink $11M Drug Price Inflation Settlement, Law360 (Feb. 13, 2013, 6:54 PM), http://www.law360.com/articles/415348/upsher-forest-ink-11m-drug-price-inflation-settlement.
 See Press Release, Iowa Office of the Attorney Gen., Miller Names Keokuk Care Center Owners in Medicaid Fraud Case (Mar. 7, 2013), https://www.iowaattorneygeneral.gov/newsroom/miller-names-keokuk-care-center-owners-in-medicaid-fraud-case.
 See R.I. Firm Settles Medicaid Fraud Claims in Connecticut for $9.9 Million, Connecticut Watchdog (June 3, 2013), http://ctwatchdog.com/health/r-i-firm-settles-medicaid-fraud-claims-in-connecticut-for-9-9-million.
 See Brian Mahoney, Texas Inks $5M Deal with Drug Co. Over Medicaid Drug Prices, Law360 (Sept. 4, 2013, 6:39 PM), http://www.law360.com/articles/470093/texas-inks-5m-deal-with-drug-co-over-medicaid-drug-prices.
 See Kathryn Brenzel, Diagnostic Co. Settles Whistleblower FCA Suit for $17.5M, Law360 (Sept. 25, 2013, 3:18 PM), http://www.law360.com/articles/475628/diagnostic-co-settles-whistleblower-fca-suit-for-17-5m.
 See Press Release, Attorney General of Virginia, Cuccinelli Announces $37 Million Virginia Medicaid Fraud Settlement With McKesson Corp. For Inflating Prices of 400+ Drugs (Oct. 18, 2013), https://www.oag.state.va.us/20-resource/mfcu-archived/288-october-18-2013-cuccinelli-announces-37-million-virginia-medicaid-fraud-settlement-with-mckesson-corp-for-inflating-prices-of-400-drugs-archived.
 See Bibeka Shrestha, State Farm Defrauded Flood Program After Katrina, Jury Finds, Law360 (Apr. 9, 2013, 8:59 PM), http://www.law360.com/articles/431287.
 See Bibeka Shrestha, State Farm Attacks Post-Katrina Gov’t Fraud Verdict, Law360 (May 10, 2013, 4:52 PM), http://www.law360.com/articles/440611/state-farm-attacks-post-katrina-gov-t-fraud-verdict?article_related_content=1.
 See Matthew Heller, UTC’s Judgment Upped to $664M in Jet Engine FCA Suit, Law360 (July 1, 2013, 8:55 PM), http://www.law360.com/articles/454619.
 See Chris M. Morrison, Evolution of a $237M FCA Health Care Verdict, Law360 (Nov. 26, 2013, 5:50 PM), http://www.law360.com/articles/491477.
 See Jeff Overley, Hospital Billed Medicare $39M in False Claims, Jury Finds, Law360 (May 9, 2013, 4:46 PM), http://www.law360.com/articles/440149/hospital-billed-medicare-39m-in-false-claims-jury-finds?article_related_content=1.
 See Jeff Rubenstone, Jury Finds Pipemaker JM Eagle Liable in False Claims Suit, Engineering News-Record (Nov. 19, 2013), http://enr.construction.com/products/materials/2013/1119-jury-finds-pipemaker-jm-eagle-liable-in-false-claims-suit.asp.
 See U.S. Dep’t of Health & Human Services, Office of Inspector Gen., Semiannual Report to Congress (October 2012–March 2013), http://oig.hhs.gov/reports-and-publications/archives/semiannual/2013/SAR-S13-Final.pdf.
 See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Obama Administration Announces Ground-breaking Public-private Partnership to Prevent Health Care Fraud (July 26, 2012), http://www.justice.gov/opa/pr/2012/July/12-ag-926.html.
 See HEAT Task Force, STOP Medicare Fraud, U.S. Dep’t of Health & Human Servs. & Dep’t of Justice, http://www.stopmedicarefraud.gov/aboutfraud/heattaskforce/index.html (last visited Jan. 6, 2014).
 See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, EMH Regional Medical Center and North Ohio Heart Center to Pay U.S. $4.4 Million to Resolve False Claims Act Allegations (Jan. 7, 2013), http://www.justice.gov/opa/pr/2013/January/13-civ-023.html.
 See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Northern Virginia Therapy Provider to Pay $700,000 to Resolve False Claims Act Allegations (Feb. 13, 2013), http://www.justice.gov/opa/pr/2013/February/13-civ-193.html; see also Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Tennessee-Based Therapy Providers to Pay $2.7 Million to Resolve False Claims Act Allegations (Mar. 8, 2013), http://www.justice.gov/opa/pr/2013/March/13-civ-290.html.
 See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, South Carolina Ambulance Company to Pay U.S. $800,000 to Resolve False Claims Allegations (Feb. 25, 2013), http://www.justice.gov/opa/pr/2013/February/13-civ-232.html.
 See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Hospice of Arizona and Related Entities Pay $12 Million to Resolve False Claims Act Allegations (Mar. 20, 2013), http://www.justice.gov/opa/pr/2013/March/13-civ-326.html; see also Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, South Carolina-based Harmony Care Hospice Inc. and CEO/Owner Daniel J. Burton to Pay U.S. $1.286 Million to Resolve False Claims Act Allegations (Nov. 20, 2012), http://www.justice.gov/opa/pr/2012/November/12-civ-1401.html.
 See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Sanofi US Agrees to Pay $109 Million to Resolve False Claims Act Allegations of Free Product Kickbacks to Physicians (Dec. 19, 2012), http://www.justice.gov/opa/pr/2012/December/12-civ-1526.html.
 See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Missouri Hospital System Agrees to Pay $9.3 Million to Resolve False Claims Act and Stark Law Violations (Nov. 5, 2012), http://www.justice.gov/opa/pr/2012/November/12-civ-1320.html; see also Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Adventist Health Pays United States and State of California $14.1 Million to Resolve False Claims Act Allegations (May 3, 2013), http://www.justice.gov/opa/pr/2013/May/13-civ-507.html; Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Montana Hospitals Agree to Pay $3.95 Million to Resolve Alleged False Claims Act and Stark Law Violations (May 1, 2013), http://www.justice.gov/opa/pr/2013/May/13-civ-495.html; Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, US Joins False Claims Act Lawsuit Alleging Illegal Physician Compensation by Mobile, Ala., Health Firm (July 8, 2013), http://www.justice.gov/opa/pr/2013/July/13-civ-768.html.
 See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, U.S. Intervenes in False Claims Act Lawsuit Against Fla. Home Health Care Company and Its Owner (July 19, 2013), http://www.justice.gov/opa/pr/2013/July/13-civ-717.html.
 See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Orthofix Subsidiary, Blackstone Medical, Pays U.S. $30 Million to Settle False Claims Act Allegations (Nov. 2, 2012), http://www.justice.gov/opa/pr/2012/November/12-civ-1309.html; see also Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Victory Pharma Inc. of San Diego Pays $11.4 Million to Resolve Kickback Allegations in Connection with Promotion of Its Drugs (Dec. 27, 2012), http://www.justice.gov/opa/pr/2012/December/12-civ-1547.html; Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Amgen to Pay U.S. $24.9 Million to Resolve False Claims Act Allegations (April 16, 2013), http://www.justice.gov/opa/pr/2013/April/13-civ-438.html.
 See DOJ FY 2013 Recoveries Press Release, supra note 1; see also Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Boehringer Ingelheim to Pay $95 Million to Resolve False Claims Act Allegations (Oct. 25, 2012), http://www.justice.gov/opa/pr/2012/October/12-civ-1291.html; Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Amgen Inc. Pleads Guilty to Federal Charge in Brooklyn, NY.; Pays $762 Million to Resolve Criminal Liability and False Claims Act Allegations (Dec. 19, 2012), http://www.justice.gov/opa/pr/2012/December/12-civ-1523.html; Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, ISTA Pharmaceuticals Inc. Pleads Guilty to Federal Felony Charges; Will Pay $33.5 Million to Resolve Criminal Liability and False Claims Act Allegations (May 24, 2013), http://www.justice.gov/opa/pr/2013/May/13-civ-606.html.
 See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Boehringer Ingelheim to Pay $95 Million to Resolve False Claims Act Allegations (Oct. 25, 2012), http://www.justice.gov/opa/pr/2012/October/12-civ-1291.html.
 See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Group of Owned and Affiliated Florida Hospitals Agree to Pay US $10.1 Million to Resolve False Claims Act Allegations (Nov. 20, 2012), http://www.justice.gov/opa/pr/2012/November/12-civ-1391.html.
 See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Florida Physician to Pay $26.1 Million to Resolve False Claims Allegations (Feb. 11, 2013), http://www.justice.gov/opa/pr/2013/February/13-civ-183.html.
 See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Medicare Fraud Strike Force Charges 89 Individuals for Approximately $223 Million in False Billing, (May 14, 2013), http://www.justice.gov/opa/pr/2013/May/13-crm-553.html.
 See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, United States Sues Virginia-based Contractor for False Claims Under Contract for Security in Iraq (Oct. 31, 2012), https://www.justice.gov/opa/pr/united-states-sues-virginia-based-contractor-false-claims-under-contract-security-iraq. .
 See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, FreshPoint Inc. to Pay $4.2 Million for Overbilling the Department of Defense for Produce (Nov. 19, 2013), http://www.justice.gov/opa/pr/2013/November/13-civ-1233.html.
 See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, CIA Contractors Settle False Claims Act and Kickback Allegations for $3 Million (Mar. 7, 2013), http://www.justice.gov/opa/pr/2013/March/13-civ-280.html.
 See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, RPM International Inc. and Tremco Inc. Pay Nearly $61 Million for Failing to Provide Government Discounts Provided to Others, (Aug. 28, 2013), http://www.justice.gov/opa/pr/2013/August/13-civ-968.html.
 See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Illinois-based Hardware Distributor Pays US $70 Million to Resolve False Claims Act Allegations (Dec. 26, 2012), http://www.justice.gov/opa/pr/2012/December/12-civ-1545.html.
 See Press Release, Office of Pub. Affairs, New York-Based Corning Incorporated to Pay U.S. $5.65 Million to Resolve False Claims Allegations (Mar. 8, 2013), http://www.justice.gov/opa/pr/2013/March/13-civ-289.html.
 See Financial Fraud Enforcement Task Force, U.S. Dep’t of Justice, http://www.stopfraud.gov/about.html (last visited Jan. 3, 2014).
 See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, The Department Announces Departure of Financial Fraud Enforcement Task Force Executive Director Michael Bresnick (July 31, 2013), http://www.justice.gov/opa/pr/2013/July/13-ag-869.html.
 See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Pittsburgh-based Bank to Pay U.S. for Failing to Engage in Prudent Underwriting Practices on SBA Loan Guarantees (Jan. 25, 2013), http://www.justice.gov/opa/pr/2013/January/13-civ-109.html.
 See Letter from Daniel R. Levinson, Inspector Gen., U.S Dep’t of Health & Human Servs., to John W. Suthers, Att’y Gen. of Colo. (Oct. 24, 2013), http://oig.hhs.gov/fraud/docs/falseclaimsact/Colorado.pdf.
 See Letter from Daniel R. Levinson, Inspector Gen., U.S Dep’t of Health & Human Servs., to Martha Coakley, Att’y Gen. of Mass. (July 31, 2013), http://oig.hhs.gov/fraud/docs/falseclaimsact/Massachusetts.pdf.
 See Letter from Daniel R. Levinson, Inspector Gen., U.S Dep’t of Health & Human Servs., to Chuck Roehrdanz, Att’y Gen. of Minn. (Nov. 12, 2013), http://oig.hhs.gov/fraud/docs/falseclaimsact/minnesota.pdf.
 See Letter from Daniel R. Levinson, Inspector Gen., U.S Dep’t of Health & Human Servs., to Tim Fox, Att’y Gen. of Mont. (Oct. 24, 2013), http://oig.hhs.gov/fraud/docs/falseclaimsact/Montana.pdf.
 Text of Proposed Regulations, New York State Office of the Attorney General, (last visited Jan. 6, 2014).
 See Letter from Daniel R. Levinson, Inspector Gen., U.S Dep’t of Health & Human Servs., to Peter F. Gilmartin, Att’y Gen. of R.I. (Oct. 24, 2013), http://oig.hhs.gov/fraud/docs/falseclaimsact/Rhode-Island.pdf.
 See Letter from Daniel R. Levinson, Inspector Gen., U.S. Dep’t of Health & Human Servs., to Robert E. Cooper, Jr., Att’y Gen. of Tenn. (July 31, 2013), http://oig.hhs.gov/fraud/docs/falseclaimsact/Tennessee.pdf.
 See Letter from Daniel R. Levinson, Inspector Gen. U.S Dep’t of Health & Human Servs. to John B. Scott, Deputy Att’y Gen. for Civil Litig. of Tex. (Sept. 12, 2013), http://oig.hhs.gov/fraud/docs/falseclaimsact/Texas.pdf.
 See Michael Lipkin, US Chamber of Commerce Calls For False Claims Act Reform, Law360 (Oct. 24, 2013), http://www.law360.com/articles/483178/us-chamber-of-commerce-calls-for-false-claims-act-reform.
 See Jonathan G. Cedarbaum et al., U.S. Chamber Institute for Legal Reform, Fixing the False Claims Act: The Case for Compliance-Focused Reforms (October 2013), http://www.instituteforlegalreform.com/uploads/sites/1/Fixing_The_FCA_Pages_Web.pdf.
 Curing What Ails the False Claims Act: Promoting Compliance and Taxpayer Savings, 14th Annual Legal Reform Summit, U.S. Chamber Institute for Legal Reform (October 24, 2013), http://www.instituteforlegalreform.com/resource/curing-what-ails-the-false-claims-act-promoting-compliance-and-taxpayer-savings/.
 See U.S. Chamber Institute for Legal Reform’s 14th Annual Legal Reform Summit, Curing What Ails the False Claims Act: Promoting Compliance and Taxpayer Savings, (Oct. 24, 2013), http://www.instituteforlegalreform.com/resource/curing-what-ails-the-false-claims-act-promoting-compliance-and-taxpayer-savings/.
 See George Mason University School of Law, Briefing: False Claims Act Reform, Congressional Civil Justice Caucus Academy (Dec. 6, 2013), http://masonlec.org/media-center/265.
 The FCA has a reduced (double instead of treble) damages provision based on self-disclosure and cooperation. 31 U.S.C. § 3729(a)(2).
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