False Claims Act
When faced with the high stakes of treble damages, mandatory penalties, and potential collateral consequences such as exclusion, suspension, or debarment, companies turn to Arnold & Porter for our extensive experience and insights in False Claims Act (FCA) investigations, litigation, and compliance.
We have a robust practice representing companies and individuals that are the subject of government investigations or litigations under the federal False Claims Act, 31 U.S.C. §3729 et seq., and its state law equivalents. The FCA is a potent Civil War-era statute that imposes treble damages and high penalties for false or fraudulent claims submitted to the government. The firm has been involved in some of the highest profile FCA cases brought by federal and state governments, and has a wealth of FCA experience covering diverse businesses such as defense contractors, pharmaceutical and device manufacturers, healthcare providers and suppliers, and banks, among others. The firm is intimately familiar with the dynamics of those industries, including the pertinent regulatory environments, as well as the complexities of the FCA and the constantly evolving case law interpreting its provisions—a combination essential to any successful FCA representation.
Companies often find themselves the target of FCA claims not only by aggressive government lawyers, but also by lawyers for private persons, called relators or whistleblowers, who file qui tam complaints on behalf of the government hoping to get a cut of any recovery. Because these qui tam complaints are under seal while the government investigates, it is critical to have experienced FCA counsel when a government investigation begins, usually with arrival of a puzzling subpoena, civil investigative demand, or other request for information. We can help spot the FCA issues at the outset and navigate you through the process. Knowing your business, its regulatory environment, and the intricacies of the FCA are necessary to strategize defenses against the government or the relator, who is statutorily entitled to prosecute the case even if the government declines to proceed. We have a successful track record persuading the government not to pursue these cases or obtaining dismissals. We have also litigated these cases through motion practice or fact and expert discovery. In addition, when need be, we have negotiated reasonable settlements with the government or relators. We also work with companies to minimize their FCA exposure at the front end by developing tailored compliance programs, conducting risk reviews, and creating and revising policies and ethics codes.
The firm has decades of this necessary experience in jurisdictions throughout the country. Our team includes dozens of former government attorneys at United States Attorney's Offices and the Department of Justice who handled FCA and fraud cases in the government and have continued to focus in that field in private practice. We also have attorneys from State AG Offices and with deep regulatory experience from other government agencies, such as the Department of Defense, the FDA, the Department of Health and Human Services, the Federal Reserve Board, the Office of the Comptroller of the Currency, the NY State Department of Financial Services, and the EPA. The experience and background of our team members also enables us to evaluate criminal or debarment issues, and handle State AG actions, such as those under state FCAs or state consumer protection laws, that often arise in tandem with federal FCA matters. We also have in-depth knowledge of both the financial services industry and the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA), a statute invoked with increasing frequency in recent years in conjunction with FCA claims brought against banks, mortgage servicers, and other companies. Our experienced FCA attorneys include not only senior partners, but also counsel and associates at all levels; the firm can handle these serious matters in a cost-effective manner.
The FCA is a complex statute and Arnold & Porter has litigation expertise in many of the recent hot-button issues arising under its provisions, including materiality under the recent Supreme Court decision in Escobar, first-to-file and public disclosure defenses to relator suits, and the growing use of statistical sampling, extrapolation, or other indirect proof of liability by FCA plaintiffs. Our Appellate and Supreme Court group has also prepared amicus and other briefs regarding these cutting-edge issues.
The insights of our attorneys have been recognized through demand for our comprehensive Deskbook on Internal Investigations, Corporate Compliance and White Collar Issues. Published by the Practicing Law Institute, the Deskbook is the nation's leading single volume treatise on white collar issues and includes a definitive chapter on the False Claims Act.
Below are examples of just some of our FCA representations:
Defense and Other Government Contracting
- Obtained multiple dismissals of FCA actions during the past five years for the single largest logistics contractor supporting the US military in Iraq and Afghanistan in federal district courts nationwide, including Eastern District of Virginia, District of Columbia, and Central District of Illinois.
- Representing companies across industry sectors in False Claims Act matters, including investigation and advocacy before the Department of Justice on intervention and successfully defending companies in both non-intervened relator qui tam actions and intervened cases brought by the DOJ.
- Won dismissal in 2015 of non-intervened qui tam alleging false claims regarding a government contractor's provision of air charter services for personnel into the Middle East. The court found that the relator had failed to allege fraud and granted relator leave to replead; relator chose not to replead and the case was dismissed.
- Won a landmark ruling in 2014 in DC Circuit relating to privilege governing internal investigations in connection with an FCA case.
- After an 11-day trial in the Court of Federal Claims in 2011, won a total victory against the government in a prominent fraud case; the fraud rulings have been affirmed on appeal.
- Government contractor in a $1.4 billion fraud trial against the United States that resulted in judgment for the government contractor on all but one claim, which resulted in a low value negotiated settlement.
- Global supplier of communications and security products in qui tam action regarding its dealings with a government customer that resulted in favorable settlement at a small fraction of the United States' original damages claim.
- Government contractor in qui tam action and successfully obtained two writs of mandamus vindicating the contractor's claim of attorney-client privilege over materials created during an internal investigation led by company lawyers; subsequently won summary judgment on all counts.
- Government contractor in qui tam action in which, after dismissal by trial court and reversal by circuit court, the Supreme Court ruled 9-0 in favor of contractor that Wartime Suspension of Limitations Act does not suspend statute of limitation for civil fraud actions, including those brought under the False Claims Act.
- Government contractor in False Claims Act case brought by the government alleging violations of Truth in Negotiations Act in price negotiations for alleged failure to disclose current cost or pricing data and claiming damages of potentially upwards of $400 million.
- Global supplier of telecommunications products in qui tam action regarding its provision of services to schools and libraries under the federal E-Rate program; although the district court denied a motion to dismiss, the Fifth Circuit reversed and held on an issue of first impression that funds from the E-Rate program are not "provided by" the United States for purposes of the False Claims Act.
- Obtained dismissal of qui tam against a government contractor on grounds that alleged contractual deficiencies alone do not create False Claims Act liability; the Fourth Circuit affirmed the dismissal in a published opinion that has been cited in countless False Claims Act cases since.
- Successfully defended a government contractor in qui tam action where a relator sought more than $600 million in damages and penalties; relator voluntarily dismissed the suit after the team won a parallel contract interpretation suit against the Army in which the Army adopted the contractor's interpretation of the contract, which preempted relator's claims.
- Individual in a large mortgage FCA case brought by DOJ in which the individual was charged with violating FIRREA by making false statements and certifications to the Department of Housing and Urban Development.
- Won summary judgment in this non-intervened qui tam regarding morale, welfare, and recreation services; affirmed on appeal in first post-Escobar case in DC Circuit.
- After meetings and written advocacy, persuaded the government not to intervene in this qui tam suit regarding the handling of government property during the war in Iraq; after the government declined to intervene, the relator dismissed the case.
- Aerospace company in convincing the Department of Justice not to intervene in a qui tam case and then persuading the relator to drop the case.
- FORTUNE 100 information technology company in negotiating successful resolution of criminal, civil fraud, and False Claims Act allegations concerning cost mischarging under a DoD computer networking contract.
- Technology services company in a lengthy federal investigation and an unprecedented action filed jointly against our client and the City of New York by the US and State of New York alleging violations of the federal and New York False Claims Acts.
- DoD contractor that allegedly allowed Russian nationals employed by a subcontractor to perform software work on a project for an intelligence agency. The FCA case was settled on favorable terms, and federal prosecutors found no criminal liability.
- DoD contractor in settling for a nominal payment a DOJ investigation into a former subsidiary's alleged failure to conduct required aircraft engine testing.
- Industrial gases company in a multi-billion case alleging false claims associated with royalty payments for gas extracted from federal property, including district court litigation and appeals to the US Federal Circuit and Supreme Court.
Pharmaceuticals and Medical Devices
- Pharmaceutical company in obtaining dismissal with prejudice of federal claims of kickbacks and off-label promotion of asthma medication on Rule 9(b) and first-to-file bar grounds.
- Pharmaceutical and medical device company in obtaining dismissal with prejudice of allegations of kickbacks and off-label promotion of ophthalmology medications on Rule 9(b) grounds.
- Pharmaceutical company defending allegations of kickbacks in connection with interactions with specialty pharmacies, including patient adherence programs, leading to successful resolution.
- Pharmaceutical company defending allegations of kickbacks in connection with speaker and other promotional programs with physicians.
- Pharmaceutical company in obtaining first-to-file dismissal of kickback claims and successfully resolving allegations of off label promotion of dermatology medicine.
- Life sciences company regarding federal investigation of improper discounts of bundled pharmaceutical and medical device products.
- Pharmaceutical company in an off-label marketing investigation that was successfully resolved with a misdemeanor plea and FCA civil settlement after lodging a First Amendment challenge.
- Pharmaceutical manufacturers in responding to subpoenas and CIDs relating to arrangements with PBMs and donations to independent patient assistance foundations, respectively.
- Pharmaceutical trade associations in drafting numerous amicus briefs regarding cutting-edge FCA issues.
- Numerous pharmaceutical and device companies counseling them regarding kickback and promotional risks in connection with contractual arrangements with third parties, company promotional strategies, and other conduct.
- Large national healthcare entity in an investigation by FBI, HHS-OIG, Main Justice, and US Attorney's Offices across six districts involving alleged Medicare and Medicaid fraud. The matter involves parallel criminal, civil, and administrative investigations into qui tam allegations related to alleged violations of the Anti-Kickback Statute, Stark Laws, and False Claims Act.
- Healthcare company regarding provision of free goods and payment to physicians for performing clinical trials.
- More than two dozen Medicare/Medicaid healthcare professional or suppliers in criminal and civil False Claims Act cases arising from government allegations such as: lack of medical necessity, services below standard of care, unbundling, improper billing and coding, the offer and receipt of kickbacks, invalid certificates of need, lack of requisite licensure, and violations of the Stark Law.
Financial and Other Industries
- Mortgage servicing company in obtaining dismissal of a federal False Claims Act litigation alleging fraud in mortgage origination and foreclosure activities.
- Financial services company in a False Claims Act suit in obtaining dismissal with prejudice of allegations of false claims in connection with the federal student loan program on jurisdictional grounds.
- Bank in connection with a federal investigation under FIRREA into the bank's origination practices and representations to the market in the sale of residential mortgage-backed securities.
- Bank in connection with a federal investigation into whether mortgages underwritten by the bank and insured by the Federal Housing Administration violated the federal False Claims Act.
- Bank in a state False Claims Act qui tam action alleging failure to escheat money to the state from certain unclaimed property it retained as part of a check-clearing process in which the bank acts as a clearing agent for other banks. Obtained favorable Court of Appeals ruling.