Government Contracts False Claims Act Defense

With high stakes of treble damages, mandatory penalties, and potential collateral consequences such as exclusion, suspension or debarment, companies turn to Arnold & Porter for our insights and extensive experience in False Claims Act compliance, investigations, negotiations and defense. We represent global leaders in diverse industries including healthcare, pharmaceuticals, medical devices, defense, aerospace, accounting, information technology, financial services, telecommunications, energy, and insurance.

We have been involved in some of the highest profile civil and criminal fraud and False Claims Act cases brought by the federal government or state attorneys general offices. Our veteran team includes the former Attorney General for the District of Columbia, former lawyers from the Department of Justice (DOJ) and US Attorney's offices with years of experience in False Claims Act matters, together with former lawyers from the Department of Defense, Department of Health and Human Services, Food and Drug Administration, Environmental Protection Agency, Securities Exchange Commission, Department of Energy, and experienced defense counsel who vigorously defend companies by anticipating, strategically responding to, and litigating government enforcement actions.

We routinely work with companies to minimize False Claims Act exposure by tailoring compliance programs to the organization's specific need. We conduct risk reviews and develop company business ethics codes and compliance programs in order to mitigate risk and demonstrate a company's present responsibility as a government contractor. We regularly provide training for legal departments and business employees.

Recognizing that civil investigations are often accompanied by parallel criminal investigations, we coordinate strategy and response, to both the criminal and civil matters. Our white collar attorneys frequently obtain favorable results with prosecutors either to decline prosecution or to enter into non-prosecution or deferred prosecution agreements.

Companies frequently defend matters at both the federal and state or local levels, often simultaneously. Our substantial experience in state Attorney General investigations and litigation allows us to coordinate effective, efficient responses to investigations or litigation in multiple jurisdictions.

As a result of our in-depth knowledge of the underlying industries, as well as the statutory and regulatory framework in False Claims Act cases, we have a successful track record persuading the government not to intervene, or negotiating fair settlements with the government or relator efficiently and with minimal business disruption. If the case proceeds to litigation, we are adept at obtaining dismissals or achieving favorable results at trial and on appeal.

Experience Highlights

  • Kellogg Brown & Root (KBR) 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 KBR that Wartime Suspension of Limitations Act does not suspend the statute of limitations for civil fraud actions, including the FCA. Kellogg Brown & Root Services, Inc., et al., v. US, ex rel. Carter, 575 US 650 (2015). The case was dismissed on remand and dismissal was affirmed on appeal. US ex rel. Carter v. Halliburton Co., et al., 866 F.3d 199 (4th Cir. 2017), cert denied, 86 USLW 3638 (US June 25, 2018).
  • Fluor Corporation in persuading DOJ to decline intervention, after an extensive investigation, in a qui tam action brought by multiple relators relating to the management of hundreds of millions of dollars-worth of materials on a contingency contract performed in Afghanistan (DSC 2018).
  • KBR in persuading the DOJ to voluntarily dismiss its DOJ-initiated FCA case where DOJ alleged contractor defrauded the government by paying a Request for Equitable Adjustment of $50 million and then seeking government reimbursement under a cost contract. US v. Kellogg Brown & Root Services, Inc., et al., No. 4:12-cv-4110 (CD Ill. 2017).
  • KBR in successful defense of FCA, fraud and Anti-Kickback Act case alleging more than $1.5 billion in damages. We won dismissal of the FCA claim prior to trial. After trial, the court found for KBR on all claims except one that resulted in low value settlement. All fraud rulings have been affirmed on appeal. Kellogg Brown & Root Services, Inc. v. US, 99 Fed. Cl. 488 (2011), aff'd, 728 F.3d 1348 (Fed. Cir. 2013), opinion corrected on denial of reh'g, 563 F. App'x 769 (Fed. Cir. 2014).
  • Global supplier of telecommunications products in successful defense of 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 FCA purposes. US ex rel. Shupe v. Cisco Systems, Inc., 759 F.3d 379 (5th Cir. 2014).
  • KBR in winning landmark mandamus rulings in DC Circuit relating to privilege governing internal investigations in connection with an FCA case, In re Kellogg Brown & Root, Inc., 756 F.3d 754 (DC Cir. 2014) and In re Kellogg Brown & Root, Inc., 796 F. 3d 137 (DC Cir. 2015), then subsequently winning summary judgment on all accounts, which was affirmed on appeal, US ex. rel. Barko v. Halliburton Co., et al., No. 05-cv-1276 (DDC 2017), aff'd, 709 F. App'x 23 (DC Cir. 2017). We also obtained a nearly $50,000 cost award for KBR at the conclusion.
  • Department of Defense contractor in substantial civil FCA and related suspension and debarment proceedings. This particular matter involved the confluence of significant demands, mainstream press coverage, international contracting, and unique legal issues regarding extraterritoriality. Following extensive litigation, we successfully resolved all aspects of the matter through settlement and agreement.
  • Large defense contractor in obtaining favorable settlement in DOJ-initiated FCA investigation involving allegations of fraudulent inducement in the award by the military of a software development program (SD Cal. 2018).
  • Large defense contractor in obtaining favorable settlement in DOJ-initiated FCA case alleging violations of TINA in price negotiations for alleged failure to disclose current cost or pricing data and claiming damages of potentially upwards of $400 million (ED Mich. 2017).
  • KBR in winning summary judgment in non-intervened qui tam regarding morale, welfare and recreation services, which was affirmed on appeal in first post-Escobar case in DC Circuit. US ex rel. McBride v. Halliburton Co., No. 1:05-cv-828, 2014 WL 12691854 (DDC 2014), aff'd, 848 F.3d 1027 (DC Cir. 2017).
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