A recent Sixth Circuit opinion provides defendants a valuable roadmap for using government witness testimony to defeat False Claims Act (FCA) claims on materiality grounds at the summary judgment stage. In U.S. ex rel. American Systems Consulting, Inc. v. ManTech Advanced Systems Int’l Inc., Case No. 14-3269 (6th Cir.), the court rejected the relator’s argument that materiality decisions should be left to a jury. Instead, the court expressly held that “a judge may decide as a matter of law whether a misrepresentation was material under the FCA.”
On January 13, 2015, the United States Supreme Court ruled in favor of homeowners seeking to rescind their loans and mortgages with written notice to lenders within three years of completion of a real estate transaction, where lenders allegedly failed to comply with the federal Truth in Lending Act (TILA). Based on this decision in Jesinoski v. Countrywide Home Loans, Inc., it is not necessary that a homeowner actually file a court action within those three years.
On January 8, 2015, the United States Court of Appeals for the Fourth Circuit reinstated the government’s False Claims Act (FCA) claims in United States v. Triple Canopy, Inc., No. 13-2190. In reversing the district court’s dismissal of the government’s case, the Fourth Circuit highlighted, both explicitly and implicitly, the importance of the government’s decision to intervene in the case.
It is once again time for public companies to march into proxy season. While the SEC has not adopted any significant new rules or amendments effective for the 2015 proxy season, you should keep the following items in mind as you prepare.
Earlier this week, Judge Amy Totenberg of the United States District Court for the Northern District of Georgia imposed significant monetary sanctions against a pair of relators who blatantly and repeatedly violated the seal order in a pending qui tam action, United States ex rel. Bibby v. Wells Fargo Bank, N.A., Case No. 1:06-CV-0547-AT.
On December 15, 2014, the United States Supreme Court decided that a party seeking to remove a class action to federal court need not include evidence of the amount in controversy as part of its petition for removal. Instead, the party seeking removal need only plausibly state that the amount at stake exceeds $5 million. The case is Dart Cherokee Basin Operating Co. LLC v. Owens, 574 U.S. ---, 2014 U.S. LEXIS 8435 (2014).
According to a recent Department of Justice press release regarding annual False Claims Act (FCA) recoveries, FCA recoveries continue to skyrocket, in keeping with the trend in recent years. 2014 marks the third straight year in which the Department of Justice has announced a record-setting annual recovery.
The National Labor Relations Board (NLRB) recently issued a decision reaffirming its much-maligned 2012 D.R. Horton opinion. In D.R. Horton, the NLRB held that an employer could not require employees to resolve employment-related claims through individual arbitrations, thereby waiving their right to proceed in a collective or class action.
Last week, the District of Kansas granted summary judgment to Boeing in U.S. ex rel. Smith v. The Boeing Company, Case No. 05-10730MLB (D. Kan.), a False Claims Act case in which the qui tam relators effectively tried to second-guess the professional judgment of the Federal Aviation Administration (FAA).
There is good news for FCA defendants out of the First Circuit: According to a recent decision, settlement payments in excess of the government’s single damages are tax deductible if the defendant can show that the excess sums are compensatory, rather than punitive. The Internal Revenue Code allows businesses to deduct its “ordinary and necessary expenses” but not “any fine or similar penalty paid to a government for the violation of any law.” Applying this guidance to FCA settlements is complicated by the FCA’s treble damages provisions, which clearly implicate a punitive damages component.
J.B. Lind, an associate in the Vorys Cincinnati office and a member of the litigation group, authored an article for the September issue of the Cincinnati Bar Association’s CBA Report titled “CALL Class XVIII: Youth Court.”
On August 22, 2014, the Sixth District Court of Appeals affirmed on all counts a Williams County probate court’s September 2012 decision in favor of PNC Bank, National Association against successor trustee and beneficiaries’ various breach-of-fiduciary-duty claims. The decision in Newcomer v. National City Bank, (2014-Ohio-3619; 2007 Ohio App. LEXIS 6365 (Ohio App. 6th Dist.)) provides critical guidance for Ohio trustees on four key points of law.
As reflected in the recent decision by the United States District Court for the Southern District of Ohio in Brown v. Tellermate Holdings, Ltd., communication and candor are key components of modern discovery. Indeed, the Brown decision emphasizes that, not only do attorneys have an affirmative obligation to speak to the key players related to the matter being litigated so that counsel and client together can identify, preserve, and search the sources of discoverable information, but doing so is necessary for effective advocacy.
Last week, the D.C. Circuit provided good news to defense contractors, health care providers and all other corporate entities doing business with the government. In a forceful opinion, the court overruled a trial court decision that portended disastrous consequences for privileged internal investigations by corporate legal departments.
Today, the Supreme Court granted the petition for certiorari in Kellogg Brown & Root Servs., Inc. v. United States ex rel. Carter. The petition presented two questions: (1) whether the Wartime Suspension of Limitations Act (WSLA) applies to claims of civil fraud brought by qui tam relators, and (2) whether the False Claims Act’s (FCA) first-to-file rule is an absolute bar or whether it permits subsequent actions so long as the first-filed action had been dismissed on non-merits grounds prior to filing of the subsequent action.
The Third Circuit’s recent decision in U.S. ex rel. Foglia v. Renal Ventures Mgmt., LLC, 2014 U.S. App. Lexis 10549 (3d. Cir. June 6, 2014), evens the circuit split regarding whether a FCA plaintiff must identify at least one representative false claim before being granted a ticket to discovery—a troubling development for anyone who does business with the federal government and therefore runs the risk of dealing with an FCA lawsuit.
Lisa Forbes, a partner in the Vorys Cleveland office and a member of the litigation group, authored an article titled "Avoiding Liability: Considerations and Guidelines for Not-for-Profit Directors and Officers" for the Cleveland Metropolitan Bar Association.
Qui tam relators and the Department of Justice continually push the FCA envelope with implied certification cases. A recent case from the District of Massachusetts, U.S. ex rel. Julio Escobar, et al. v. Universal Health Services, Inc., illustrates how FCA plaintiffs try to use this theory to shoehorn non-fraudulent regulatory non-compliances into FCA violations—and how to beat such claims.
The Supreme Court of Ohio issued its decision dated March 4, 2014, in the case of FirstMerit Bank, N.A. v. Inks, et al (2014-Ohio-789), confirming important Ohio statutory protections for lenders in workout situations under Ohio Revised Code Section 1335.05.