Detailed Table of Contents

Transcription

1 Detailed Table of Contents A Few Thoughts... vii Foreword...ix Preface...xi About the Author... xv Author s Litigation and Publication History... xvii Author s False Claims Act Litigation... xvii Author s Published False Claims Act Opinions...xxi Other Publications by the Author... xxv Congressional Testimony... xxvi Summary Table of Contents... xxvii Chapter 1. Whistleblowers Fighting For What s Right... 1 I. Introduction... 2 II. What it Means to Be a Whistleblower III. Is a Qui Tam Suit a Whistleblower s Only Choice? IV. Sooner or Later, You Will Fight With Your Government A. Jack Gravitt s Successful Battle for All Qui Tam Relators B. The Department of Justice s Efforts to Deprive Relators of Part of Their Relator s Share The Department of Justice s Attacks on Chet Walsh The Department of Justice s Efforts to Belittle Alfred Pedicone s Heroic Efforts and Deny Him the Recovery He Earned The Department of Justice s Attempts to Minimize the Relator s Share in One of the Largest Health Care Fraud Recoveries Ever The Department of Justice s Attempts to Reduce the Relator s Share Despite the Fact That the Relator s Counsel Had Essentially Assumed the Role of Government Attorneys in Litigating the Case The Department of Justice Ignores Its Promises to Relator David Magee xxxiii

2 xxxiv False Claims Act: Whistleblower Litigation C. The Department of Justice s Attempts to Bar Government Employee Relators The Department of Justice s Dual Status Public Disclosure Argument Misapplication of the Original Source Rule Public Policy Considerations Regarding Government Employee Relators Government Efforts to Block Relators From Providing Assistance in the Investigation of Their Claims D. The Department of Justice s Misuse of Prosecutorial Discretion to Eliminate Politically Unpopular Qui Tam Cases E. Department of Justice Statistics Demonstrate That Relator Shares Recovered Are Not What Congress Intended Chapter 2. History of Qui Tam Litigation I. Introduction II. Early English Qui Tam Statutes III. Early Defense Contractor Fraud in America IV. Civil War Enactment A. Whether Government Contractors Should Be Subject to Court Martial for Defrauding the Government B. Whether Scienter Should Be an Element of a Violation of the Law C. Whether the Relator Should Receive a Reward of 50 Percent of the Amount Recovered D. Whether the Statute of Limitations Should Be Three, Six, or Ten Years V. The 1943 Amendments to the False Claims Act VI. The 1986 Amendments to the False Claims Act A. The Congressional Debate and Testimony on the 1986 Amendments B. The 1986 Amendments Qui Tam Provisions Prior Government Knowledge No Longer Bars Qui Tam Suits The Relator s Role in the Litigation Strengthened New Remedies for Whistleblower Retaliation Guaranteed Relator s Share of the Proceeds of the Action C. Increases in Civil Penalties and Damages D. Knowing Violations E. The Burden of Proof F. Reverse False Claims Provisions G. The Effectiveness of the 1986 Amendments in Combating Fraud... 84

3 Detailed Table of Contents xxxv H. The 1988 Amendments to the False Claims Act: Super Rogues VII. The 2009 Amendments to the False Claims Act: FERA A. Congressional Concern With Judicial Decisions That Undercut the False Claims Act s Effectiveness Relation Back: Baylor University Medical Center The Final Straw: Allison Engine B. Changes to the Seven Liability Provisions Section 3729(a)(1) Becomes Section 3729(a)(1)(A) Section 3729(a)(2) Becomes Section 3729(a)(1)(B) Section 3729(a)(3) Becomes Section 3729(a)(1)(C) Section 3729(a)(4) Becomes Section 3729(a)(1)(D) Section 3729(a)(5) Becomes Section 3729(a)(1)(E) Section 3729(a)(6) Becomes Section 3729(a)(1)(F) Section 3729(a)(7) Becomes Section 3729(a)(1)(G) C. New Definitions Claim Obligation Material D. Expanded Retaliation Protection E. Relation Back of Government Complaint to Filing Date of Qui Tam Action F. Service on State or Local Authorities G. Civil Investigative Demands VIII. The 2010 Amendments to the False Claims Act A. The Patient Protection and Affordable Care Act The Public Disclosure Bar Is No Longer Jurisdictional The Government Can Save a Relator From Dismissal Based Upon Becomes Substantially the Same Fewer Sources Trigger the Public Disclosure Bar The Original Source Exception Is Expanded and Clarified a. 31 U.S.C. 3730(e)(4)(B)(i) b. 31 U.S.C. 3730(e)(4)(B)[(ii)] B. The Dodd-Frank Wall Street Reform and Consumer Protection Act Chapter 3. Statutory Framework of the False Claims Act I. Introduction II. What Is a False Claim? III. What Constitutes a Knowing Intent to Defraud Under the Act? IV. Burden of Proof V. Limitations on Who Can Bring Qui Tam Suits A. General Limitations B. Public Disclosure Limitations and the Original Source Exception

4 xxxvi False Claims Act: Whistleblower Litigation C. Limitations for Government Employees D. Intervention and Related Cases Under 31 U.S.C. 3730(b)(5) VI. Where Suit Can Be Brought VII. Statute of Limitations VIII. Conduct of False Claims Act Litigation IX. Damages A. Relator s Share of the Government s Damages and Penalties B. Attorneys Fees and Costs X. Whistleblower Protection XI. Scope of the False Claims Act XII. What Constitutes False Claims? A. The Seven Different Types of False Claims Act Violations Violations of 31 U.S.C. 3729(a)(1)(A) Violations of 31 U.S.C. 3729(a)(1)(B): False Statements Violations of 31 U.S.C. 3729(a)(1)(C): Conspiracy a. Intracorporate Conspiracies b. The Application of Rule 9(b) s Particularity Requirements to 3729(a)(1)(C) Claims Violations of 31 U.S.C. 3729(a)(1)(D) Violations of 31 U.S.C. 3729(a)(1)(E) Violations of 31 U.S.C. 3729(a)(1)(F) Violations of 31 U.S.C. 3729(a)(1)(G): Reverse False Claims B. False Claims Act Fraud Schemes Contract Violations and Implied Certifications a. Oil and Gas Royalty Reports Procurement a. Fraud in the Inducement Defective Pricing and Violations of the Truth in Negotiations Act Health Care a. False Claims Act Liability Arising From Violations of the Anti-Kickback and Self-Referral Laws i. Liability Attaches for Seeking Funds That a Provider Is Statutorily Prohibited From Receiving ii. Claims Incident to Kickbacks and Referrals Are Not Covered by Medicare: Liability Attaches for Violating the Terms of the Agreement With the United States b. False Claims Act Liability Arising Under Flat Fee Reimbursement: The Prospective Payment System and TEFRA

5 Detailed Table of Contents xxxvii c. False Claims Act Liability Arising From Substandard Care i. Claims for Substandard Care Are Expressly False ii. Claims for Substandard Care Are Impliedly False d. Redispensing Schemes e. Medicare Secondary Payer Act f. False Claims Act Liability Arising in the Context of Home Health Services Lending and Loan Applications State Agencies Transportation Insurance Important Government Policies False Claims Act Violations of Government Contract Environmental Provisions False Claims Act Violations of the Davis-Bacon Act False Claims Act Violations of the Food and Drug Administration Regulations Trade Agreements Act Compliance Other False Claims Act Scenarios XIII. Materiality As an Element of a Civil False Claims Act Action A. The Allison Engine Decision B. The Materiality Requirements Added by FERA to Two Specific FCA Provisions C. The Materiality Standard Established in FERA D. The Supreme Court s Escobar Decision Imposes a Materiality Requirement on Section 3729(a)(1)(A) Claims E. Application of the Escobar Materiality Standard F. Application of the FERA Materiality Standard G. The Government s Expressed Views on What Misconduct Is a Material Violation Post-Escobar XIV. Proof of Actual Damages Is Not Required to Establish False Claims Act Violations XV. Intent to Defraud, Specific Intent, and Scienter A. Knowing and Knowingly B. Negligent and Innocent Conduct C. Government Knowledge of Fraud XVI. Prime Contractor and Subcontractor False Claims Act Liability A. Prime Contractor Responsibility for Subcontractor B. Subcontractor Responsibility Under the False Claims Act The Presentment Issue Created by Totten The Supreme Court Changes the False Claims Act in Allison Engine

6 xxxviii False Claims Act: Whistleblower Litigation C. Liability of Subcontractors on Fixed Price Contracts D. Purchase Orders Are Subcontracts E. Successor Liability for False Claims Act Violations XVII. False Claims Act Relationship With Contract Disputes Act XVIII. Tax Bar Chapter 4. The Constitutionality of the Qui Tam Provisions I. Introduction II. The History of Qui Tam Actions as Evidence of the Constitutionality of the False Claims Act s Qui Tam Provisions III. Relators Standing to Sue Under the Qui Tam Provisions of the False Claims Act A. Standing Doctrine Generally B. Problems in Applying the Standing Doctrine to Qui Tam Actions C. Addressing the Standing Requirement of Injury in Fact Representational Standing or The Assignment Theory The Congressional Grant of Standing to Qui Tam Relators Relators Right to a Statutory Bounty Confers Standing Relators Individual Injuries Satisfy Article III Standing Requirements D. The Qui Tam Provisions of the False Claims Act Serve the Purposes of the Standing Doctrine Qui Tam False Claims Act Cases Do Not Impair the Proper Functioning of Federal Courts Qui Tam False Claims Act Cases Do Not Aggrandize Judicial Power at the Expense of the Other Two Branches of Government IV. The Supreme Court Speaks Out in Stevens: A Relator Has Article III Standing Under the False Claims Act A. How the Stevens Decision Resolved the Standing Question B. The Stevens Holding That a State Is Not a Person Under the False Claims Act V. The Qui Tam Provisions of the False Claims Act Are Consistent With the Separation of Powers Doctrine of the Article II Take Care Clause A. Initiating the Litigation B. Conducting the Litigation C. Terminating the Litigation D. The Evolution of Greater Executive Control Over Qui Tam Lawsuits VI. The Qui Tam Provisions of the False Claims Act Are Consistent With the Appointments Clause of Article II

7 Detailed Table of Contents xxxix VII. The Qui Tam Provisions of the False Claims Act Do Not Violate the Due Process, Excessive Fines, or Double Jeopardy Clauses of the U.S. Constitution A. Due Process Arguments B. Excessive Fine and Double Jeopardy Arguments Supreme Court Authority That Excessive Fines and Double Jeopardy Do Not Apply to the Civil FCA Cases Analyzing FCA Damages Awards Under the Excessive Fines Clause a. United States v. Mackby b. United States ex rel. Bunk v. Gosselin World Wide Moving, N.V c. United States ex rel. Drakeford v. Tuomey d. Other Cases VIII. Constitutionality of the Retroactivity of the 2009 Amendments to Section 3729(a)(1)(B) A. Retroactive Application of FERA Does Not Violate the Ex Post Facto Clause The FCA Establishes Civil Proceedings The FCA Is Not So Punitive Either in Purpose or Effect as to Negate Congress Intention to Deem It Civil a. Factor 1: The False Claims Act Has No Affirmative Disability or Restraint b. Factor 2: The False Claims Act Is Not Historically Viewed As Punishment c. Factor 3: The False Claims Act Does Not Require Criminal Scienter d. Factor 4: The False Claims Act Is Not Primarily Concerned With Retribution or Deterrence e. Factor 5: The False Claims Act Reaches Behavior That Is Already a Crime f. Factor 6: The False Claims Act Has a Rational Remedial Purpose g. Factor 7: The False Claims Act Is Not Excessive B. Retroactive Application of FERA Does Not Violate the Due Process Clause C. The 2009 FERA Amendments Are Not Arbitrary and Irrational D. Retroactive Application of FERA Does Not Violate the Separation of Powers Doctrine IX. The Seal Provision of the False Claims Act Is Constitutional X. Conclusion Chapter 5. Subject Matter Jurisdiction I. Introduction II. Actions By and Against Soldiers III. Actions Against Senior Government Officials

8 xl False Claims Act: Whistleblower Litigation IV. Actions Already in Government Litigation V. Public Disclosure and Original Source: Introduction A. Public Disclosure, Original Source, and Parasitic Suits: History and Background B. Public Disclosure As a Jurisdictional Bar VI. The Patient Protection and Affordable Care Act and Its Amendment of the Public Disclosure Bar A. The Public Disclosure Bar Is No Longer Jurisdictional B. The Government Can Save a Relator From Dismissal C. Based Upon Becomes Substantially the Same D. Fewer Sources Trigger the Public Disclosure Bar VII. Public Disclosure Jurisprudence A. Manner of Public Disclosure Hearings Hearings in State Courts News Releases Administrative Reports Administrative Audits and Investigations State and Local Government Reports and Audits Foreign Hearings, Investigations, and Newspapers Information Obtained Pursuant to the Freedom of Information Act Other Public Disclosure Issues a. Timing of a Public Disclosure b. Substance of Public Disclosure VIII. Based Upon Publicly Disclosed Information IX. Original Source A. The Revised Definition of Original Source B. Direct and Independent Knowledge Investigation of Facts Investigations That Include Examinations of Publicly Available Documents Type of Direct and Independent Knowledge Required Other Direct and Independent Knowledge Issues C. Voluntary Disclosure to the United States D. Federal Employees as Relators E. Other Issues Regarding Disclosure to the Government F. Plain Meaning Original Source G. Original Source Third Prongs Disclose to the Discloser: The First Third Prong Prior Disclosure to the Government: The Second Third Prong X. Other Original Source Issues A. Multiple Relators B. Forum Selection Issues Created by the Circuit Split C. Effect of Government Intervention on Original Source and Public Disclosure Issues

9 Detailed Table of Contents xli Chapter 6. Other Threshold Issues I. Multiple Relators A. First-to-File Is Not an Absolute Bar The Intervention Language of Section 3730(b)(5) Does Not Prohibit Amending the Complaint to Add Relators First Jurisdictionally Valid Suit Filed What Is a Related Action Under Section 3730(b)(5)? An Amended Complaint Adding Qui Tam Claims Does Not Relate Back to Original Non Qui Tam Complaint B. Third-Party Complaints C. Death of Relator D. Relator s Intervention in Related Actions E. Pro Se Parties F. Who Can Be a Relator II. Preemption III. Venue, Personal Jurisdiction, Transfer, and Forum Non Conveniens IV. Attempts to Limit the Relator s Role in False Claims Act Actions A. The Legislative History of the False Claims Act B. The False Claims Act Affords the Relator the Right of Unrestricted Participation as a Full Party When the Government Intervenes C. Case Law Affirms the Right of the Relator to Unrestricted Participation When the Government Intervenes D. Must the Government Intervene to Dismiss a Qui Tam Case Pursuant to 31 U.S.C. 3730(c)(2)(A)? V. Primary Jurisdiction VI. Laches and Statutes of Limitations VII. Collateral Estoppel VIII. Retroactivity of Amendments to the False Claims Act A. Retroactivity of 1986 Amendments to the False Claims Act B. Retroactivity of the Fraud Enforcement and Recovery Act of 2009 s Amendments to the False Claims Act Amendment to 31 U.S.C. 3729(a)(2) Renumbered as 31 U.S.C. 3729(a)(1)(B): False Statements Amendment to 31 U.S.C. 3731(c): Relation Back of Government s Complaint in Intervention Amendments to 31 U.S.C. 3733: Civil Investigative Demands Amendment to 31 U.S.C. 3732(c): Service on State or Local Authorities Amendment to 31 U.S.C. 3729(c) Renumbered as 31 U.S.C. 3729(b)(2)

10 xlii False Claims Act: Whistleblower Litigation 6. Judicial Temporal Application of FERA Amendments a. Clarified Provisions b. Amendment to 31 U.S.C. 3729(a)(2) Renumbered as 31 U.S.C. 3729(a)(1)(B): False Statements i. Legislative History for FERA Clarification of 31 U.S.C. 3729(a)(1)(B) ii. Principles of Statutory Interpretation iii. Claims in Section 4(f)(1) of FERA Does Not Mean Claims for Payment C. Retroactivity of 2010 Patient Protection and Affordable Care Act Amendments to the False Claims Act D. Retroactivity of 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act Amendments to the False Claims Act IX. Alternate Proceedings: 31 U.S.C. 3730(c)(5) and 3730(e)(3) A. When Is a Proceeding an Alternate Remedy Under 31 U.S.C. 3730(c)(5)? First Criterion: Redressing the Fraud Second Criterion: Impairing the False Claims Act Action Final Criterion: Recovery to the Government: The Relator Is Entitled to a Share of Any Proceeds Recovered B. Opinions Determining Whether Proceedings or Recoveries Are Alternate Remedies Mirror the Outcome Called for by These Guidelines C. A Valid Qui Tam Complaint Is Not Necessary to Recover a Share of an Alternate Remedy D. Criminal Proceedings as Alternate Remedies When Criminal Prosecutions Are Alternate Remedies The Relator May Be Entitled to Share in the Recovery of a Criminal Prosecution E. Intervention Is Not a Prerequisite to 31 U.S.C. 3730(c)(5) F. 31 U.S.C. 3730(e)(3): Administrative Proceedings Can Bar Qui Tam Actions G. Forum for Alternate Remedy Proceedings X. Multidistrict Litigation and False Claims Act Cases A. A Primer on Multidistrict Litigation Applicable Law Depends First on the Basis for Jurisdiction Applicable Law Depends Second on What Power the Judge Is Exercising

11 Detailed Table of Contents xliii 3. The Effects of Transfer and Remand on Judicial Rulings in Multidistrict Litigation B. False Claims Act Cases and Multidistrict Litigation The Effects of the Section 3730(b)(2) Seal on Discovery in Multidistrict Litigation Controlling Law in a False Claims Act Case in Multidistrict Litigation XI. Bankruptcy Issues and the False Claims Act A. Standing of a Bankrupt Relator to Proceed With a Qui Tam Action Seal Implications of Bankruptcy Proceedings Power of the Trustee in Bankruptcy B. Removal of a False Claims Act Case From the Bankruptcy Court to District Court C. Applicability of the Automatic Stay to False Claims Act Actions Applicability of the Stay to Attorneys Fees Applicability of the Stay to Codefendants D. Dischargeability of a Debt Obtained by Fraud The Burden of Proof Under 11 U.S.C. 523(a) Dischargeability of Treble Damages and Attorneys Fees Discharge of Settlement Agreements and Releases Covering Fraudulent Acts The Element of Proximate Causation Under 11 U.S.C. 523(a)(2)(A) Failure to Comply With Bankruptcy Procedures E. Limitation on Back Pay Awards F. Employment of a Qui Tam Lawyer in a Bankruptcy G. Settlement Procedures in a Bankrupt Relator s False Claims Act Case XII. Arbitration Agreements Chapter 7. attorney-client Relationships in False Claims Act Litigation I. Introduction to Client Relationships II. Contract of Representation III. The Relationship Between the Relator and Relator s Counsel A. How to Find Competent Counsel for the Relator B. Selecting Counsel for the Relator C. Contract of Representation Fee Agreements and the Attorneys Fees Provision of the False Claims Act The Code of Professional Responsibility s Guidance About Reasonable Attorneys Fees

12 xliv False Claims Act: Whistleblower Litigation 3. Assignment of Statutory Attorneys Fees D. The Roles Played by the Attorney and the Client in False Claims Act Cases E. The Advisability of Entering Into Contractual Arrangements With Other Relators and Their Counsel Managing First-to-File Negotiations a. The First-Filed Case Definitely Encompasses All of the Later-Filed Allegations b. The First-Filed Case Does Not Encompass All of the Later-Filed Allegations IV. Defendant s Attorney-Client Relationship A. Challenges in Representing False Claims Act Defendants B. How to Find and Select Competent Counsel for the Defendant V. The Government s Attorney-Client Relationship Chapter 8. Preparation of the Sealed False Claims Act Case I. Selecting the Case II. Information and Document Gathering A. The Client B. The Freedom of Information Act C. Government D. Media E. Interested Organizations F. Witnesses G. Experts III. Investigating and Selecting the Potential Defendants IV. The Disclosure Statement to the Attorney General A. Protecting the Relator s Disclosure Statement From Discovery V. The False Claims Act Complaint A. Rule 9(b) Requirements for Pleading False Claims Act Violations The Relationship of Rule 8 and Rule 9(b) B. Courts Do Not Require Complaints to Plead Evidence Rule 9(b) and the Details Required to Be Alleged Identification of Specific Employees Not Required Alleging a Knowing Violation Discovery and Leave to Amend the Complaint Alleging Materiality Post-Escobar VI. Introduction to Bringing the Suit VII. Filing the Qui Tam Action Under Seal A. Protective Orders While the Complaint Is Under Seal VIII. Assisting in the Government s Investigation

13 Detailed Table of Contents xlv IX. How Long Will the Government Investigation Last? X. The Defendant s Role While the Case Is Under Seal XI. Preparing to Unseal the Case XII. Failure to Comply With Seal Requirements XIII. Procedures for Unsealing Complaint XIV. Service of the Unsealed Complaint A. Complaint B. Request to Preserve Evidence XV. Amending the Complaint A. Amendment by the Government B. Amendment by Relator XVI. Litigation Procedures After the Government s Election XVII. Litigation Procedures Where the Government Does Not Proceed With the Action XVIII. Can the False Claims Act Case Remain Under Seal if the Government Does Not Intervene? A. Does the Complaint Remain Sealed? B. Do Documents Other Than the Complaint Remain Sealed? XIX. Preliminary Injunction Chapter 9. Discovery in False Claims Act Cases I. Basic Considerations for Discovery II. Planning Discovery: What, When, and Where A. Interrogatories Relator s Interrogatories Defendant s Interrogatories Government Interrogatories B. Document Requests Relator s Document Requests Defendant s Document Requests Government Document Requests C. Requests for Admission D. Depositions Plaintiff s Depositions Defendant s Depositions E. Requests for Inspection III. Special Considerations in Obtaining False Claims Act Discovery A. Defendant s Informal Discovery of the Relator B. Defendant s Informal Discovery of the Government The Independent Third Party Perception and the Problems It Causes Not Interfering With the Investigation Causes Qui Tam Counsel to Play Catch-Up When the Department of Justice Declines to Intervene Cooperation Helps the Relator Help the Government

14 xlvi False Claims Act: Whistleblower Litigation 4. Lack of Cooperation Assists the False Claims Act Defendant C. Discovery From Defendant D. Discovery From Nonparties E. Balancing the Relator s Right to Obtain Discovery With Governmental Interests IV. Discovery Issues and Disputes A. Attorney-Client Privilege and Work Product Doctrine Issues in False Claims Act Litigation Attorney-Client Privilege Work Product Doctrine Discoverability of the Relator s Statement Discoverability of Documents Sharing Privileged Information Between Government and Relator: The Joint Prosecution Privilege The Crime-Fraud Exception to the Attorney-Client Privilege and Work Product Doctrine B. The Self-Evaluative Privilege in False Claims Act Cases Privileged Self-Evaluative Documents The Self-Evaluative Privilege and Selective Disclosure C. Classified Material The Classified Information Privilege Obtaining Security Clearances to Handle Classified Information Defendant s Use of the Classified Information Privilege D. State Secrets Privilege E. Deliberative Process Privilege F. Proprietary and Trade Secret Material G. Medical Privileges H. Protective Orders I. The Health Insurance Portability and Accountability Act and the Public Health Services Act The Health Insurance Portability and Accountability Act The Public Health Services Act J. Contacts With Government Employees and Government Counsel V. Resolution of False Claims Act Discovery Disputes VI. Touhy Regulations Chapter 10. Common Defenses I. Rule 9(b): Pleading With Particularity Requirements by the Federal Circuit A. First Circuit B. Second Circuit C. Third Circuit

15 Detailed Table of Contents xlvii D. Fourth Circuit E. Fifth Circuit F. Sixth Circuit G. Seventh Circuit H. Eighth Circuit I. Ninth Circuit J. Tenth Circuit K. Eleventh Circuit L. District of Columbia Circuit II. Government Knowledge Is Not a True Affirmative Defense A. History of the Prior Government Knowledge Bar B. Prior Government Knowledge Is Only Relevant to Mitigate a Defendant s Knowledge When Disclosure of All Pertinent Facts Is Made to a Government Official With Authority to Modify the Contract and the Government Approves the Modification The Defendant Must Disclose All Pertinent Information The Defendant Must Disclose the Information to the Contracting Officer or Other Government Official With Authority to Modify the Contract The Government Must Approve the Submission of the False Claim C. Juries Should Not Be Instructed on the Government Knowledge Defense D. Negating Knowledge With Claimed Reasonable Interpretations of Ambiguities III. Limitations on Affirmative Defenses A. Waiver B. The Limits of a Contracting Officer s Authority C. Unavailability of Estoppel Due to Actions of Contracting Officer D. Estoppel E. Ratification F. Unclean Hands G. Failure to Mitigate H. Contributory and Comparative Negligence I. Superseding and Intervening Causes IV. Sovereign Immunity Concerning Suits Against States and Local Entities V. Unsupervised Releases of False Claims A. Validity and Public Policy Issues B. Dismissal of a Pending Qui Tam Action VI. Counterclaims A. Indemnity and Contribution B. Breach of Fiduciary Duty and Confidentiality C. Indemnity, Contribution, and Breach of Duty Counterclaims Are Not Advisable

16 xlviii False Claims Act: Whistleblower Litigation D. Defamation Claims E. Conversion F. Breach of Contract G. Counterclaims Against the Government H. The Computer Fraud and Abuse Act Chapter 11. Common False Claims Act Motion Practice I. Introduction II. Preparation for Briefing III. Motions to Dismiss A. Standards of Law on a Motion to Dismiss B. Drafting the Motion to Dismiss C. The Public Disclosure and Original Source Provisions D. The First-to-File Provision E. Rule 9(b) F. Statute of Limitations G. Wartime Suspension of Statute of Limitations IV. Motions for Summary Judgment V. Motions in Limine A. Motions in Limine by All Parties to Limit Irrelevant and Prejudicial Evidence B. Motions in Limine by Defense Counsel to Limit the Evidence the Relator and the United States Can Use to Establish Claims C. Motions in Limine by All Parties to Limit Motivational Evidence D. Treble Damages and Attorneys Fees Do Not Go to the Jury E. Motions in Limine by Government Counsel to Sit at the Relator s Counsel Table in a Nonintervened Case F. Motions in Limine by the Relator s Counsel to Stop Defense Counsel From Arguing That the United States Nonintervention Decision Is a Comment on the Merits of the False Claims Act Case VI. Final Pretrial Briefing VII. Post-Trial Briefing VIII. Other Briefing Issues Chapter 12. specialized Knowledge and Expertise: Use of Testifying and Nontestifying Experts I. Introduction II. How to Find a Good Expert III. Using Nontestifying Experts for Consultation IV. Types of Experts A. Government Contracting Procedures B. Damages Experts Accounting

17 Detailed Table of Contents xlix 2. Appraisers C. Substantive Experts Related to the Subject Matter D. Medical, Psychological, and Actuarial Damages for Employment Retaliation Claims E. Legal Experts F. Electronic Data and Metadata V. Admissibility of Expert Witness Testimony A. General Rules Governing Experts B. The Daubert Inquiry VI. Using Statistical Sampling to Prove Liability and Damages A. Sampling Approved: United States ex rel. Martin v. Life Care Centers of America, Inc B. Sampling Rejected: United States v. Vista Hospice Care, Inc C. Litigating False Claims Act Cases With Statistical Samples Chapter 13. Trial Strategies in the False Claims Act Case I. Introduction II. Examples of Themes for the Government and Relators A. National Security B. Contractor Integrity C. Patriotism D. Law Enforcement E. Protecting the Treasury III. Examples of Themes for Defendants A. Lack of Knowledge B. Products or Services Provided Are Not Defective C. The Whistleblower Is a Bounty Hunter, Not a Patriot IV. Computers and False Claims Act Trials V. Evidence Questions A. Witnesses B. Statistical Evidence VI. Jury Instructions VII. False Claims Act Model Jury Instructions A. Instruction 1: Description of the False Claims Act Instruction 1.A a. Alternate Instruction 1.A.I: Cases Alleging 31 U.S.C. 3729(a)(1)(A) False Claims Violations b. Alternate Instruction 1.A.II: Cases Alleging 31 U.S.C. 3729(a)(1)(B) False Statements Violations c. Alternate Instruction 1.A.III: Cases Alleging 31 U.S.C. 3729(a)(1)(C) Conspiracy Violations d. Alternate Instruction 1.A.IV: Cases Alleging 31 U.S.C. 3729(a)(1)(D) Conversion Violations

18 l False Claims Act: Whistleblower Litigation e. Alternate Instruction 1.A.V: Cases Alleging 31 U.S.C. 3729(a)(1)(E) False Receipts Violations f. Alternate Instruction 1.A.VI: Cases Alleging 31 U.S.C. 3729(a)(1)(F) Unlawful Sales or Pledges Violations g. Alternate Instruction 1.A.VII: Cases Alleging 31 U.S.C. 3729(a)(1)(G) False Statements h. Alternate Instruction 1.A.VIII: Cases Alleging 31 U.S.C. 3729(a)(1)(G) Failure to Pay Instruction 1.B Instruction 1.C a. Alternate Instruction 1.C.I: Nonintervened Case b. Alternate Instruction 1.C.II: Intervened Case Instruction 1.D Commentary a. Instruction 1.A b. Instruction 1.B c. Instruction 1.C d. Instruction 1.D B. Instruction 2: Statement of the Case Commentary C. Instruction 3: Violations of 31 U.S.C. 3729(a)(1)(A) Instruction 3.A: Violations of 31 U.S.C. 3729(a)(1)(A) Optional Instruction 3.B: No Showing of Specific Harm Required Commentary a. Instruction 3.A b. Optional Instruction 3.B D. Instruction 4: Violations of 31 U.S.C. 3729(a)(1)(B) Instruction 4.A: Violations of 31 U.S.C. 3729(a)(1)(B) Optional Instruction 4.B: No Showing of Specific Harm Required Commentary a. Instruction 4.A b. Optional Instruction 4.B E. Instruction 5: Violations of 31 U.S.C. 3729(a)(1)(C) Commentary F. Instruction 6: Violations of 31 U.S.C. 3729(a)(1)(D) Commentary G. Instruction 7: Violations of 31 U.S.C. 3729(a)(1)(E) Commentary H. Instruction 8: Violations of 31 U.S.C. 3729(a)(1)(F) Commentary I. Instruction 9: Violations of 31 U.S.C. 3729(a)(1)(G) Alternate Instruction 9.A: False Statements Material to an Obligation to Pay Money to the Government

19 Detailed Table of Contents li 2. Alternate Instruction 9.B: Failure to Pay or Transmit Money or Property to the Government Commentary J. Instruction 10: Falsity Alternate Instruction 10.A: Plaintiff Alleges Violations of a Statute, Regulation, or Contract Whose Interpretation Is a Matter of Law Alternate Instruction 10.B: Plaintiff Alleges Violations of a Contract Whose Interpretation Is a Question of Fact Alternate Instruction 10.C: Fraudulent Inducement Commentary a. Alternate Instructions 10.A and 10.B b. Alternate Instruction 10.C K. Instruction 11: Knowledge Instruction 11.A: False Claims Act Knowledge Instruction 11.B: Square Corners Optional Instruction 11.C: Additional Knowledge Instruction for Corporate Defendants Optional Instruction 11.D: Government Knowledge Commentary a. Instruction 11.A b. Instruction 11.B c. Optional Instruction 11.C d. Optional Instruction 11.D L. Instruction 12: Materiality Commentary M. Instruction 13: Claim Alternate Instruction 13.A Alternate Instruction 13.B Alternate Instruction 13.C Commentary N. Instruction 14: Obligation Alternate Instruction 14.A Alternate Instruction 14.B Commentary O. Instruction 15: Government Negligence or Other Government Failure Is Not a Defense Commentary P. Instruction 16: Number of False Claims or Other Violations Instruction 16.A: Number of False Claims or Other Violations Optional Instruction 16.B: Fraudulent Inducement Commentary a. Instruction 16.A b. Optional Instruction 16.B Q. Instruction 17: Damages Instruction 17.A: Damages Not Required

20 lii False Claims Act: Whistleblower Litigation 2. Instruction 17.B: Actual Damages Alternate Instruction 17.C: Benefit of the Bargain (Market Value Difference) Alternate Instruction 17.D: Benefit of the Bargain (Market Value Not Ascertainable) Alternate Instruction 17.E: Benefit of the Bargain (Out-of-Pocket Damages) Alternate Instruction 17.F: Conditions Not Satisfied Alternate Instruction 17.G: Fraudulent Inducement Alternate Instruction 17.H: Violations of 31 U.S.C. 3729(a)(1)(G) Commentary a. Instruction 17.A b. Instruction 17.B c. Alternate Instruction 17.C d. Alternate Instruction 17.D e. Alternate Instruction 17.E f. Alternate Instruction 17.F g. Alternate Instruction 17.G h. Alternate Instruction 17.H R. Instruction 18: Liberal Calculation of Damages Instruction 18.A: Liberal Calculation of Damages Optional Instruction 18.B: Defendant Bears Risk of Uncertainty Commentary a. Instruction 18.A b. Optional Instruction 18.B S. Instruction 19: Joint and Several Liability of Multiple Defendants Commentary T. Instruction 20: State False Claims Acts Instruction 20.A: Background of State Instructions Instruction 20.B: Prior Instructions on Law Apply to the State False Claims Act Claims Instruction 20.C: Liability Under State False Claims Acts Instruction 20.D: Texas False Claims Act Commentary a. Instruction 20.C b. Instruction 20.D U. Instruction 21: Retaliation Instruction 21.A: Elements of False Claims Act Retaliation Claim Instruction 21.B: False Claims Act Violation Not Required Instruction 21.C: Definitions of Retaliation

21 Detailed Table of Contents liii 4. Instruction 21.D: Constructive Discharge Instruction 21.E: Elements of a Failure-to-Promote Claim Instruction 21.F: Threats and Harassment Instruction 21.G: Compensatory Damages Instruction 21.H: Damages Lost Income Instruction 21.I: Damages Promotion Instruction 21.J: Damages Back Pay Instruction 21.K: Mitigation of Damages Instruction 21.L: Damages Front Pay Instruction 21.M: Damages Emotional Distress Damages Commentary a. Instruction 21.A b. Instruction 21.B c. Instruction 21.C d. Instruction 21.D e. Instruction 21.E f. Instruction 21.F g. Instructions 21.G 21.N V. Instruction 22: Adverse Inference W. Special Interrogatories and Verdict Form Commentary Chapter 14. Damages I. Introduction and Basic False Claims Act Damage Theory II. Proof of Damages III. Actual Damages A. Supreme Court Cases Marcus v. Hess Damages: The Out-of-Pocket Rule a. The Marcus/Roby Rule b. Replacement Value Bornstein Damages: The Benefit-of-the-Bargain or Market Value Rule a. The Defendant Must Pay the Full Amount It Received When the Government Receives No Benefit or Its Violation is Qualitative Halper Damages: Double Jeopardy Actual Damages Are Not a Necessary Element Under the False Claims Act Causation of Damages and the Liberal Measurement of False Claims Act Damages B. Damage Theories for Different Facts and Cases Product Substitution Damages Based on Amount of Overpayment Collusive Bidding Fraudulent Loan Applications Statistical Sampling in Health Care Cases Fraudulent Inducement Damages

22 liv False Claims Act: Whistleblower Litigation IV. Consequential Damages V. Multiple Damages A. Doubling and Trebling Damages B. Double Jeopardy Issues C. Potential Punitive Nature of False Claims Act Recoveries VI. Civil Penalties A. Number of Penalties B. Amount of Penalty C. Calculation of Civil Penalties for a Subcontractor VII. Double Damages for Voluntary Disclosure VIII. Interest A. Prejudgment Interest B. Postjudgment Interest IX. Joint and Several Liability for Damages and Attorneys Fees X. Contribution and Indemnification Between Defendants XI. Jury Not Instructed Regarding Trebling or Attorneys Fees XII. Damages for High Value Items XIII. Using the Fair Debt Collection Practices Act to Attach False Claims Act Defendant Property Chapter 15. Whistleblower Protections in the Workplace I. Whistleblower Protections Under 31 U.S.C. 3730(h) II. The Broad Scope and Purpose of Whistleblower Protection Under 31 U.S.C. 3730(h) III. The Employment Relationship IV. Protection Against All Types of Retaliatory Conduct V. Adoption of Employment Law Doctrines and Constructive Discharge VI. Proving 31 U.S.C. 3730(h) Whistleblower Retaliation Claims A. The First Element: The Whistleblower Engaged in Protected Activity B. The Second Element: The Employer Knew of the Whistleblower s Protected Activity C. The Third Element: The Whistleblower Was Discriminated Against in Retaliation for the Protected Activity VII. Preemption of State Law Employment Claims VIII. Concurrent Jurisdiction IX. Injunctive Relief X. Other Relief XI. Statute of Limitations A. The 2010 Amendments to 31 U.S.C. 3730(h) B. Graham County Soil & Water Conservation District v. United States ex rel. Wilson

23 Detailed Table of Contents lv C. The Discovery Rule D. Use of Equitable Estoppel to Extend Filing Dates XII. Settlement Chapter 16. Relator s Share of the Recovery I. The Relator s Share of the False Claims Act Recovery A. Mandatory Statutory Factors B. Court Determinations of the Relator s Share II. The 1986 Congressional Intent in Support of the Relator s Share III. Relator s Share Where the Case Is Based on a Public Disclosure A. Legislative History of the Public Disclosure Limitation on a Relator s Share B. Cases That Apply the Public Disclosure Limitation on a Relator s Share IV. A Relator Criminally Convicted for Conduct Arising From a Violation of the False Claims Act Is Not Entitled to a Reward V. Relator s Share Where the Relator Planned and Initiated the Fraud VI. Relator s Share Case Law A. United States ex rel. Merena v. SmithKline Beecham Corp B. United States ex rel. Barajas v. Northrop Corp C. United States ex rel. Taxpayers Against Fraud v. General Electric Co D. United States ex rel. Pedicone v. Mazak Corp E. United States ex rel. Coughlin v. IBM Corp F. United States ex rel. Alderson v. Quorum Health Group G. United States ex rel. Johnson-Pochardt v. Rapid City Regional Hospital H. United States ex rel. DRC, Inc. v. Custer Battles, LLC I. United States ex rel. Rille v. Hewlett-Packard Co. and United States ex rel. Rille v. Cisco Systems J. United States ex rel. Shea v. Verizon Communications K. United States ex rel. Pallares v. Itani VII. What Constitutes the Proceeds of a Settlement VIII. Relator s Share in Alternate Remedies IX. Department of Justice Relator s Share Guidelines X. When a Dispute Arises Over the Relator s Share, What Happens to the Contested Portion of the Relator s Share? XI. Taxation of the Relator s Share XII. Thirty Percent Relator s Share Awards Over Thirty Years Chapter 17. Attorneys Fees I. Introduction II. Relator s Right to Attorneys Fees III. Defendant s Right to Attorneys Fees

24 lvi False Claims Act: Whistleblower Litigation A. Fees Awarded to Defendant B. Fees Denied to Defendant IV. The Government s Right to Attorneys Fees V. Obtaining an Award of Attorneys Fees, Expenses, and Costs Under the False Claims Act A. Right to Fee Award Unsuccessful Claims Nominal Damages Fees Can Exceed Client s Recovery B. Fee Application Review C. Fee Application Timing and Content D. Standards for Calculating the Amount of Attorneys Fees Hourly Rates a. Current Rates Versus Historical Rates b. National Rates Versus Local Rates Reasonableness of Hours a. Vague Time Entries b. Block Billing c. Duplication and Conferencing d. Legal Research e. Travel Time f. Clerical Work g. Unrelated Time h. Litigation of the Relator s Share i. Hours Spent on Fee Application E. Costs F. Expenses VI. Upward Adjustments VII. Recovery of Both Statutory and Contingent Fees VIII. Arming for a Fee Fight: Discovery of Defendants Fee and Expense Information A. Hours Expended by Defense Counsel Are Relevant, Discoverable, and Admissible B. Hourly Rates of Defense Counsel Are Relevant, Discoverable, and Admissible C. Defense Counsel s Total Fees Are Relevant Toward Assessing Whether Plaintiff s Counsel s Total Fees Are Reasonable D. No Breach of Attorney-Client Privilege by Permitting Discovery of Fees E. Cases Where Discovery of Opposing Counsel s Fee Information Has Not Been Permitted F. Defendant s Expenses Are Relevant, Discoverable, and Admissible G. Conclusion IX. The Government s Interest in Relator s Attorneys Fees X. Joint and Several Liability for Attorneys Fees

25 Detailed Table of Contents lvii Chapter 18. Appeals I. Appeals A. Timing of the Appeal B. Stay of Execution and Bond C. Government Amicus Briefs II. Interlocutory Appeals Under 28 U.S.C. 1292(b) Chapter 19. Settlement I. Introduction A. Adequacy of the Settlement B. Settlement of the Relator s Share C. The Court s Determination of the Proceeds of the Settlement The Government Is Obligated to Tell the Relator the Value of the Noncash Proceeds of the Settlement The Court Determines the Total Amount of the Settlement Proceeds Before Approving the Settlement II. Settlement Goals in False Claims Act Litigation A. The Defendant s Settlement Goals B. The Defendant s Settlement Strategy Cooperate With the Government Take Corrective Action Discipline Offending Employees Change Company Policies and Procedures Avoid Retaliation Mount a Positive Public Relations Campaign C. Settling Civil, Criminal, and Administrative Claims Related to the False Claims Act Case III. The Relators Settlement Goals A. Settlement When the Department of Justice Does Not Intervene B. Settlement When the Department of Justice Intervenes IV. The Department of Justice s Settlement Goals V. The Trial Court s Settlement Role VI. Raising the Subject of Settlement VII. Confidentiality VIII. Settlement Documents A. Settlement and Taxes B. Unsupervised Releases of False Claims Pre-Filing/Future Releases Releases When the Government Intervenes Dismissal of a Pending Qui Tam Action IX. The Relator s Challenges to Settlement A. Settlement Hearing

26 lviii False Claims Act: Whistleblower Litigation B. The Relator s Entitlement to a Hearing C. The Relator s Entitlement to Discovery D. The Standard for a Fair, Adequate, and Reasonable Settlement E. Holding the Fairness Hearing In Camera X. The Nonsettling Defendant s Challenges to a Settlement XI. The Government s Challenges to a Settlement XII. Arbitration of False Claims Act Cases Chapter 20. The Media, Congress, and the Public Interest I. How the Media Can Impact Your Case II. How to Make the Most of Publicity About Your Case A. Effective Techniques for Cooperating With the Fourth Estate B. How to Manage Media Requests for Information C. How to Use Media Information in Your Case III. The United States Congress A. The Congressional Role in False Claims Act Litigation B. How to Seek Congressional Assistance IV. Ethical Considerations in Media Relations V. Press Releases Chapter 21. Future Outlook for the False Claims Act I. Introduction II. Continued Attacks on the Qui Tam Provisions of the False Claims Act A. Voluntary Disclosure Proposals B. Prior Government Knowledge Bar C. Government Employee Restrictions D. Use of Inaccurate Statistics to Attack Qui Tam Provisions E. Culpable Relator Legislation F. Health Care Special Interests Legislative Proposals III. The False Claims Act and Pharmaceutical Companies A. Common Allegations Lodged Against Pharmaceutical Companies B. Using the False Claims Act Against Pharmaceutical Companies: An Increasing Trend C. The Increase in Off-Label Marketing Cases D. State Involvement in False Claims Act Litigation Against Pharmaceutical Companies E. Pending/Future Legislation May Increase State Cases Against Pharmaceutical Companies IV. Applicability of the False Claims Act to Faith-Based Organizations That Receive Federal Funds V. Using the False Claims Act in the Context of Hospice Fraud