Source: https://www.vsg-law.com/blog/the-saic-case-a-new-approach-to-false-claims-act-damages/
Timestamp: 2019-01-21 01:33:02
Document Index: 189000898

Matched Legal Cases: ['§ 3729', '§ 20', '§ 3729', '§ 3729', '§ 3729', '§ 3729', '§ 3729']

The SAIC Case: A New Approach To False Claims Act Damages
Abigail Graber and Robert Vogel
In the case of United States v. Science Applications International Corporation, 626 F.3d 1257 (D.C. Cir. 2010) (“SAIC”), the U.S. Court of Appeals for the District of Columbia issued an important and broad-ranging decision interpreting the federal False Claims Act (“FCA”), 31 U.S.C. § 3729 et seq. The United States alleged that a government contractor, SAIC, had submitted false statements certifying compliance with conflict-of-interest provisions in its contract with the Nuclear Regulatory Commission (“NRC”), and that SAIC’s claims for payment under the contract were also false in light of the company’s actual non-compliance. The court’s unanimous opinion, written by Judge Tatel, addressed three issues: 1) the conditions under which so-called “implied certifications” can result in false claims; 2) whether corporate liability should attach via “collective knowledge”; and 3) the standard by which damages should be calculated in False Claims Act cases. This paper will first provide a general overview of the SAIC case and then analyze the court’s attempt to create a coherent approach to determining damages under the False Claims Act.
In 1992, the NRC awarded SAIC a contract to provide advice and technical assistance on rulemaking pertaining to the recycling and release into the commercial market of radioactively contaminated materials from nuclear facilities. SAIC performed extensive work under the contract and developed detailed, technical reports, at least one of which was published by the NRC in 1999. SAIC’s expertise and contributions proved valuable enough that in 1999, SAIC and the NRC entered into a substantially similar, follow-on contract.
Both the 1992 and 1999 contracts contained provisions intended to prevent the contractor and its employees from engaging in behavior or other business relationships that could create a conflict of interest. Under NRC regulations which were incorporated into the contract, the term “organizational conflict of interest” was defined as:
a relationship . . . whereby a contractor or prospective contractor has present or planned interests related to the work to be performed under an NRC contract which: (1) May diminish its capacity to give impartial, technically sound, objective assistance and advice or may otherwise result in a biased work product, or (2) may result in its being given an unfair advantage.
41 C.F.R § 20-1.5402(a) (1979), quoted in SAIC, 626 F.3d at 1262. Per the contracts, SAIC agreed not to enter into any such relationships and to receive permission from the NRC before it or any of its employees entered into a contractual relationship which potentially could raise such concerns. The contracts contained strict disclosure requirements in the event that SAIC discovered a conflict of interest after beginning its work for the NRC. Nondisclosure was a condition of possible disqualification of eligibility for or termination of the contracts.
On the same theme, upon signing the contracts SAIC made several explicit “certifications” and “representations” that it was not being placed in a position of having a conflict of interest, either through consulting on similar matters with entities regulated by the NRC, or by engaging in other work that would bias its judgment in advising the NRC. Id. The pre-printed payment vouchers that the NRC provided SAIC for invoicing did not contain any express certifications of compliance with the contract’s conflict-of-interest provisions, nor did the contract explicitly condition payment on compliance with those obligations. However, SAIC did re-certify compliance each of the several times the contracts were modified.
In October 1999, the NRC discovered that SAIC had contracted with two private companies—British Nuclear Fuels, Ltd., in 1997, and the Bechtel Jacobs Company, in 1999—for work related to recycling the same sorts of radioactive nuclear material that the NRC would regulate. As a result of these and other alleged, undisclosed, potential conflicts of interest, the NRC terminated its contract with SAIC. The United States government then filed suit in the United States District Court for the District of Columbia, alleging that SAIC had violated §§ 3729(a)(1) and 3729(a)(2) of the False Claims Act.1
At the conclusion of the trial, a jury found SAIC liable for violating the False Claims Act and breaching its contract with the NRC. For the False Claims Act violations, the jury awarded single damages to the United States of $1,973,839.61, i.e., the total amount paid under the contracts. On the breach of contract claim, however, the jury found SAIC liable for damages of only $78. Based on the jury’s findings, the trial court awarded the United States treble damages and $577,500 in civil penalties for the False Claims Act violations, resulting in a total damages award of $6,499,096.83.
On appeal, SAIC argued that the trial court made several errors of law, including: (a) applying the wrong standard of liability for cases involving so-called “implied false certifications”; (b) wrongly permitting a finding of scienter based on a company’s “collective knowledge”; and (c) erroneously instructing the jury on the method of calculating damages under the False Claims Act.
Prior to May 2009, the False Claims Act made liable a person who “knowingly presents, or causes to be presented, to an officer or employee of the United States Government or a member of the Armed Forces of the United States a false or fraudulent claim for payment or approval,” 31 U.S.C. § 3729(a)(1), or “knowingly makes, uses, or causes to be made or used, a false record or statement to get a false or fraudulent claim paid or approved by the Government.” Id. at § 3729(a)(2).
A claim is “false” if the party making the claim knows that the party is not entitled to the payment that is claimed. There are several ways a claim can be determined “false” under the False Claims Act. The simplest type of false claim is a request for payment for work or services that were not performed or delivered, or a claim for work or services delivered contrary to specifications. The government’s task in SAIC was complicated by the fact that no party disputed that SAIC had performed services for the NRC, and, according to the testimony of trial witnesses, performed them well. Instead, the court held that the government was required to prove its case via a “certification theory,” which requires a plaintiff to establish that a claim “rests on a false representation of compliance with an applicable federal statute, federal regulation, or contractual term . . . . False certifications can be either express or implied.” SAIC, 626 F.3d at 1266. Thus, at issue in SAIC were (a) had SAIC made any material, express false certifications? And, if not, (b) was SAIC liable under the False Claims Act for false certifications that were only “implied”?
Although the government argued that SAIC had made material, express false certifications—SAIC’s representations of compliance upon signing the contract and the subsequent contract modifications—the court of appeals rejected that contention. The court found that because SAIC did not make these representations in the context of a direct request for payment, the statements were not actionable under the pre-May 2009 version of the False Claims Act. In other words, because SAIC had expressly certified compliance with its conflict-of-interest obligations only upon entering into the contract, but not when submitting payment vouchers, the government could not prevail on an “express” false certification theory. Instead, the court required the government to prove that SAIC was liable on the basis of false “implied certifications” that were part of the claims for payment themselves.
Relying on an earlier Second Circuit holding in United States ex. rel. Mikes v. Straus, 274 F.3d 687 (2d Cir. 2001), SAIC argued that a contractor can be liable under the False Claims Act for an implied false certification of compliance with a legal requirement only when the contractor failed to comply with a condition which a statute, rule, or contract hasexpressly designated as a condition of payment. See id. at 697. The SAIC court rejected this argument and refused to follow Mikes. Instead, the SAIC court held that “[t]o establish FCA liability under an implied certification theory, the plaintiff must prove by a preponderance of the evidence that compliance with the legal requirement in question ismaterial to the government’s decision to pay.” SAIC, 626 F.3d at 1271 (emphasis added). That is, SAIC was liable because the government might not have paid SAIC had the company disclosed its potential conflicts of interest. In so holding, the SAIC court followed the Ninth and Tenth Circuits’ approach to the conditions under which FCA liability attaches for implied false certifications. See United States ex rel. Lemmon v. Envirocare of Utah, Inc., 614 F.3d 1163, 1169-1170 (10th Cir. 2010); Ebeid v. Lungwitz, 616 F.3d 993, 997-998 (9th Cir. 2010).
The SAIC case also raised the issue of how to apply the False Claims Act’s scienterstandard to corporate entities. A person can be liable under the statute for making false claims only if one has knowledge of their falsity. Under the False Claims Act,
the terms ‘knowing’ and ‘knowingly’ mean that a person, with respect to information – (1) has actual knowledge of the information; (2) acts in deliberate ignorance of the truth or falsity of the information; or (3) acts in reckless disregard of the truth or falsity of the information, and no proof of specific intent to defraud is required.
31 U.S.C. § 3729(b) (1/05/2009).
The district court in SAIC instructed the jury to find that SAIC had acted “knowingly” if one of two conditions were met. First, if any individual at the company knew, or recklessly disregarded the knowledge, that SAIC had made a material false statement to the NRC; or second, if that information was available in the corporation’s “collective knowledge.” The instruction stated:
[I]f a corporation has many employees or agents, you must consider the knowledge possessed by those employees and agents as if it was added together and combined into one collective pool of information. If that collective pool of information here gives a reasonably complete picture of . . . false or fraudulent claims or false statements, you may find that SAIC itself possessed a reasonably complete picture of the false or fraudulent claims or false statements and acted knowingly.
SAIC, 626 F.3d at 1273. On appeal, SAIC challenged the appropriateness of using a company’s “collective knowledge” to establish the company’s scienter under the False Claims Act.
The False Claims Act does not impose liability on those who make innocent mistakes or are simply negligent. However, when dealing with corporate defendants, drawing the line between “negligence” and “deliberate ignorance” of information can be difficult. As theSAIC court recognized, there may be situations where corporate managers have intentionally structured their organizations so that certain employees will not learn certain information, allowing the corporation plausible deniability against charges of fraud. In other situations, however, large corporations may employ thousands of individuals, each of whom possesses unique knowledge and none of whom can possibly track every aspect of the corporation’s business and contractual obligations. Thus, according to the SAICcourt, judges must balance Congress’ intent to prevent corporations from engaging in “‘ostrich-like’ conduct” with its equally compelling desire not to impose “burdensome obligation[s]” on businesses. Id. at 1274, quoting S. Rep. No. 99-345 at 6, 19 (1986),reprinted in 1986 U.S.C.C.A.N. 5266, 5272.
The SAIC court acknowledged that “some forms of constructive knowledge” are included in the False Claims Act’s definition of “knowing,” but emphasized that “its definition of that term imposes liability for mistakenly false claims only when the defendant deliberately avoided learning the truth or engaged in aggravated gross negligence.” Id. at 1274-1275. The court of appeals expressed concern that the district court’s jury instruction allowed a jury to find a company liable for “knowing” misconduct when the company’s only “knowledge” of wrongdoing consisted of different bits of knowledge spread out amongst a multitude of low-level employees with no proven connection to each other or the claims process. The court of appeals sought to narrow a company’s liability under the False Claims Act for “knowing” misconduct to those situations where a company deliberately creates structures that would prevent particular employees from learning of the misconduct, or situations where particular employees have knowledge of the misconduct that is the basis of the False Claims Act violation.
Persons found liable of False Claims Act violations are subject to “a civil penalty of not less than $5,000 and not more than $10,000 [per violation], plus 3 times the amount of damages which the government sustains because of the act of that person.” 31 U.S.C. § 3729(a) (1/05/2009). SAIC argued that one of the district court’s instructions to the jury essentially compelled the jury to find the company liable under the False Claims Act for single damages of $1,973,839.61, i.e., the entire amount paid to SAIC under the contracts. That instruction read:
The damages that the United States is entitled to recover under the False Claims Act are the amount of money that the government paid out by reason of the false claims over and above what it would have paid out had SAIC not made the false claims. Your calculations of damages should be limited to determining what the Nuclear Regulatory Commission paid to [SAIC] over and above what the NRC would have paid had it known ofSAIC’s organizational conflicts of interest. Your calculation of damages should not attempt to account for the value of services, if any, that SAIC conferred upon the Nuclear Regulatory Commission.
SAIC, 626 F.3d at 1278.
In determining damages in False Claims Act cases, most courts have looked to traditional contract remedies and applied either a “benefit-of-the-bargain” or an “out-of-pocket-cost” framework. Under the benefit-of-the-bargain standard, damages are the difference between the market value of the goods or services to which the government was entitled and the market value of the goods or services the government actually received. SeeUnited States v. Bornstein, 423 U.S. 303, 316 n. 13 (U.S. 1976); United States ex rel. Roby v. Boeing Co., 302 F.3d 637, 646-647 (6th Cir. Ohio 2002). Thus, the government always ought to receive the full value of a product, even if it was acquired for a discounted price. However, courts also acknowledge that some contract deliverables cannot be objectively priced: the market value of advice, for example, is difficult to establish. In those instances, damages are usually calculated as the difference between the price the government paid,i.e., the out-of-pocket cost, and value to the government of what it received. SAIC, 626 F.3d at 1279. Under both of these paradigms, some account is made for the value of the product provided to the government.
Even following these traditional methods can present a variety of problems. Most glaringly, in instances in which a good or service cannot be given a market value, applying an out-of-pocket-cost standard to determine damages does not eliminate the need to value the product in some way. Courts have provided little guidance to lawyers on how to proceed in calculating the value of intangible services. In an attempt to simplify, judges may instead define damages as the government’s out-of-pocket costs, period, as the district court in SAIC instructed the jury.
Second, benefit-of-the-bargain and out-of-pocket-cost calculations may not, in fact, “put the government in the same position as it would have been if the defendant’s claims had not been false”—the objective of the False Claims Act damage reward. Id. at 1278. Many False Claims Act cases involve government contractors that have made false statements in order to procure contracts for which they are entirely ineligible. Once they have been granted the contract, however, these companies may submit claims, and receive payments, for goods and services that conform completely to government specifications. Thus, calculating the damages via a benefit-of-the-bargain analysis would result in no damages at all. A very common category of False Claims Act actions that take this pattern are those alleging Anti-Kickback Statute (“AKS”) violations in the health-care industry. Health-care providers who accept kickbacks are ineligible to participate in Medicare and Medicaid. In these cases, courts are presented with a dilemma: if the objective value of a health-care provider’s service is exactly what the government paid, but that service was tainted by kickbacks, what is the appropriate amount of damages?
One possible solution to this problem would be to view the government’s damages through the prism of equitable remedies (i.e., restitution or disgorgement), in which the focus is on the inherent fairness of the situation. To permit companies to enrich themselves by lying to the government is simply unfair, even if those companies perform their contractual duties well, and would have the perverse effect of encouraging the companies to violate the law. This may explain why, in False Claims Act cases based on health-care providers’ violations of the AKS, courts have found that all government outlays under the contract are recoverable as damages. For example, in United States v. Rogan, the Seventh Circuit held:
Nor do we think it important that most of the patients for which claims were submitted received some medical care—perhaps all the care reflected in the claim forms . . . [Defendant] Edgewater did not furnish any medical service to the United States. The government offers a subsidy (from the patients’ perspective, a form of insurance), with conditions. When the conditions are not satisfied, nothing is due. Thus the entire amount that Edgewater received . . . must be paid back.
United States v. Rogan, 517 F.3d 449, 453 (7th Cir. 2008) (emphasis added). In other words, even in False Claims Act cases where the government may not have suffered an obvious financial loss, courts have allowed a recovery of “damages” that does not permit the defendant to benefit from its misconduct.
SAIC fits the model for an equitable remedy case, and the district court’s damage instructions seem to reflect that approach. During the trial, NRC witnesses confirmed that, had they known of SAIC’s relationships with British Nuclear Fuels and Bechtel Jacobs, they would have likely canceled SAIC’s contracts. In other words, had SAIC not made false statements regarding its conflicts of interest, it could not have gotten or kept the contracts at issue, and the government would have paid it no money at all during those times when a potential conflict existed. Thus, the district court’s instruction to the jury focused exclusively on the amount of the government’s payments and relieved the government of any burden to prove that it had been harmed by SAIC’s performance under the contract.
The D.C. Circuit was uncomfortable with the district court’s jury instructions for one fundamental reason: the instructions compelled the jury to ignore evidence that the work performed by SAIC was excellent, and to ignore the possibility that the government had received all the value that it had paid for. The court of appeals recognized that there was evidence that SAIC not only delivered all the work product that it had promised to deliver under its NRC contracts, but also that reviewing NRC officials had “uniformly praised” SAIC’s work product. SAIC, 626 F.3d at 1278. Indeed, on the witness stand the NRC project manager characterized SAIC’s work as “the opposite of a conflict.” Id. at 1280.
In light of these revelations, the D.C. Circuit was clearly uncomfortable with the prospect of the district court compelling the jury to award as False Claims Act damages every penny that the government paid to SAIC for its work, while at the very same time, when deciding the breach of contract claim under traditional contract damages principles, the jury was finding that the government received virtually all the benefits of that work (i.e., all but the $78 in contract damages). The court of appeals’ solution was, in essence: let both sides present their evidence regarding the value of the work delivered, and let the jury take that evidence into account when deciding the amount of damages under the False Claims Act.
In strict legal terms, the court described its approach as a “benefit-of-the-bargain” framework: “In a case where the defendant agreed to provide goods or services to the government, the proper measure of damages is the difference between the value of the goods or services actually provided by the contractor and the value the goods or services would have had to the government had they been delivered as promised.” Id. at 1278. In more practical terms, the court placed the evidentiary burden on the government to quantify the specific harm it had incurred even in circumstances where, had it known the full truth about the situation, it would have paid the contractor nothing at all. The court of appeals made clear that the jury could still impose the total amount paid under a contract as False Claims Act damages, but only after the government had presented some evidence that the product delivered was actually worthless to the government, and after taking into account whatever evidence the contractor presented to the contrary.
Taken literally, the SAIC court seems to be shifting the focus of the False Claims Act damages inquiry away from remedying the contractors’ unjust enrichment and, instead, towards remedying the provable financial injury suffered by the government. In suggesting this approach, the D.C. Circuit Court may be removing a strong incentive for contractors to accurately represent themselves when seeking government contracts and to engage in ethical behavior in the course of their contract performance. Before, companies who procured contracts for which they were knowingly ineligible might have been wary, not only because they could be forced to forfeit all of their proceeds, but also because they could be liable for treble that amount. One can imagine a contractor now gambling that the company will be able to keep most of its profits if it unjustly wins a government contract, as long as it delivers a quality product.
Before crooked contractors start toasting the court, however, they should recognize that the D.C. Circuit did not simply adopt a strict contract approach to damages and leave it at that. Rather than rejecting case precedent that put the focus on preventing the contractor from benefitting from its wrongdoing—e.g., the Seventh Circuit’s Rogan case, supra—the SAIC court purported to distinguish those cases. In so doing, the SAIC court acknowledged an “exception” to the benefit-of-the-bargain standard that may prove, in the end, to swallow the rule.
In distinguishing these cases where something like equitable remedies may still prevail, the SAIC court held that government should bear the burden of producing evidence as to the value of the product it receives in cases where the government is contracting for services rendered directly to the government. However, where part of the government’s purpose in awarding the contract in question is to support the interests of a third party—for instance, a Medicare beneficiary, or a small business—the government remains free to argue that, regardless of the quality of a contractor’s performance, the government received no value for what it paid. In other words, citing the Rogan case with approval and distinguishing it from the case at bar, the SAIC court held that, where the government itself is not the sole or direct recipient of a contract’s benefits, “the government can easily establish that it received nothing of value from the defendant and that all payments made are therefore recoverable as damages.” Id. at 1279.
Given current trends in False Claims Act actions, the D.C. Circuit’s decision to distinguishRogan, rather than declining to follow that case, may be the most important consequence of SAIC. Between January 2009 and the end of September 2010, the government recovered $4.6 billion through False Claims Act cases against the health-care industry, about 85 percent of total False Claims Act recoveries in that time.2 Using the False Claims Act against contractors who have violated the AKS has become one of the government’s main weapons against health-care fraud. If they had rejected the reasoning of Rogan, Judge Tatel and his colleagues could have severely curtailed the government’s efforts against health-care fraud. Because the government funds Medicare and Medicaid on behalf of third-party beneficiaries—elderly and indigent citizens—and does not receive the health-care services directly, unscrupulous providers are still potentially liable for treble damages based on the full amount of government payments for kickback-tainted services. As the Seventh Circuit ruled in Rogan, the medical necessity or quality of those services remains irrelevant.
The SAIC court’s reasoning is by no means necessarily limited to the health-care sector. Courts could view work under defense contracts for reconstruction in Iraq and Afghanistan, for example, as services rendered for the benefit of those nations, and not the United States itself. Still another situation where the third-party exception would apply is when the government acts not as a proprietor, but as a policy-maker. Government procurement practices sometimes favor certain kinds of contractors as a matter of public policy. Congress and executive agencies create set-asides for small, minority-owned, and women-owned businesses, among others, in order to promote a certain social and economic vision. When a company that does not fit the parameters of a set-aside fraudulently wins such a contract, it has done nothing to advance the government’s policy goals, and thus may be liable for the full value of payments received, even after SAIC.
United States ex rel. Longhi v. Lithium Power Techs., Inc., 575 F.3d 458 (5th Cir. 2009), cited by Judge Tatel, is the kind of case that falls into this exception. Lithium Power Technologies, a small business, made false statements regarding, among other things, the company’s facilities and industry connections on its applications for grants from the Small Business Innovation Research (“SBIR”) program. The SBIR program, as its name suggests, awards certain kinds of research grants to small businesses in order to promote market competition. Despite the fact that Lithium Power conducted useful research, the Fifth Circuit ruled that the full amount of the grants could be recouped as False Claims Act damages, because the government’s overriding policy goals had not been achieved: “The Government’s benefit of the bargain was to award money to eligible deserving small businesses . . . . [The] intangible benefit of providing an ‘eligible deserving’ business with the grants was lost as a result of the Defendants’ fraud.” Id. at 473. Contractors submitting deceptive applications to receive minority, female, or other set-asides will find themselves in similar hot water.
While there are some obvious and explicit applications of the SAIC exception, the rule is not well defined and carries some perverse implications. First, Judge Tatel does not really elaborate on why “nothing is due” when government contractors that are funded to provide services to third parties do not follow all contractual terms and conditions, although the same policy does not apply when the government itself is the beneficiary of the goods or services. After all, even when making payments on behalf of third-parties, the government still often will receive some benefit. The Longhi court acknowledged that the research conducted by Lithium Power Technologies might have had value. Doctors receiving kickbacks can still provide exemplary medical care, and providing quality medical care for all citizens is an important government purpose in funding health insurance. Yet, the SAIC court would not require the government to present evidence that the services provided under these kinds of contracts were completely worthless to it when the government claims full contract payments as False Claims Act damages.
The court also ignores the fact that the government is always, on some level, acting to benefit a third party: the American citizenry. This aspect of the SAIC ruling may result in disputes over what constitutes a “third party.” Clearly, Medicare and Medicaid recipients are; taxpayers in general are not. Per Longhi, honest small businesses are “third party” beneficiaries of government contracts, but per SAIC, honest businesses in general are not.
Third and relatedly, the court’s purpose is rendered more puzzling by the fact that contractors who induce government payments through fraudulent representations can be found liable for the full cost of those payments (trebled), even if their fraudulent representations have little to no bearing on whatever third-party benefit is at hand. InLonghi, for example, no party disputed that Lithium Power Technologies was a small business; it falsely represented eligibility for the contract on other criteria. To say that the policy goal of the SBIR program was to award grants to “eligible deserving small businesses” renders the idea of policy- or third-party-oriented contracts meaningless as a distinguishable category. Presumably, a goal of any contract is to reward and encourage “eligible” and “deserving” companies and disadvantage their ineligible, undeserving competition. In applying the SAIC exception, then, courts will have to somehow determine when the intent to benefit a third party through a contract award becomes so primary as to render a purpose of the contract “policymaking” and not procurement. The SAIC court provides no guidelines for performing this analysis.
The flip side of this ambiguity is that in cases where a contract implicates a mix of proprietary and policy goals, a court may let a dishonest but productive company off the hook if it decides that the government’s policy considerations are unimportant relative to the value of the goods or services ultimately provided. Many defense-related contracts, for example, condition bidders’ eligibility for the contract on their compliance with Foreign Ownership, Control or Influence (“FOCI”) provisions. One could view FOCI conditions as a matter of policy or third-party benefit—to support American contractors, rather than their foreign counterparts—but the government is still acting as a direct purchaser of services through these contracts. SAIC leaves the door open for judges and juries, not contracting officials, to determine which third-party benefits and policy goals are important to the government, which are merely incidental, and what their overall monetary value is.
Ultimately, SAIC may not alter damage awards much at all. In addition to providing for a fairly broad exception to the benefit-of-the-bargain rule, Judge Tatel hinted that the court will accept broad theories of harm put forth by the government. He stated in reference to the case at hand, “[T]he government remains free to argue that the value of SAIC’s advice and assistance was completely compromised by the existence of undisclosed conflicts, making the full amount paid to SAIC the proper measure of damages.” SAIC, 626 F.3d at 1279-1280. In fact, the SAIC court approvingly cited a prior case employing a similar theory of damages.3 The important point for the court of appeals was simply that a jury be allowed to weigh in on the level government harm—and whatever figure the jury reasonably comes to, the court will probably accept. SAIC’s effect on False Claims Act recoveries, then, likely will be muted unless courts articulate a standard more definitive than “reasonableness” for calculations of the harm to the government from false claims.
* Abigail Graber is a student at Yale Law School in the Class of 2014. Robert Vogel is a partner with the firm of Vogel, Slade & Goldstein, LLP.
1 Congress amended the False Claims Act via the Fraud Enforcement and Recovery Act of 2009 (“FERA”), Pub. L. No. 111-21, 123 Stat. 1617, long after the conduct at issue in the case. The court’s opinion interpreted the pre-FERA False Claims Act.
2 Department of Justice, Office of Public Affairs. (2010). Department of Justice Recovers $3 Billion in False Claims Cases in Fiscal Year 2010: $2.5 Billion Health Care Fraud Recovery Largest in History — More Than $27 Billion Since 1986 [Press release]. Retrieved from http://www.justice.gov/opa/pr/2010/November/10-civ-1335.html.
3 In the case of United States v. TDC Mgmt. Corp., the D.C. Circuit Court held: “Once TDC deviated from its contracted role as impartial ombudsman by seeking a financial stake in joint ventures with private investors and by charging fees for the provision of material assistance to minority entrepreneurs, the district court then could properly find that the Program no longer had any value to the government.” United States v. TDC Mgmt. Corp., 288 F.3d 421, 428 (D.C. Cir. 2002).