Limits On "Self-Help" Discovery In FCA Cases
As states continue to enact their own false claims statutes – approximately 30 states now have statutes modeled after the federal FCA – state attorneys general are also aggressively pursuing potential FCA violations and coordinating their efforts to extract treble damages and civil penalties from defendants. The FCA also deputizes whistleblowers to bring fraud claims (called qui tam actions) on behalf of the United States.
The most recent statistics published by DOJ confirm that the number of FCA suits and the size of monetary recoveries under the FCA continue to be significant. In FY 2016, DOJ recovered more than $4.7 billion in FCA settlements and judgments. Of this total, $2.5 billion came from the health care industry, followed by nearly $1.7 billion from the financial industry. These totals do not include sums recovered under state false claims acts, which often are prosecuted in parallel.
The number of qui tam cases filed in FY 2016 remained high at 702, with DOJ recouping approximately $2.9 billion as a result of such actions. This continued trend is unsurprising, given that whistleblowers stand to obtain up to 30 percent of any monetary recovery and given the sheer size of whistleblower awards in recent years. Indeed, in FY 2016, whistleblowers were awarded $519 million.
Recent statutory amendments have also expanded liability under the FCA and made it more difficult for defendants to get cases dismissed at the outset of the proceeding. When the Fraud Enforcement and Recovery Act was signed into law in May 2009, the range of parties potentially liable under the FCA broadened, available defenses narrowed and the government’s most successful tool for fighting alleged fraud was otherwise strengthened. The passage of the Affordable Care Act in 2010 provided additional incentives for whistleblowers to file suit and, for the first time, expressly permitted certain FCA suits in the health care industry to proceed based on predicate violations of the federal Anti-Kickback Statute.
Led by a cross-office and cross-practice group of attorneys – composed of former federal prosecutors and seasoned litigators – we have substantial experience handling FCA investigations and legal actions, whether initiated by the government or by whistleblowers. Notably, our experience extends to investigations and litigation under state false claims act provisions, which may differ from their federal counterpart in small but important ways.
We have counseled a wide range of clients, from privately held companies to Fortune 50 global brands. Our clients are companies doing business in numerous industry sectors, including pharmaceuticals, medical devices, chemicals, aerospace, biotechnology, defense, information technology, telecommunications, health care, consumer products and services, higher education, and transportation. We also routinely represent individual defendants when separate counsel becomes necessary.
Our objective is to resolve FCA matters at an early stage of the proceeding and in a cost-effective manner by convincing the government to decline intervention in the underlying qui tam action or to forgo its investigation altogether. When litigation is necessary, we have a history of success at every stage of an FCA proceeding.
We also counsel clients on the many legal issues and proceedings that often run in parallel with FCA matters, including white collar defense, suspension and debarment proceedings, civil and criminal subpoenas, employment and retaliation claims, and the shareholder derivative suits that are sometimes filed on the heels of an FCA settlement. Clients also call on us to assist them with due diligence in connection with mergers and acquisitions and establishing or revamping their compliance programs.