AGG’s Government Investigations Team Insights provides periodic updates covering legal and regulatory topics. Our team, which includes former federal prosecutors, SEC enforcement attorneys, and federal agency attorneys, has successfully represented companies and individuals, including executives of public companies, in numerous civil and criminal investigations, including before the U.S. Department of Justice and U.S. Attorney’s Offices, the SEC, the EPA, the FDA, the FTC, and many other federal and state agencies. We also assist our clients by conducting internal and parallel investigations, and advising them regarding the related issues that often follow government investigations, including civil litigation, media interest, and reputational concerns.
In this edition, we discuss a Fifth Circuit case where the court significantly reduced a False Claims Act jury verdict due to the government’s delay in litigating the case, three appellate cases where the defendants’ sentences were vacated, and the recently introduced Senate bill to amend the False Claims Act.
Featured Articles
The Government Cannot Cut Corners: Appellate Courts Reverse Sentences in Three Recent Cases Because the Government Did Not Adequately Prove Loss
By Aaron M. Danzig
Three appellate courts recently reversed sentences because the government did not adequately present evidence to support the alleged loss calculation underlying the court’s determination of the sentencing guidelines range. In one case, the court found that the government’s extrapolation of the alleged loss amount was not statistically valid. In the other two, the courts found that the government presented insufficient or mathematically flawed evidence to support its claimed loss amount. While the convictions were affirmed in these cases, the sentences were vacated and remanded to the district court for resentencing.
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Senate Introduces Bill Amending False Claims Act Materiality Element and Anti-Retaliation Provision Expanding Liability
By Aaron M. Danzig, Landen Benson, & Thomas E. Kelly
On July 25, 2023, Sens. Chuck Grassley (R-IA), Dick Durbin (D-IL), John Kennedy (R-LA), and Roger Wicker (R-MS) introduced the False Claims Amendments Act of 2023. The proposed amendment to the False Claims Act does not remove the requirement that the alleged false claim must be material to the government’s decision to pay the claim. Instead, it modifies the materiality requirement by stating that the government’s decision to continue paying allegedly false claims does not necessarily mean a party’s non-compliance with rules or regulations related to its submission of claims to the government was immaterial to the government’s decision to pay if there are other reasons for the government’s continued payment. The bill also seeks to expand the application of the FCA’s anti-retaliation protections to former employees, an issue on which courts have been split. If passed, these changes could limit defendants’ defenses to False Claims Act cases, while also expanding the universe of people who could sue under the FCA’s anti-retaliation provisions.
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Gamesmanship No More: How the Government’s Dawdling Cut a False Claims Act Verdict in Half
By Kara G. Silverman
After a substantial jury verdict following a lengthy trial, the United States Court of Appeals for the Fifth Circuit declined to accept the defendants’ invitation to throw out the government’s complaint in intervention as a sanction for engaging in an eight-year investigation campaign in a False Claims Act (“FCA”) case. However, in a welcome turn of events, the Fifth Circuit substantially cut the damages in ruling that the government’s complaint did not relate back to the relator’s original complaint and that it could recover any damages from acts taken more than six years from the filing of its complaint in intervention due to the statute of limitations. This case could serve as a much-needed deterrent for the government to continue subjecting defendants to an extensive and burdensome investigatory process while the case remains under seal.
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