Federal False Claims Act Wrap Up - September 2020

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This week we take look at two recent federal decisions concerning the False Claims Act (“FCA”).

The first case, Ndoromo v. Barr, is interesting because of the billion dollars in alleged damages.

In this case out of the U.S. District Court for the District of Columbia, the pro se plaintiff sued various government officials, including the United States Attorney General, for over $1 billion dollars in damages. In separate, prior proceedings, the plaintiff was convicted of various criminal charges, including healthcare fraud. That conviction resulted in the government’s seizure of plaintiff’s funds and personal property in a civil forfeiture action. In response, the plaintiff sued the government and alleged, among other things, that the government violated the False Claims Act. The judge promptly dismissed the claim, noting that the FCA is supposed to be used to “ensure that funds are not falsely taken from the government”, not the other way around. Ndoromo v. Barr, 2020 --- F.Supp.3d ----, 2020 WL 5107546 (U.S.D.C. D.C., August 31, 2020).

The lesson? The only lesson from this case is that perhaps the pro se plaintiff should have retained counsel.

The second case, United States ex rel. Olhausen v. Arriva Medical, LLC, involves a more garden variety dismissal, but makes some interesting distinctions with regard to an “insider” relator’s pleading obligations:

In this case, the Southern District of Florida considered and granted a motion to dismiss on all counts of the relator’s complaint. The relator, a company insider, made multiple allegations of FCA violations against a diabetic supplies and medical products company. Several of the counts were dismissed under a first to file analysis, but the balance were dismissed due to the lack of particularity in the pleadings. One of the missing elements – and an important one in the Court’s view – was the relator’s failure to allege the submission of an actual claim to the government. The relator relied upon 11th Circuit authority, which has relaxed somewhat the “indicia of reliability” standard if the relator has first-hand and direct knowledge of the submission of claims to the government. The relator argued he had direct knowledge of the filing of claims by virtue of his high level position with the company. The Court held that just wasn’t enough. The relator failed to “meaningfully aid the Court in its search for ‘indicia of reliability’” that a false claim actually was submitted to the government. United States ex rel. Olhausen v. Arriva Medical, LLC, --- F.Supp.3d ---- 2020 WL 5077170 (U.S.D.C. S.D. Fl., August 27, 2020).

The lesson? Even if you are an insider, make sure you have facts to support the submission of claims to the government.

Opinions and conclusions in this post are solely those of the author unless otherwise indicated. The information contained in this blog is general in nature and is not offered and cannot be considered as legal advice for any particular situation. The author has provided the links referenced above for information purposes only and by doing so, does not adopt or incorporate the contents. Any federal tax advice provided in this communication is not intended or written by the author to be used, and cannot be used by the recipient, for the purpose of avoiding penalties which may be imposed on the recipient by the IRS. Please contact the author if you would like to receive written advice in a format which complies with IRS rules and may be relied upon to avoid penalties.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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