On November 30, 2018, the Solicitor General of the United States filed a long-awaited amicus brief in response to the U.S. Supreme Court’s request for the government’s view of the False Claims Act (FCA) case U.S. ex rel. Campie v. Gilead Sciences, Inc. (see here for previous analysis of the Ninth Circuit decision in the case, and here for discussion of the Supreme Court’s request).
In its brief, the Solicitor General states that the conclusion of the Ninth Circuit – that “the fact of continued government payments did not by itself require dismissal of [the relator’s FCA] claims at the pleading stage” – was “correct and consistent with decisions issued by other circuits in comparable circumstances” and as a result no further review is warranted. The Solicitor General’s brief appears to advocate for a more narrow reading of the Ninth Circuit decision than many commenters have undertaken, explaining that “the relevance of a governmental payment decision turns on whether the government had ‘actual knowledge’ of violations at the time of payment” but in this case it is disputed what the government knew about alleged violations and when it learned about such violations.
The Solicitor General draws a distinction between government knowledge of violations of statutory, regulatory or contractual requirements with government knowledge of allegations of such violations, and explains that under Escobar the latter knowledge does not hold the same significance for purposes of determining materiality. The brief reiterates that the standard for determining materiality under Escobar requires a holistic review of the evidence, and therefore adopting a rule by which relators must plead facts concerning the motivation for the government’s continued payments in an FCA case – as the government maintains the petitioners seek in this case – would essentially render dispositive one factor above others. The Solicitor General’s brief also refutes the interpretation that the Ninth Circuit established a “more than the mere possibility” standard for post-Escobar materiality under the implied false certification theory of FCA liability. The Solicitor General states simply that it “is incorrect” to characterize the Ninth Circuit as having established that standard as “the governing legal test” for materiality. In the alternative, the Solicitor General provides the following explanation for that language in the Ninth Circuit’s decision:
That language is best understood to mean that respondents have alleged more than a mere legal entitlement for the government to withhold payment; they have alleged facts from which one reasonable inference is that the government would have taken that course if it had known all the relevant facts when the payment decisions were made.
Despite advocating for a denial of further review, which would leave in place the Ninth Circuit’s reinstatement of the previously-dismissed suit, the Solicitor General pledges that upon remand to the district court, “the government will move to dismiss” the suit using its authority to dismiss FCA suits not in the public interest. This determination was made in part due to “the government’s thorough investigation of [the relator’s] allegations and the merits thereof,” and also because of the government’s concern that the parties “might file burdensome discovery… requests for FDA documents and FDA employee discovery… which would distract from the agency’s public-health responsibilities.” According to the Solicitor General, the government has thus “concluded that allowing this suit to proceed to discovery (and potentially a trial) would impinge on agency decision-making and discretion” and would not serve governmental interests.
The government’s brief could reduce the likelihood that the Supreme Court will review this case. As a result, uncertainty regarding the viability of the government knowledge defense to materiality in an implied false certification FCA action is likely to persist within federal courts until the Supreme Court has an opportunity to provide further guidance. And if the petition in this particular case is denied by the Court, any disappointment at that outcome for the petitioner is likely to be ameliorated by the government’s commitment to dismissing the case upon remand.
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