FCA Alert : Lawyers & Attorneys for Whistleblower, False Claims Act & Qui Tam Defense : Kelley Drye & Warren LLP

If you are looking for an informative discussion about the Lauren Stevens case (which we reported on earlier here), I recommend ordering a copy of the ABA’s teleconference "After United States v. Lauren Stevens - The Potential for Criminal liability during Government investigations - What an in-house counsel needs to know," which was held earlier today. The panelists include The Honorable Roger W. Titus, the federal judge who presided over the Stevens case (and who dismissed the action mid-trial on a Rule 29 motion); Assistant United States Attorney Sara Bloom of the United States Attorney’s Office for the District of Massachusetts, who prosecuted the action; and Bill Hassler, a member of Stevens’ defense team. During the teleconference, a couple of interesting facts came up. First, the Stevens jurors applauded when Judge Titus informed them in private that he had dismissed the case and indicated that they would have gone the same way had the case gotten to them. Second, when asked whether it was true that the U.S. Attorney for the District of Maryland refused to sign the Stevens indictment, no panelist wished to comment, but all panelists agreed that the Maryland U.S. Attorney did not sign either of the two indictments against Stevens. For further commentary about the Stevens case, click here and here.

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To learn more about recent developments in False Claims Act litigation and the measures companies may take to reduce FCA exposure, please see the two publications below:

Compliance Programs:  An Answer to the Risks Posed by the False Claims Act, originally published in the August 2011 issue of Metropolitan Corporate Counsel.

Litigating False Claims Act Cases in the First Circuit Post-Blackstone and Amgen, originally  published in the August 29, 2011 issue of Bloomberg Law Reports.

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Relators, Mary Beth Pilecki-Simko and Tom Giunta, sued The Chubb Institute (“TCI”) and TCI’s corporate parents, The Chubb Corporation (“TCC”) and High-Tech Institute, Inc., alleging that TCI made misrepresentations to the Department of Education to obtain student financial aid in the form of loans and grants from the federal government.  The District Court dismissed the case with prejudice because relators failed to plead their claims with particularity as required by Rule 9(b) and denied relators’ motion for reconsideration.  The Third Circuit affirmed, holding that conclusory allegations of scienter fail to even satisfy the more lenient standard of Fed R. Civ. P. 8(a).  Additionally, the Third Circuit ordered relators to pay TCC attorneys’ fees and costs because relators included TCC as a party to the appeal but failed to challenge any of the District Court’s rulings regarding the sufficiency of the veil-piercing and successor liability allegations directed at TCC.  See United States ex rel. Pilecki-Simko v. The Chubb Institute, Case No. 10-3907, 2011 WL 3890975 (3rd Cir. Sept. 6, 2011).

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Mary Cafasso, a former employee of General Dynamics C4 Systems (“GDC4”), brought a False Claims Act case against her former employer after her job was eliminated following corporate restructuring.  The 9th Circuit affirmed the District Court’s dismissal of Cafasso’s claims and the granting of summary judgment in favor of GDC4 on its counterclaim for breach of a confidentiality agreement.  The Court held that, in addition to meeting the heightened pleading standard of Rule 9(b) of the Federal Rules of Civil Procedure, an FCA complaint must also “state a plausible claim for relief” pursuant to Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949-50 (2009).  See United States ex rel. Cafasso v. General Dynamics C4 Systems, Inc., 637 F.3d 1047 (9th Cir. 2011).

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