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Civil False Claims and Qui Tam Actions by jolinmilioncherie


									Civil False Claims
and Qui Tam Actions
Second Edition

by John T. Boese

The last six months of False Claims Act jurisprudence provide ample evi-
dence that this is a complex, rapidly changing area of law. Federal courts
continue to wrestle with the difficulties that arise when regulatory, contrac-
tual, and statutory violations are litigated as ‘‘fraud’’ under a low reckless
disregard standard. A Fifth Circuit panel was, for the second time in only
two years, reversed by the en banc court in a False Claims Act case with
potentially far-reaching implications. Another circuit court panel, confronted
with critically important constitutional questions, withdrew and completely
re-wrote its panel opinion after recognizing a number of flaws in its original
          These developments demonstrate that False Claims Act cases require
close attention to new and rapidly evolving issues that can have a dramatic
effect on the success of a litigation strategy. The bi-annual supplement to this
treatise is designed to assist FCA practitioners in recognizing and applying
those developments to their practices.

Highlights of the 2004-1 Supplement
The 2004-1 Supplement brings you up-to-date on the latest developments,
•     The ramifications of the Supreme Court’s ruling in Cook County v.
      United States ex rel. Chandler;
•     New case law regarding Due Process and Excessive Fines constitu-
      tional limits on FCA damages and penalties;

•         A review of recent efforts to increase congressional oversight of False
          Claims Act settlements;
•         Substantially revised and updated analysis of the falsity and intent
          elements of FCA liability;
•         The latest developments relating to express and implied false certifi-
          cations, and the materiality of allegedly false claims;
•         The application of ‘‘tainted claim’’ theories of liability, particularly in
          the context of FCA health care cases involving alleged kickback and
          self-referral violations;
•         Recent developments regarding the FCA’s complex public disclosure
          jurisdictional bar;
•         Analysis of case law regarding the effect of Federal Rule of Civil
          Procedure 9(b) on public disclosure and original source determina-
•         Completely revised and updated discussion of challenges to
          jurisdiction under the FCA’s first-to-file provision;
•         The federal income tax treatment of the relator’s share award and Sec-
          tion 3730(h) recoveries;
•         New appellate case law regarding the government’s authority to
          dismiss qui tam suits over the relator’s objection; and
•         The latest developments on the application of the FCA’s statute of
          limitations provisions.

The Table of Cases, Table of Statutes, and Index have been updated to reflect
all changes to the text.

11 / 03

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                                   2004 Aspen Publishers
From the Desk of
    John T. Boese

To Our Readers:
         As this supplement goes to press, Civil False Claims and Qui
Tam Actions passes a milestone: the tenth anniversary of the publi-
cation of the first edition in July 1993. That anniversary warrants some
short retrospection on the development of the law under the False
Claims Act over the last ten years and this book’s role in that devel-
         In 1993, the FCA was still, in many ways, an immature law.
Less than seven years had passed since the watershed FCA amend-
ments in October 1986. The major legal issues were still the consti-
tutionality of qui tam enforcement and retroactivity of the 1986
amendments, hardly burning issues today. All the prevailing cases had
held that states were subject to liability—an issue that the Supreme
Court resolved in 2002 but which was not even worthy of a mention
in the 1993 version of the book. The bedrock principle of materiality
was just beginning to be recognized, and the Department of Justice
adamantly denied any application of materiality to FCA liability, a
position the DOJ did not change until last year. Courts in 1993 were
hopelessly confused and in conflict over public disclosure and original
source. Some things never change.
         FCA recoveries were minuscule by today’s standards: In 1993,
total qui tam recoveries were $171 million, less than many single
settlements today. The Act, originally focused almost solely on the
defense industry, is now the key issue for health lawyers, oil and gas
lawyers, and others who had never heard the words ‘‘qui tam’’ in 1993.
Equally startling are the state qui tam laws. In 1993, there were two
state qui tam false claims laws, and almost no recoveries; today, there
are twelve, and every month brings evidence of their increasing scope
and usage.
         Which is not to say that these developments have always been
logical, useful, practical, or even constitutional. Luckily, many courts,
and particularly courts of appeal and the Supreme Court, have rec-
ognized the enormously punitive nature of the FCA and provided
some limits and protections.
         In short, the False Claims Act is not the law it was in 1993.
And, I am proud to say, this book has played some small role in that
legal development. It has been cited to date in 14 federal circuit court
decisions and 26 district court decisions. It is cited in virtually every
law journal article on the topic. It was cited by the Ninth Circuit for
the core of the decision in Hopper, and it was referred to as ‘‘the
leading authority’’ by the Sixth Circuit in Clausen. In many ways, the
book—quoted first by a key Maine district court in 1996 and later by
the Sixth Circuit—helped to prevent the ‘‘reverse false claims’’ pro-
vision from becoming the private enforcement mechanism of every
criminal and civil federal law. In short, the book has been far more
widely cited, and far more influential, than anyone could have hoped
or foreseen ten years ago.
         Very few law books celebrate a tenth anniversary. We look
forward to our twentieth.

                             JOHN T. BOESE
                             Fried, Frank, Harris, Shriver & Jacobson
                             August 2003

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