Difference between revisions of "False Claims Act"

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A September 2018 Third Circuit decision in ''Pharamerica'' clarifies that the FCA’s public disclosure bar is not triggered when a relator relies upon non-public information to make sense of publicly available information, where the public information — standing alone — could not have reasonably or plausibly supported an inference that the fraud was in fact occurring.  Similarly, the D.C. Circuit has held that the public disclosure bar is not triggered where the relator “supplied the missing link between the public information and the alleged fraud” by “rel[ying] on nonpublic information to interpret each [publicly disclosed] contract,” and where “[w]ithout [relator’s] nonpublic sources . . . there was insufficient [public] information to conclude” that the defendant actually engaged in the alleged fraud.  ''United States ex rel. Shea v. Cellco P’ship'', 863 F.3d 923, 935 (D.C. Cir. 2017).
A September 2018 Third Circuit decision in ''Pharamerica'' clarifies that the FCA’s public disclosure bar is not triggered when a relator relies upon non-public information to make sense of publicly available information, where the public information — standing alone — could not have reasonably or plausibly supported an inference that the fraud was in fact occurring.  Similarly, the D.C. Circuit has held that the public disclosure bar is not triggered where the relator “supplied the missing link between the public information and the alleged fraud” by “rel[ying] on nonpublic information to interpret each [publicly disclosed] contract,” and where “[w]ithout [relator’s] nonpublic sources . . . there was insufficient [public] information to conclude” that the defendant actually engaged in the alleged fraud.  ''United States ex rel. Shea v. Cellco P’ship'', 863 F.3d 923, 935 (D.C. Cir. 2017).


='''Scienter Under the False Claims Act Does Not Require Proof of Specific Intent'''=
='''Scienter Under the FCA Does Not Require Proof of Specific Intent'''=
An ordinary breach of a government contract caused by an honest mistake ordinarily does not give rise to False Claims Act liability.  To prevail in a ''qui tam'' action, a ''relator must prove the defendant acted knowingly, i.e., that the defendant'' “(i) has actual knowledge of the information; (ii) acts in deliberate ignorance of the truth or falsity of the information; or (iii) acts in reckless disregard of the truth or falsity of the information.”  31 U.S.C. § 3729(b).  But '''proof of specific intent to defraud is not required.'''  Therefore, a person who acts in deliberate ignorance or reckless disregard of a false or fraudulent claim can be liable under the False Claims Act.
An ordinary breach of a government contract caused by an honest mistake ordinarily does not give rise to False Claims Act liability.  To prevail in a ''qui tam'' action, a ''relator must prove the defendant acted knowingly, i.e., that the defendant'' “(i) has actual knowledge of the information; (ii) acts in deliberate ignorance of the truth or falsity of the information; or (iii) acts in reckless disregard of the truth or falsity of the information.”  31 U.S.C. § 3729(b).  But '''proof of specific intent to defraud is not required.'''  Therefore, a person who acts in deliberate ignorance or reckless disregard of a false or fraudulent claim can be liable under the False Claims Act.