Ninth Circuit Loosens the False Claims Act Original Source Requirement for Whistleblowers

In an en banc decision filed July 7, 2015, the Ninth Circuit reversed the district court’s original dismissal of consolidated qui tam suits brought by whistleblowers, alleging that their former employer, Kinetic Concepts, Inc., had fraudulently claimed reimbursements from Medicare. See US ex rel. Hartpence v. Kinetic Concepts, Inc. (12-55396) and US ex rel. Godecke v. Kinetic Concepts, Inc. (12-56117). The Court held that there are now only two requirements in order for a whistleblower to be an “original source” who may recover under the False Claims Act (FCA): (1) before filing the action, the whistleblower must voluntarily inform the
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Rethinking Expressly Unallowable Costs: What the Defense Contract Audit Agency’s Guidelines Mean for Federal Contractors

The auditors for the Defense Contract Audit Agency (DCAA) received additional guidance from DCAA further defining and focusing on the identification of expressly unallowable costs and the recovery of penalties for those unallowable costs. Federal contractors should consider this guidance carefully; what the DCAA instructs its auditors regarding unallowable costs will directly impact contractors that are the subject of the DCAA auditor’s review. On December 18, 2014, DCCA issued MRD 14-PAC-021(R), Audit Alert Distributing a Listing of Cost Principles That Identify Expressly Unallowable Costs.  The guidance contains over 32 pages of cost principle excerpts and directs the DCAA auditor to question
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“Request for Payment” Link Reinforced By Recent Federal Ruling

On January 7, 2015, a California federal judge granted an FCA defendant’s Motion to Dismiss premised on allegations that it failed to comply with Good Manufacturing Practices (“cGMPs”) regulations. See U.S. ex rel. Campie v. Gilead Sciences, Inc., No. 11-cv-00941 (N.D. Cal. Jan. 7, 2015). In this case, two former Gilead employees with quality control responsibilities filed a Qui Tam action against their previous employer alleging various violations of cGMP requirements. The relators asserted in their Complaint that they discovered and reported to Gilead officials numerous violations of Federal Food and Drug Administration (“FDA”) regulations, but that Gilead concealed those
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An Important Ninth Circuit Decision on Scope of Liability under the False Claims Act.

In 2014, the Ninth Circuit issued an important decision on the notion that good faith disputes and/or disputed interpretations of contract requirements should not be actionable as false claims. In Gonzalez v. Planned Parenthood, 759 F.3d 1112 (9th Cir. 2014), the relator alleged that the Medi-Cal billing manual required Planned Parenthood to bill Medi-Cal “at cost” for contraceptives; which the relator alleged meant at Planned Parenthood’s acquisition cost. When Planned Parenthood submitted bills to Medi-Cal it billed costs for contraceptives at its “usual and customary rates.” In 1997, the California Department of Healthcare Services, the governing body for Medi-Cal, informed
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