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Government intervenes in Allison Engine Case to help appeal District Court Ruling

by Nolan and Auerbach on January 12, 2010

The Department of Justice (DOJ) intervened in Allison Engine Co. v. United States ex rel Sanders , a qui tam case pending in the U.S. District Court for the Southern District of Ohio, and which had already made one trip up to the U.S. Supreme Court. .”( In 2008, the Supreme Court agreed that there was no “presentment” requirement in Section 3729(a)(2), but held that a Defendant must be shown to have made a false statement or record for the purpose of getting a false claim paid or approved by the Government. Allison Engine Co. v. United States ex rel Sanders, 128 S.Ct. 2123 (2008).

One of the issues in the case is a key retroactivity provision of the False Claims Act, as amended by the Fraud Enforcement and Recovery Act of 2009 (FERA) (signed into law May 20, 2009). In an opinion issued in October 2009, the District Court essentially held that because FERA’s amendments in Section 3729(a) create liability for conduct that was not previously actionable, they are unconstitutional on grounds they violate the Ex Post Facto clause. The Court also found that the wording of the retroactivity provision was directed to “claims” pending as of the retroactivity date, not “cases,” so that provision did not apply to the claims at issue in Allison, which had been submitted 15 or more years earlier.

This action by DOJ was taken to support Relators’ “Motion To Certify . . . For Interlocutory Appeal” filed on the same date. Both motions argue that the District Court’s Order involves a controlling issue of law, that there are substantial grounds for differences of opinion regarding the Order and that an immediate appeal would materially advance the litigation. If the motions are granted, the Sixth Circuit Court of Appeals will be asked to decide both the constitutionality of the retroactivity provision of FERA and whether that provision applies to “claims” or “cases” that are pending on the retroactivity date, June 7, 2008. The case is important because unless DOJ and the Relator succeed in overturning the District Court, an important False Claims Act (“FCA”) provision as amended by FERA will not apply retroactively and its application will be construed in a manner very limited to plaintiff’s. It is likely that if the Sixth Circuit hears the appeal, that it will at least hold that the retroactivity provision was directed to “cases” not claims.

For more information about qui tam law and health care fraud, contact Nolan and Auerbach, PA.

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President Announces Support for Important False Claims Act Amendments

by Nolan and Auerbach on April 22, 2009

The Obama Administration strongly supports enactment of S. 386 (the Fraud Enforcement and Recovery Act of 2009), according to a statement released April 20, 2009, by the Executive Office of the President. The White House’s recent endorsement of this legislation which, among other things, restores the original power of the False Claims Act, comes with broad support from law enforcement and the Department of Justice, according to an April 22 press release by Senator Patrick Leahy (D-Vt.), who introduced the Fraud Enforcement and Recovery Act (with Senators Chuck Grassley (R-Iowa) and Ted Kaufman (D-Del.) on February 5.

To read the press release and the senator’s statement, go to http://leahy.senate.gov/press/200904/042209a.html.

For more information about qui tam law and health care fraud, contact Nolan and Auerbach, PA.

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The Time is Now for Fraud Enforcement and Recovery Act, Grassley says

by Nolan and Auerbach on April 21, 2009

As he debates on the senate floor on a bill that he cosponsored, the Fraud Enforcement and Recovery Act, Senator Chuck Grassley of Iowa released a statement reminding Americans that these fragile economic times are ideal for passing a bill aimed at empowering whistleblowers to help recover and stop health care and other types of fraud. The legislation, addressing among other things weaknesses in the False Claims Act (FCA), is necessary to encourage individuals in qui-tam type lawsuits to pursue cases that the Justice Department might or might not pursue.

Grassley says in his April 20, 2009, statement that special interests are surfacing, who don’t want to encourage whistleblowers to report wrongdoing and are looking to squelch the bill.

The point: We can’t keep spending, as a nation, without taking steps to combat fraud and abuse. The Fraud Enforcement and Recovery Act not only ensures that law enforcement officials and prosecutors have the tools and resources necessary to enforce our laws, but it also amends the civil False Claims Act to ensure that taxpayer money lost to fraud, waste or abuse can be recovered.

The legislation, most importantly, will ensure that the law adheres to the FCA’s original intent.

“Specifically, these amendments address a loophole that was created in the FCA by the Supreme Court decision in Allison Engine which could be used by fraudfeasors to evade liability by hiring subcontractors to perform work on government contracts.  Some defendants are already filing briefs in court seeking to have FCA cases dismissed based upon this decision, and it needs to be addressed to protect taxpayer dollars,” Grassley writes.

“We need to act now to stomp out new claims of fraud to send a message that the American taxpayers won’t be taken for a ride.”

To read the entire statement, go to: http://grassley.senate.gov/news/Article.cfm?customel_dataPageID_1502=20209.

For more information about qui tam law and health care fraud, contact Nolan and Auerbach, PA .

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Watchdog Groups Call on President to Support Stronger Whistleblower Protections

by Nolan and Auerbach on April 3, 2009

Our nation’s watchdog organizations, including the American Civil Liberties Union, American Federation of Government Employees, National Whistleblower Center and Project on Government Oversight, sent a letter to President Obama on April 1, 2009 urging that the government fulfill his campaign and transition policy commitments to strengthen whistleblower rights.

In the letter, the coalition asks the president to strongly endorse legislation that would protect from retaliation of federal employees who expose waste, fraud, abuse, suppression of federal research, and threats to public health and safety, and give them access to jury trials. The legislation would also direct federal government agency heads to institute “no-retaliation” policies for employees.

The groups are concerned that a signing statement issued by the president on March 11, attached to H.R. 1105, the omnibus spending bill, contradicts those earlier steps and could have a chilling affect on lawful whistleblowing disclosures, according to a press release about the letter on Project on Government Oversight’s website.

To read the letter, click here. For a copy of the POGO press release, go to http://www.pogo.org/pogo-files/alerts/whistleblower-issues/wi-wp-20090401.html.

For more information about qui tam law, whisleblowers and health care fraud, contact Nolan and Auerbach, PA.

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