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Fraud & Business Torts

Universal Health Services v. U.S. ex rel. Escobar - Post-Decision SCOTUScast

SCOTUScast 7-12-16 featuring Richard A. Samp
Richard A. Samp July 12, 2016

On June 16, 2016, the Supreme Court decided Universal Health Services v. United States ex rel. Escobar. This case involves the federal False Claims Act, which allows a private party to bring a “qui tam” action alleging that the defendant defrauded the federal government. In a “qui tam” action the government remains the actual plaintiff, but the private party--referred to as the “Relator”--typically litigates the case for the government’s benefit and receives a specified share of any recovery.  

Here, Relators alleged that their daughter--who died of a seizure in 2009--was treated by various unlicensed and unsupervised staff at Arbour Counseling Services, a facility owned by Universal Health Services, in violation of Massachusetts regulations. They argued that Arbour's alleged noncompliance with various supervision and licensing requirements rendered its reimbursement claims submitted to the state Medicaid agency actionably false under both the federal and Massachusetts False Claims Acts. The district court dismissed the complaint for failure to state a claim, holding that regulatory noncompliance alone was inadequate to render Arbour’s reimbursement claims “false.” The U.S. Court of Appeals for the First Circuit, however, reversed that judgment and remanded the case. Compliance with the regulations at issue, the court concluded, was a condition of government reimbursement to Arbour. By submitting reimbursement claims, the Court reasoned, Arbour implicitly certified compliance with that condition. Thus, by pleading regulatory noncompliance Relators adequately pleaded falsity.

By a vote of 8-0, the Supreme Court vacated the judgment of the First Circuit and remanded the case for further proceedings. In an opinion delivered by Justice Thomas, a unanimous Court agreed that the implied false certification theory can be a basis for liability under the False Claims Act--when a defendant submitting a claim makes specific representations about the goods or services provided, but fails to disclose non-compliance with material statutory, regulatory, or contractual requirements that make those representations misleading with respect to those goods or services. But liability under the False Claims Act for failing to disclose violations of legal requirements, the Court explained, does not turn upon whether those requirements were expressly designated as conditions of payment. What matters is not the label the Government attaches to a requirement, but whether the defendant knowingly violated a requirement that the defendant knows is material to the Government’s payment decision. 

To discuss the case, we have Richard A. Samp, who is Chief Counsel at Washington Legal Foundation.

RJR Nabisco, Inc. v. The European Community - Post-Decision SCOTUScast

SCOTUScast 7-12-16 featuring Cory Andrews
Cory L. Andrews July 12, 2016

On June 20, 2016, the Supreme Court decided RJR Nabisco, Inc. v. The European Community. The European Community and 26 of its member states sued RJR Nabisco (RJR) in the U.S. District Court for the Eastern District of New York, alleging that RJR conducted a global money-laundering enterprise in violation of several laws, including the Racketeer Influenced and Corrupt Organizations Act (RICO), a federal statute. The alleged RICO enterprise involved the importation of illegal drugs into European countries by Colombian and Russian criminal organizations, with RJR helping to launder their drug money through a cigarette import-purchase scheme. Applying a presumption against extraterritorial application of federal law, the district court dismissed The European Community’s civil RICO claim. The U.S. Court of Appeals for the Second Circuit vacated that judgment and reinstated the RICO claim, however, concluding that various alleged predicates for RICO liability had been intended by Congress to apply extraterritorially, and that other offenses asserted sufficiently important domestic activity to come within RICO’s coverage. RJR subsequently obtained a writ of certiorari from the U.S. Supreme Court on the following question: whether, or to what extent, RICO applies extraterritorially.  

By a vote of 4-3, the Supreme Court reversed the judgment of the Second Circuit and remanded the case. Justice Alito delivered the opinion of the Court, which determined that the question of RICO’s extraterritorial application really divides into two questions: (1) Do RICO’s substantive prohibitions, contained in §1962, apply to conduct that occurs in foreign countries? (2) Does RICO’s private right of action, contained in §1964(c), apply to injuries that are suffered in foreign countries? On the first question, the Court held that under the facts asserted in this case, RICO’s prohibitions did apply extraterritorially. On the second question, however, the Court held that §1964(c)’s private right of action did not overcome the presumption against extraterritoriality, and thus a private RICO plaintiff must allege and prove a domestic injury. Because in this case an earlier stipulation had resulted in waiver and dismissal of respondents’ domestic claims, the Court explained, their remaining RICO damages claims rest entirely on injury suffered abroad and must be dismissed.

Justice Alito’s majority opinion was joined in full by the Chief Justice and Justices Kennedy and Thomas, and as to Parts I, II, and III by Justices Ginsburg, Breyer, and Kagan. Justice Ginsburg filed an opinion concurring in part, dissenting in part, and dissenting from the judgment, in which Justices Breyer and Kagan joined. Justice Breyer filed an opinion concurring in part, dissenting in part, and dissenting from the judgment. Justice Sotomayor took no part in the consideration or decision of the case.

To discuss the case, we have Cory L. Andrews, who is senior litigation counsel for the Washington Legal Foundation.

Sheriff v. Gillie - Post-Decision SCOTUScast

SCOTUScast 6-1-16 featuring Jennifer Mascott
Jennifer L. Mascott June 01, 2016

On May 16, 2016, the Supreme Court decided Sheriff v. Gillie. This case involves litigation between debtors to Ohio institutions and special counsel who sought to collect money owed to the institutions. Two questions were before the Supreme Court: (1) Do special counsel appointed by Ohio’s Attorney General qualify as “state officers” exempt from the Fair Debt Collection Practices Act’s (FDCPA) governance? (2) Is special counsel’s use of the Attorney General’s letterhead a false or misleading representation proscribed by FDCPA §1692e? The U.S. Court of Appeals for the Sixth Circuit held that special counsel were independent contractors who could not claim an FDCPA exemption and remanded the case for trial on the deceptiveness issue.

By a vote of 8-0, the Supreme Court reversed the judgment of the Sixth Circuit and remanded the case. Writing for a unanimous Court, Justice Ginsburg explained that--even assuming for the sake of argument special counsel do not rank as “state officers”--their use of the Attorney General’s letterhead did not offend §1692e. Not fairly described as “false” or “misleading,” the use of the letterhead accurately conveyed that special counsel, in seeking to collect debts owed to the State, do so on behalf of, and as instructed by the Attorney General. 

To discuss the case, we have Jennifer L. Mascott, who is an Olin/Searle Fellow in Law at Georgetown University Law Center.

Governmental Power versus Free Speech? - Podcast

Practice Groups Podcast
John S. Baker, Jr., C. Boyden Gray, Scott Pruitt May 16, 2016

Several state attorneys general have banded together to investigate what ExxonMobil did and did not know about global warming over the past decades.  A subpoena issued by the attorney general of the U.S. Virgin Islands seeks Exxon records dating back to 1977, including communications with some 90 private organizations and dozens of private individuals.  Other subpoenas have been issued to private organizations.  Our panel of experts discussed the merits of the investigation, how widely it might range, and its implications.

Featuring:

  • Prof. John S. Baker, Jr., Visiting Professor, Georgetown University Law Center
  • Hon. C. Boyden Gray, Founding Partner, Boyden Gray & Associates
  • Hon. Scott Pruitt, Attorney General, State of Oklahoma

RJR Nabisco, Inc. v. The European Community - Post-Argument SCOTUScast

SCOTUScast 4-20-16 featuring Richard A. Samp
Richard A. Samp April 20, 2016

On March 21, 2016, the Supreme Court heard oral argument in RJR Nabisco, Inc. v. The European Community. The European Community and 26 of its member states sued RJR Nabisco (RJR) in the U.S. District Court for the Eastern District of New York, alleging that RJR conducted a global money-laundering enterprise in violation of several laws, including the Racketeer Influenced and Corrupt Organizations Act (RICO), a federal statute. The alleged RICO enterprise involved the importation of illegal drugs into European countries by Colombian and Russian criminal organizations, with RJR helping to launder their drug money through a cigarette import-purchase scheme. Applying a presumption against extraterritorial application of federal law, the district court dismissed The European Community’s civil RICO claim. The U.S. Court of Appeals for the Second Circuit vacated that judgment and reinstated the RICO claim, however, concluding that various alleged predicates for RICO liability had been intended by Congress to apply extraterritorially and that other offenses asserted sufficiently important domestic activity to come within RICO’s coverage.

The U.S. Supreme Court granted RJR’s subsequent petition for writ of certiorari on the following question: whether, or to what extent, RICO applies extraterritorially.

To discuss the case, we have Richard A. Samp, who is Chief Counsel at Washington Legal Foundation.