On July 5, 2019, the D.C. Circuit Court of Appeals affirmed dismissal of a qui tam lawsuit against several chemical manufacturers that set forth a unusual theory of liability: the relator alleged that the manufacturers violated the False Claims Act (FCA) by failing to self-report information about the dangers of their chemicals under the Environmental Protection Agency’s (EPA) voluntary Compliance Audit Program.

According to the relator, the manufacturers should have self-disclosed certain information to the EPA, who in turn would have assessed civil penalties under the Toxic Substances Control Act.  By failing to do so, the relator alleged that the defendant manufacturers concealed their obligations to transfer property (the risk information) and money (the unassessed penalties) to the government.


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The FCA continues to be the federal government’s primary civil enforcement tool for investigating allegations that healthcare providers or government contractors defrauded the federal government. In the coming weeks, we will take a closer look at recent legal developments involving the FCA. This week, we examine the requirement that the conduct alleged to have resulted in a false claim must be material to the government’s decision to pay that claim and how courts have evaluated this issue in recent cases.

FCA claims should fail when the regulations allegedly violated are immaterial to the government’s decision to pay a claim. Where the theory of FCA liability turns on compliance with statutes and regulations in the healthcare context, courts continue to distinguish between regulations that are conditions of participation in the federal healthcare program and regulations that are conditions of payment, holding only violations of the latter can underpin FCA liability. As the Sixth Circuit has explained, violations of condition of participation are best addressed through administrative sanctions, not the “extraordinary remedies” of the FCA.  See U.S. ex rel. Hobbs v. MedQuest Assocs., 711 F.3d 707 (6th Cir. 2013).


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The D.C. Circuit reversed the district court’s dismissal of a serial relator’s qui tam lawsuit under the FCA’s first-to-file bar in U.S. ex rel. Heath v. AT&T, Inc., finding that the relator’s two qui tam lawsuits targeted factually distinct types of frauds. The D.C. Circuit further determined that the relator’s qui tam lawsuit satisfied the pleading requirements of Rule 9(b).
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