What Constitutes Fraud

gavelThe False Claims Act is all about addressing fraud resulting in financial loss to the government.  But the statute does not actually define what constitutes this essential element.  Instead, it has been up to the courts to decide how far to extend the statute’s ultimate reach.  This has led to a divergence of views with some courts taking a narrow and more formalistic approach to the statute’s coverage, and others being more expansive to get at all types of fraud against the government regardless of the form.

Here are some of the more recent court decisions on the scope of what constitutes fraud under the statute.

March 19, 2015

First Circuit Joins Growing Number Of Courts Taking More Reasoned View Of What Constitutes Fraud Under The False Claims Act

By Gordon Schnell

The False Claims Act is all about addressing fraud resulting in financial loss to the government.  But the statute does not actually define what constitutes this essential element.  Instead, it has been up to the courts to decide how far to extend the statute’s ultimate reach.  This has led to a divergence of views with some courts taking a narrow and more formalistic approach to the statute’s coverage, and others being more expansive to get at all types of fraud against the government regardless of the form.  In its United States ex rel. Escobar v. Universal Health Services decision issued Tuesday, the First Circuit made a clear pronouncement it was joining the latter camp of courts.
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January 15, 2015

Fourth Circuit Embraces Expansive View of False Claims Act Fraud and Materiality In Triple Canopy Ruling

By Gordon Schnell

Another circuit court decision giving a properly expansive view of what it takes to make out a fraud claim under the False Claims Act.  This one from the Fourth Circuit in United States v. Triple Canopy, Inc..  Before the Court were two key questions.  One, whether a defense contractor’s claim for payment still could be false when there was nothing false on the face of the invoice.  And two, whether a false statement or record still could be material to the government’s decision to pay when the government did not rely on or even see the statement or record.  The Fourth Circuit answered with a resounding “Yes” to both questions.
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September 4, 2014

Eighth Circuit Clarifies Position on Pleading Fraud Under the False Claims Act

By Jason Enzler

The Eighth Circuit has become the latest appellate court to join the fray over what is required of False Claims Act complaints.  Last Friday, in U.S. ex rel. Thayer v. Planned Parenthood of the Heartland, the Court held that a qui tam relator need not plead a representative sample of a false claim in order to survive a motion to dismiss the complaint.  In doing so, the Eighth Circuit sided with what appears to be the majority of circuit courts in taking a less restrictive view of what a relator must allege in order to meet Rule 9(b)’s pleading requirements and stay in court.
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June 12, 2014

Third Circuit Deepens Divide on What Courts Require of Qui Tam Complaints

By Jason Enzler

Last Friday, the Court of Appeals for the Third Circuit held that it would join three other circuit courts in rejecting a more restrictive view of what qui tam relators must allege in order to survive challenges to their False Claims Act complaints. In doing so, the Third Circuit’s decision in Foglia, ex rel. U.S. v. Renal Ventures Management, LLC has deepened the split forming among the circuit courts, with four circuit courts taking a more restrictive view on the minimum facts whistleblowers must state in their complaints.
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