Monday, May 27, 2013

Recent Qui Tam/FCA Articles from Around the Web

Dear Readers:

I apologize for my absence the last few weeks. I am happy to be back writing articles. I have recently come across several blogs and bloggers who have written about a number of interesting qui tam and False Claims Act ("FCA") cases:

  • Generic drug maker filing a qui tam against a competitor in part based on the competitor’s fraudulent patent drug application.
Berger & Montague’s blog, “Latest Court Ruling Allows Groundbreaking Qui Tam Lawsuit Between Pharmaceutical Rivals to Proceed,” highlights an interesting qui tam filed by the generic drug manufacturer Amphastar against its competitor, Aventis Pharma. The qui tam alleges that Aventis fraudulently procured a patent on its drug, Lovenox, and that as a result of the false patent, Aventis overcharged Medicare and Medicaid for that drug. The Court has recently denied Aventis' Motion to Dismiss Amphastar’s Amended Complaint. See Pharmaceuticals v. Aventis Pharma, U.S.District Court, C.D. CA., EDCV-09-0023 MJG.
  • In an insurance coverage dispute over a qui tam settlement, the billing practices of a medical management services organization were not subject to coverage because they were not professional services covered by the professional liability policy.
Wiley Rein recently wrote about an interesting case, MSO Washington, Inc. v. RSUI Group, Inc., 2013 WL 1914482 (W.D. Wash.), which addressed insurance coverage for a qui tam settlement: “False Claims Act Qui Tam Action Over Billing Practices Does Not Involve Professional Services; Claim Is Barred by Fraud Exclusion.” In this case, the Court granted summary judgment against the insured, a medical management services organization, who sought coverage and a finding of bad faith against its insurer for failing to reimburse it for the qui tam settlement that it paid that related to the billing practices. The Court did not find coverage because “billing claims under the [False Claims Act] does not qualify as a professional service.” Additionally, the Court found that claims arising under the False Claims Act did not fall within the scope of the policy’s coverage for a “negligent act, error or omission” because a FCA claim must involve a “knowing presentation of what is known to be false.” The article includes a link to the Court’s decision.
  • Court dismisses False Claims Act Suit Related to Alleged Mortgage Fraud by Bank of America and Countrywide Financial.
Vinson & Elkins ("V&E") has a interesting article, "Court Forecloses Government’s Attempt to Use False Claims Act to Combat Mortgage Fraud," discussing the ruling by U.S. District Court Judge Jed Rakoff dismissing the False Claims Act claims brought in a qui tam in which the U.S. Attorney for the Southern District of New York has intervened. The case is U.S. ex rel O’Donnell v. Bank of America Corporation successor to Countrywide Financial Corp., 12-cv-1422, U.S. District Court, Southern District of New York. In this case, the government alleged that Countrywide used a “streamlined” loan origination model to increase the speed in which it originated and sold loans and that the use of that model resulted in “rampant instances of fraud and other serious loan defects.”  Many of those fraudulent loans, the government claims, were sold to Freddie Mac and Fannie Mae. As V&E points out, the government’s FCA claims were a stretch because the provision of the FCA under which it was proceeding was passed in 2009, after most of the loans at issue.  At the same time, the Court permitted the government to pursue its claims brought pursuant to the Financial Institutions Reform Recovery Enforcement Act (“FIRREA”). The Court has informed the parties that it will soon issue a detailed opinion in support of its ruling.

A. Brian Albritton
May 27, 2013 

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