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False Claims Act

Wherever Government dollars are spent – whether for national defense needs, to implement civilian agency programs, to acquire the goods and services consumed on a daily basis by the Government in the conduct of its affairs, to underwrite or subsidize transportation and infrastructure improvements, or to provide health care for the citizenry – scrutiny follows.  The False Claims Act, 31 U.S.C. §3729 et. seq., has become the primary weapon in the federal government’s antifraud arsenal and it has proven to be a potent weapon.  In 2014, the United States recovered a record $5.7 billion in settlements and judgments in False Claims Act cases, including:

  • $3.1 billion from banks and other financial institutions involved in making false claims for federally insured mortgages and loans.
  • $2.3 billion from the health care industry for false claims made against federal health care programs, such as Medicare and Medicaid. 

In addition to the federal arsenal, 29 states and the District of Columbia have false claims act statutes, which they use independently of and in cooperation with the federal government to recover state dollars lost to alleged fraud.  False Claims Act actions have been successfully brought against companies in virtually every segment of the economy, including defense contractors, health care providers, pharmaceutical and medical device manufacturers, banks and similar lending institutions and commercial companies that sell goods and services to governments.

Sheppard Mullin’s experience defending False Claims Act investigations and litigation is broad and deep.  Our False Claims Act practice combines attorneys that specialize in the substantive disciplines in which false claims cases arise, such as Government contracts, health care, financial services and technology, with experienced defense attorneys, the majority of whom are former prosecutors.  Together, they seamlessly integrate their statutory, regulatory, and industry expertise with deep knowledge of how government investigations are conducted and how they can be defended against.  Our attorneys' underlying substantive knowledge and experience enables us to work through audit and investigative processes with our clients and Government officials to ensure that the correct regulatory requirements are applied, narrow issues of legitimate dispute, and when possible, resolve disputes short of litigation.  When settlement proves unavailing, our attorneys have a breadth and depth of experience in defending fraud-related claims in court that rivals that of any firm in the country. 

Collectively, our attorneys have hundreds of years’ experience defending state and federal False Claims Act investigations and litigation.  We have defended state and federal False Claims Act investigations and litigations on behalf of government contractors, health care providers, manufacturers of pharmaceuticals and medical devices, commercial companies and financial institutions.  We have defended FCA investigations and litigations nationwide, including in Arizona, California, the District of Columbia, Florida, Massachusetts, Minnesota, New Mexico, Nevada, New York, Ohio, Tennessee, and Virginia.  We also have extensive experience defending criminal and administrative investigations and litigation, which often accompany False Claims Act Investigations.  Our experience includes:

  • Responding to civil, criminal, and administrative investigative subpoenas
  • Civil Investigative Demands (or "CIDs")
  • False Claims Act litigation – including federally initiated and qui tam actions – throughout the country
  • Jury and bench trials of False Claims Act cases
  • Grand jury investigations
  • Search warrants
  • Suspension and debarment proceedings

Representative Matters include:

  • Defense verdict for Fortune 100 defense contractor in a FCA case that was recognized by the National Law Journal as one of the Top 10 Defense Verdicts that year.
  • Successful trial defense of contractor in FCA case alleging fraud regarding contracts with the Coalition Provisional Authority in Iraq.  Obtained summary judgment on behalf of Fortune 500 government contractor in a FCA case that sought more than $2.4 billion in damages.
  • Obtained summary judgment in an FCA case involving alleged sales of computer products that were not compliant with the Trade Agreements Act, which was affirmed on appeal by the U.S. Court of Appeals for the District of Columbia Circuit. Successful defense of state FCA investigations of pharmaceutical manufacturer’s sales and marketing practices.
  • Negotiated cost of litigation FCA settlement on behalf of medical device manufacturer in connection with allegedly fraudulent rebates.

Some of our most effective work, however, is on cases that never become public.  Our attorneys work proactively with clients to develop and update compliance programs to detect and prevent problems before the threat of litigation even arises.  Our attorneys can also audit compliance programs to identify actual or potential problems at a point in time when reasonable prophylactic, corrective, or curative steps can be taken.