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qui tam

Politics roundup

by Walter Olson on December 3, 2014

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[cross-posted and slightly adapted from Cato at Liberty]

I’ve got a guest post up at Reason on how bounty-seeking informants are bypassing the Internal Revenue Service tipster-reward program in favor of selected state False Claims Acts, such as New York’s, which enable richer recoveries for disloyal employees and others who charge defendants with underpaying taxes. Excerpt:

Will the spread of a culture of informants sow distrust and disloyalty in the workplace, while encouraging dissident executives and their lawyers to shake settlements out of risk- and publicity-averse targets by seizing on doubtful, gray-area legal theories? That’s part of the game too. Lately hedge funds and litigation finance firms have moved in to bankroll the filing of likely “whistleblower” cases. …

…by getting pro-plaintiff laws through the legislature in just a few states—New York liberalized its law four years ago—advocates can set the stage for a nationwide informant push.

In Illinois, a single Chicago lawyer was reported in 2012 to have used that state’s whistleblower law to file at least 238 lawsuits against retailers, pocketing millions in settlements, over alleged failure to charge sales tax on shipping-and-handling.

Whole thing here.

P.S. More recent coverage of the runaway False Claims Act train: “Repeat whistleblowers reap millions of dollars in false-claims suits” [ABA Journal] David Ogden testifies for the U.S. Chamber on what needs to happen with the federal FCA [House Judiciary] “UK Commission Takes A Pass On U.S.-Style Whistleblower Bounties” [Daniel Fisher, Forbes]

Pharmaceutical roundup

by Walter Olson on June 30, 2014

  • “Report: Government warnings about antidepressants may have led to more suicide attempts” [Washington Post]
  • Celebrity doc known for touting diet-health snake oil told off by Senators known for touting socio-economic snake oil [NBC, Business Week]
  • Physicians’ prescription of drugs off-label may “seem odd to the uninitiated, but it is called the practice of medicine, and there is absolutely nothing wrong with [it].” [Steven Boranian/D&DLaw, Sidley, Steve McConnell/D&DLaw (False Claims Act angle, with much background on that law generally)]
  • “23andMe Closer to FDA Approval” [Matthew Feeney/Cato, earlier]
  • FDA guidance could foreclose most use of tweets, Google ads and other character-limited vehicles in pharmaceutical promotion [Jeffrey Wasserstein/FDA Law Blog, Elizabeth N. Brown/Reason]
  • Average wholesale price (AWP) litigation: “Pennsylvania High Court Joins Judicial Stampede That’s Trampling State Attorneys-General/Plaintiffs’ Bar Alliances” [WLF, Beck, earlier]
  • California infant’s death opens window on lucrative (for some prescribers) intersection of workers’ comp and compounded pharmaceuticals [Southern California Public Radio]

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June 26 roundup

by Walter Olson on June 26, 2014

  • Court slaps “nightmare” Sacramento litigant Raj Singh with sanctions [KXTV, auto-plays, earlier]
  • Child overprotection: “I don’t think they even drink liquid soap, the gateway drug for sunscreen.” [Lenore Skenazy, Free-Range Kids]
  • Three-fer: personal injury, qui tam lawsuits against guardrail maker coordinated by disappointed patent litigant [Insurance Journal]
  • Donald Trump hit with sanctions in lawsuit for not disclosing insurance policy [South Florida Business Journal, our Trump coverage]
  • On AirBnB and sharing services, it’s lefty economist Dean Baker (con) vs. David Henderson (pro). Go David! [EconLib] London black cabs seek level playing field with Uber. Good idea, let’s deregulate ‘em both [Matthew Feeney, Cato]
  • Waffle House chairman claims attorneys committed extortion in ex-housekeeper’s sex lawsuit [Atlanta Journal-Constitution]
  • “Tenth Circuit Says No to ‘Death by Discovery’ in Dispute over Agreement to Arbitrate in Class Action” [Lars Fuller, Class Action Blawg on Howard v. Ferrellgas Partners LP]

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The Chamber has been tracking this major engine of contingency-fee litigation as it jumps from federal practice to the realm of similar state laws vigorously lobbied for by the plaintiff’s bar. I have an opinion piece in the Baltimore Business Journal on the Maryland version, which 1) nearly passed this year, 2) would go further than the federal law in some vital respects, and 3) has become an issue in a closely watched primary contest.

May 30 roundup

by Walter Olson on May 30, 2014

Daniel Fisher at Forbes gives the manufacturer’s side of the story behind a massive whistleblower suit seeking billions from J.M. Eagle over its supply of plastic pipe to public water and utility systems. Qui tam lawyers Phillips & Cohen give their side of the story here. Here’s Fisher on the law firm’s success:

The firm was founded by John Phillips, who as a congressional staffer helped draft a 1986 law that made it easier to pursue whistleblower cases. He subsequently earned enough to become a major Democratic Party donor and now serves as the U.S. Ambassador to Italy.

Update: Phillips & Cohen writes to say that the above quotation “contains an error: John Phillips was never a congressional staffer.”

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Maryland roundup

by Walter Olson on May 3, 2014

  • Correctional Officers Bill of Rights (COBR) of 2011, developing out of AFSCME efforts to defend prison guards in western Maryland, and role it played in Baltimore jail scandal. Vital reading [Charles Lane, City Journal, Sasha Volokh; earlier; related Kevin Williamson on incident at NYC's Riker's Island in which mentally ill inmate was permitted to roast to death, responsible officer drawing 30-day suspension]
  • Narrowly defeated effort to enact state False Claims Act becomes issue in Senate GOP primary [Frederick News-Post, earlier here, here]
  • Citing federal guidelines, Howard County schools restrict special-event food [Ellicott City Patch]
  • Judge rebuffs lawsuit by Montgomery County police union seeking to invalidate legislative measures inconsistent with its contract [WaPo] County council race “a ‘battle royale’ between the government employee and school system unions” [Seventh State]
  • “Maryland Puts Up Roadblocks to Online Ed” which just happens to protect the state’s UMUC (University of Maryland University College) [The American Interest, Arnold Kling]
  • Will Montgomery County finally get out of the liquor distribution business? [Bethesda magazine]
  • And speaking of MoCo monopolies, its taxi near-cartel needs to go: “Uber provides a better service even without the regulation” [David Lublin, The Seventh State]

Maryland roundup

by Walter Olson on April 6, 2014

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Maryland roundup

by Walter Olson on March 29, 2014

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Following its loss in a California trial, J.M. Eagle, a large manufacturer of industrial pipe, is pushing back hard against its qui tam legal adversaries. [Daniel Fisher/Forbes, Plastics News] Earlier on the False Claims Act here and here.

The docket keeps expanding and Legal NewsLine is out with a story quoting me and others:

…“In recent years, you’ve seen some pushback from the business community, but given the record of congressional expansion, they’ll be doing pretty well if they can just keep Congress from expanding it further,” said Olson, who also founded and still runs the popular blog Overlawyered.com. …

The Department of Justice announced in December that it secured $3.8 billion in settlements and judgments from civil cases involving fraud against the government in 2013. According to the office, the amount represents the second largest annual recovery of its type in history and brings total recoveries under the False Claims Act to $17 billion since January 2009….

Olson explains that the business community’s growing discontent over the False Claims Act includes concerns over incentives for whistleblowers. In many cases, the whistleblower either participated in the misconduct, or knew about the misconduct but failed to inform their company.

He adds that in worse cases, whistleblowers intentionally ignored misconduct so damages would pile up and result in a “better bounty.”

“These are all incentives that are at odds with the wish that employees be ethical and loyal to their employers, and are also sometimes at odds with the object of minimizing fraud,” Olson said.

Much more, including more quotes from me, at the link; related Peter Hutt interview piece.

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February 3 roundup

by Walter Olson on February 3, 2014

  • “Class counsel in Facebook ‘Sponsored Stories’ case seeks to impose $32,000 appeal bond on class-action objectors” [Public Citizen, Center for Class Action Fairness]
  • The best piece on bar fight litigation I’ve ever read [Burt Likko, Ordinary Gentlemen]
  • Casino mogul Adelson campaigns to suppress online gaming; is your state attorney general among those who’ve signed on? [PPA, The Hill]
  • Foreign Corrupt Practices Act (FCPA): “Anyone who values the rule of law should be alarmed by the ADM enforcement action.” [Mike Koehler]
  • New FMCSA rules on length of workweek make life difficult for long-haul truckers [Betsy Morris, WSJ via Lee Habeeb and Mike Leven, National Review and more]
  • “It takes a remarkable amount of nerve to cobble together publicly available facts, claim you’ve uncovered a fraud on the government, and file a lawsuit from which you could earn substantial financial benefits.” [Richard Samp, WLF] Whistleblower-law lobby tries to get its business model established in West Virginia [W.V. Record]
  • Pittsburgh readers, hope to see you tomorrow at Duquesne [law school Federalist Society]

January 10 roundup

by Walter Olson on January 10, 2014

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Much more rewarding to act as a government informant than to help the employer address the problem: “Allegations of wrongdoing within a company often surface in the compliance department, which often is involved in internal investigations and receives employee complaints. Like other employees, compliance staff can under various statutes submit information on potential wrongdoing for whistleblower awards or claim retaliation for raising concerns about alleged wrongdoing.” [WSJ via CompliancEX]

If you’re the federal government, one thing it’s good for is to turn a losing claim — losing because filed too late — into a possible winner. It works through something called the Wartime Suspension of Limitations Act (WSLA), enacted by Congress in 1942 as the U.S. entered World War Two, and I explain it in this guest column for Jurist.

Discrimination law roundup

by Walter Olson on January 24, 2013

  • After being slapped down by courts, EEOC concentrates on filing fewer but bigger cases [Sue Reisinger, Corporate Counsel] EEOC scores in Cintas, UPS cases [Legal Times]
  • SCOTUS grants certiorari in retaliation mixed motives case [University of Texas Southwestern Medical Center v. Nassar, SCOTUSBlog via Marcia McCormick, Workplace Prof]
  • False Claims Act could be potent weapon for discrimination plaintiffs [Texas Law Review student note by Ralph Mayrell, PDF via Bagenstos]
  • Religious liberty compatible with gay rights so long as ambitions of anti-discrimination law aren’t allowed to run wild [Eugene Volokh as part of UCLA conference on Roe's 40th and Lawrence's 10th anniversary] Case of Ocean Grove, N.J. pavilion is still regularly cited as infringement on church autonomy, but it’s not that simple, since it hinges on untypical “public use” covenant of property in question [Box Turtle Bulletin]
  • For a more genuine menace to religious liberty, however, watch out for the notion of taking the Bob Jones University precedent — in which courts upheld the stripping of an educational institution’s tax exemption due to its backward racial views — and extending it into a weapon for denying tax exemption to the much broader class of institutions said to contravene “fundamental public policy” [Caroline Maia Corbin, Concurring Opinions]
  • More on the deaf lifeguard case [Jon Hyman, earlier]
  • New York Gov. Cuomo seeks one-way fee awards in state bias cases [Reuters]

The WSJ editors wonder to what extent the feds, who have been pursuing a campaign lately to bring the colleges to heel, are coordinating with the private False Claims Act bar. Meanwhile, Rogier at Nobody’s Business spots some ironies in the Justice Department’s suit against Education Management Corp.: “pushing low- to medium-value degrees is something that law schools — including some of the best in the country — do habitually, every day. All of higher education does, with no exceptions I’m aware of.”

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