- 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]
Posts tagged as:
qui tam
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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Along with the Cato Institute’s Center for Constitutional Studies, I’ve filed an amicus brief (a first for me) urging the U.S. Court of Appeals for the Federal Circuit to recognize the constitutional flaws in the federal “false marking” statute, which empowers private parties to sue over inaccurate (in practice, mostly expired) patent markings on products and collect fines of a generally criminal/punitive as opposed to civil/compensatory nature. Here’s our argument in a nutshell, from the Cato website:
[click to continue…]
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I’m quoted in this report by Dunstan Prial of FoxBusiness.com and in this report by David Savage of the Los Angeles Times on the large-scale bounty incentives in the Dodd-Frank financial regulation bill, which bring us closer to an “informer model of law enforcement” that “encourages people to be disloyal to their friends and co-workers.” Earlier here and here. Other coverage of the whistleblowing provisions: Coyle/NLJ, Koehler/FCPA Professor, Baer/Prawfsblawg.
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There are lots of them tucked into the bill, and they will probably come at a significant cost for companies in the economy’s financial sector, as I explain in a new post at Cato at Liberty (earlier; more on qui tam and whistleblower matters more generally).
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It seems the Senate-passed financial reform bill includes whistleblower bounties and other legal goodies. [Whistleblower Law Blog] On tax informants, see our post of Wednesday.
Bonus: Amy Kolz at American Lawyer (“Serial whistle-blower Joseph Piacentile makes millions helping the government uncover fraud. That’s how the False Claims Act is supposed to work. Or is it?”). And David Walk at Drug and Device Law assails as “dumb,” credulous, and based upon a biased sample a New England Journal of Medicine feature on whistleblowing in the pharmaceutical industry:
The New England Journal of Medicine bills itself as “the world’s most influential medical journal,” and it unquestionably publishes groundbreaking articles about medicine. But all too often in recent years the NEJM has strayed from what it knows — medicine – into what it doesn’t – law and public policy, particularly tort policy. No longer content with editorials encouraging litigation against anyone but doctors, the NEJM now publishes public policy advocacy pieces dressed up as scientific studies, with the implicit suggestion that those studies should get the benefit of the NEJM’s good name in public policy debates.
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It’s attractive enough to have lured private equity money:
Three years ago, the I.R.S. began offering bigger rewards — 15 percent to 30 percent of whatever money the government recovered — in a move that has turbocharged the agency’s whistle-blower program. …
Among the lawyers, hedge funds and investors who may provide the financing for class-action lawsuits and whistle-blower cases against government contractors, the reinvigorated I.R.S. program has attracted attention.
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Things you’re missing if you aren’t checking out my other site:
- Iowa federal judge hits EEOC with $4.5 million attorney fee award over “sue first, ask questions later” litigation strategy;
- Jim Copland continues his weeklong blogging of Trial Lawyers Inc.: K Street with posts on the plaintiff’s bar’s Washington, D.C. presence (with discussion of CPSIA, employment litigation, qui tam, and arbitration, among other topics); state lobbying; and public relations, including legal academics, the media, and consumer groups;
- Hmm: House committee conveniently subpoenas Toyota defense documents that plaintiffs had been seeking to unseal (and more on Toyota);
- Obama administration plans crackdown to make more employers reclassify independent contractors as employees;
- Trial bar stirs pot in Florida politics;
- Feds swoop down on 2003 settlement to demand that parties reimburse Medicare as provided by retroactive law.
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In June we reported on a boomlet in freelance lawsuits accusing companies of marking their products with outdated patent numbers or with other violations of a federal statute that prohibits the use of false or misleading patent marks on products. On December 28 the Federal Circuit issued a decision that may greatly stimulate the activities of what are already being called “marking trolls”. It holds that courts have discretion to impose the law’s $500 penalty per mislabeled item sold, which means that total penalties might rise to gigantic levels; lawyers who bring the cases then split the proceeds with the federal government in qui tam fashion. Coverage: George Best and Jeffrey Simmons/Foley & Lardner, Robert Matthews, Jr., Patently-O, Rebecca Tushnet and more, Patent Prospector.
The Progressive Policy Institute (!) criticizes a provision almost snuck into the health-care bill that would have been a windfall for trial lawyers at the expense of the rest of us. Earlier and earlier on Overlawyered, which was the first to publicize the provision.
James Glassman at The American takes a look at the attempt to slip through a massive expansion of industrywide tort liability as part of the House health-care-reform bill a couple of weeks ago, a story that seems to have been broken for the first time in this space.
Forbes is just up with a new, improved version of my piece on the amazing trial lawyer bonanza that someone quietly tucked into last week’s draft of the health care bill. An earlier version of the piece ran at Overlawyered on Friday. The Forbes version takes note of the names of the House members who were pushing for and against the idea on the Ways & Means panel. Michelle Malkin gives it a recommendation here.
P.S. Some kind words, as well as a link, from Ashby Jones at the WSJ Law Blog (calling us “the granddaddy of legal blogs”). Plus: Don Surber, Charleston (W.V.) Daily Mail, Bainbridge, Wood/ShopFloor, Riehl World View, Bader/CEI “Open Market”.
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Contacts on Capitol Hill inform me that Republicans yesterday managed to block a remarkable provision that had been slipped into the House leadership’s 794-page health care bill just before it went to a House Ways & Means markup session. If their description of the provision is accurate — and my initial reading of the language gives me no reason to think it isn’t — it sounds as if they managed to (for the moment) hold off one of the more audacious and far-reaching trial lawyer power grabs seen on Capitol Hill in a while.
For some time now the federal government has been intensifying its pursuit of what are sometimes known as “Medicare liens” against third party defendants (more). In the simplest scenario — not the only scenario, as we will see below — someone is injured in, say, a car accident, and has the resulting medical bills paid by Medicare. They then sue and successfully obtain damages from the other driver. At this point Medicare (i.e. the government) is free to demand that the beneficiary hand over some or all of the settlement to cover the cost of the health care, but under some conditions it is also free to file its own action to recover the medical outlays directly from the negligent driver (who in some circumstances might even wind up paying for the same medical bills twice). It might do this if, for example, it does not expect to get a collectible judgment from the beneficiary.
The newly added language in the Thursday morning version of the health bill (for those following along, it’s Section 1620 on pp. 713-721) would greatly expand the scope of these suits against third parties, while doing something entirely new: allow freelance lawyers to file them on behalf of the government — without asking permission — and collect rich bounties if they manage thereby to extract money from the defendants. Lawyers will recognize this as a qui tam procedure, of the sort that has led to a growing body of litigation filed by freelance bounty-hunters against universities, defense contractors and others alleged to have overcharged the government.
It gets worse. Language on p. 714 of the bill would permit the lawyers to file at least some sorts of Medicare recovery actions based on “any relevant evidence, including but not limited to relevant statistical or epidemiological evidence, or by other similarly reliable means”. This reads very much as if an attempt is being made to lay the groundwork for claims against new classes of defendants who might not be proved liable in an individual case but are responsible in a “statistical” sense. The best known such controversies are over whether suppliers of products such as alcohol, calorie-laden foods, or guns should be compelled to pay compensation for society-wide patterns of illness or injury.
A few other highlights of the provision, pending analysis by persons more familiar with Social Security and Medicare law than myself:
- A bit of language on p. 714, I am told, would remove a significant barrier to litigation, namely a rule authorizing a lien action to be filed on behalf of Medicare only after a previous “judgment”, that is to say, only after the success of an earlier lawsuit (by the injured party) establishing responsibility for the injury.
- Language on p. 715 would double damages in cases of “intentional tort or other intentional wrongdoing”.
- P. 716 specifies that “any person” may bring the action, that is, it need not be a lawyer representing the injured person or any other injured person.
- P. 717: the bounty would be a rich one, 30 percent plus expenses. P. 719 provides that even if the federal government itself intervenes and insists on taking over the lawsuit, the bounty-hunter would still get a minimum of 20 percent, perhaps as reward for winning the race to the courthouse. No one other than the federal government could oust the first-to-file lawyer from control of the action, so other private lawyers who lost the race to the courthouse would be out of luck. Page 720 specifies that the suit may be settled “notwithstanding the objections of the United States” — that is, the objections of the entity on whose behalf it was supposedly filed — if a court so agrees.
- Medicare would have to cooperate with the private lawyers, whether or not the government joined or approved of the action, by handing over various documents useful to them.
For the moment, at least, the bullet seems to have been dodged. Some Republicans on the committee spotted the issue and raised strong protests, and by the end of the day an agreement had been reached with Democratic managers to withdraw the provision. That still provides no guarantee that it will not rear its head later in the process at some stage that proponents judge more favorable to their designs.
The idea being promoted here is an atrocious one. Even when it comes to garden-variety torts, there are many entirely legitimate reasons why federal managers might not decide to pursue Medicare liens from every possible defendant. To take only one example, they might have scruples about suing peripheral defendants who might be made to cough up settlement money to avoid the costs of litigation but against whom liability was doubtful. Freelance private lawyers would be free to sue everyone in sight and employ the most hardball tactics along the way. If the language about epidemiological and statistical evidence is indeed meant to pave the way for future suits against liquor, gun or cheeseburger purveyors, it represents a stealth attempt to restore via fine print a lawyerly dream that the courts have almost uniformly rejected over the past decade, as well as personally enrich lawyers with fees that could soar beyond even those of the scandalous tobacco-Medicaid litigation. Who in Congress slipped this language in, anyway — and on whose behalf?
Incidentally, this is not the first time the idea of Medicare-lien/”secondary payer” qui tam has been given an outing. In 2006 the famous Erin Brockovich lent her name and efforts to lawsuits filed by Wilkes & McHugh and another law firm pursuing the highly adventurous theory that a qui tam right to sue over tort-induced Medicare overpayments already exists, at least against hospitals. This campaign fared extremely poorly in court (see our earlier coverage here, here, and here). Last year, in a case argued by Kenneth Connor for Wilkes & McHugh, the Sixth Circuit ruled that claims brought by Wilkes’s client against dozens of hospitals were “utterly frivolous” and ordered counsel to show cause why sanctions should not be imposed for “unreasonable and vexatious” appeals (Stalley v. Methodist Healthcare, PDF; more at Jones Day site). (reposted with slight changes and bumped from an earlier post this morning) (& welcome Popehat, Coyote, Weisenthal/Business Insider, Hemingway/NRO “Corner”, For What It’s Worth, Blogs for Victory, TigerHawk, The Agitator, Colossus of Rhodey readers).
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Bounty-hunters crestfallen: a federal judge has rejected a Washington, D.C. lawyer’s suit against Solo Cup for stamping its product with expired patent numbers. [AP/Washington Post, earlier]
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Annals of bounty-hunting: “A recent ruling on an obscure, century-old statute has opened the door for people familiar with the finer points of patent law to sue companies that stamp their products with expired patent numbers.” Washington, D.C. patent attorney Matthew Pequignot “noticed the patent marks on the lid to his daily cup of coffee, did some research and found that the lid’s maker, Solo Cup Co., was continuing to claim patent protections for disposable lids that had expired nearly 20 years ago.” So he’s sued Solo and E.D. Va. federal judge Leonie Brinkema has allowed his case to go forward, ruling that the requisite harm to the government is satisfied because the government’s laws against “false markings” were violated. (A federal judge in New York, however, ruled differently on the harm-to-government issue in a recent case with similar facts.) Pequignot has offered to settle the Solo suit for $9 million and has sued Gillette on similar theories; the bounty-hunting law allows claimants to keep half of the recovery.
Pequignot, for his part, says he does not expect an avalanche of false markings lawsuits, despite the fact that [attorney Raymond] Stauffer and some others have already followed in his footsteps. He said that, even as a patent attorney, it took him many hours of research to be able to file his lawsuit.
[AP/Fort Wayne Journal Gazette via ABA Journal; Sheri Qualters, NLJ]
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(Updating and bumping Feb. 4 post about to roll off bottom of page because of new comment activity)
- Judge Fallon denied the motion of Florida plaintiffs to expedite a hearing on their inclusion into a settlement when they did not even bring suit (Jan. 30). Merck and the PSC are required to respond Feb. 15, and the hearing will be Feb. 21, where one can expect the motion to be denied.
- At Point of Law, I comment on the recent grand jury investigation into Merck marketing of Vioxx.
Update, Feb. 8: separately, Merck yesterday settles for $650 million different Medicaid fraud allegations over the marketing of Vioxx and other drugs. The qui tam relator will get a jackpot award of $68 million. [WaPo; DOJ; Merck] The pricing theories at the center of these lawsuits—which hold Merck liable for purportedly charging too little—definitely deserve longer discussion another time.
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Fifty years ago, conspiracy theorists could rant in bars, or perhaps write letters to the editor. Twenty years ago, conspiracy theorists could call talk radio. Now? Through the magic of qui tam laws, conspiracy theorists can wage their war against sanity in the courts.
While reading Bizarro-Overlawyered’s paean to 9/11 lawsuits — guess what? They’re not (just) about the money! They’re really about helping the public “know what happened”! — a commenter on the site provided a link to Morgan Reynolds’ 9/11-related lawsuit. Reynolds, a former economist at the Department of Labor, became unhinged sometime after 9/11 and began ranting on the internet about the various conspiracies that brought down the World Trade Center. (Hint: government laser beams from space, not airplanes.) In the past, that would have been the end of it. Even if Reynolds wanted to take legal action, he couldn’t — he wasn’t injured by 9/11, so he would have no standing to file a lawsuit against anybody.
Ah, but that doesn’t take into account the False Claims Act. The qui tam provisions of the False Claims Act allow private individuals to sue on behalf of the government whenever the government is defrauded, and collect a portion of the money owed to the government. So all one needs to do is find a creative legal hook to claim that the government has been cheated, and all of the sudden one has standing to sue. What was Reynolds’ claim? He argues that when the National Institute of Standards and Technology (NIST) — a government agency — prepared its report on the collapse of the World Trade Center, it paid various companies to consult with it. Since none of those consulting companies mentioned the government laser beams from space, they obviously defrauded the government.
So he sued… well, he sued everyone. To be precise, he sued:
Science Applications International Corp.; Applied Research Associates, Inc.; Boeing; Nustats; Computer Aided Engineering Associates, Inc.; Datasource, Inc.; Geostaats, Inc.; Gilsanz Murray Steficek Llp; Hughes Associates, Inc.; Ajmal Abbasi; Eduardo Kausel; David Parks; David Sharp; Daniele Venezano; Josef Van Dyck; Kaspar William; Rolf Jensen & Associates, Inc; Rosenwasser/Grossman Consulting Engineers, P.c.; Simpson Gumpertz & Heger, Inc.; S. K. Ghosh Associates, Inc.; Skidmore, Owings & Merrill, Llp; Teng & Associates, Inc.; Underwriters Laboratories, Inc.; Wiss, Janney, Elstner Associates, Inc.; American Airlines; Silverstein Properties; and United Airlines
Those are engineering firms, airlines, consulting firms, defense contractors, building contractors, and real estate firms. All of which get to deal with his lawsuit. (Will it eventually be dismissed? Yes. Will Reynolds be ordered to pay defendants’ costs? Probably. (Assuming he could afford those costs, which seems unlikely given how many defendants he sued.) But thanks to the notion that private citizens can sue without suffering any injury, it superficially states a valid claim. And, hey, it isn’t that much kookier than the actual 9/11 families who seek to blame the airlines, the World Trade Center, etc. for 9/11. Incidentally, this isn’t one of those wacky pro se lawsuits; Reynolds has an actual lawyer, albeit one who’s also a 9/11 conspiracy theorist.)
(No links in this post; no need to encourage these people. Google if you want to find it.)
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According to a WSJ news report, Greenlight Capital, a $4 billion New York hedge fund, has filed a federal False Claims Act lawsuit against Allied Capital Corp., alleging that a subsidiary of Allied known as Business Loan Express LLC, or BLX, “submitted fraudulent loan documents to the Small Business Administration, bilking the U.S. of millions of dollars. Greenlight and James Brickman, an individual working with the fund to bring the suit, are entitled to 25% to 30% of the proceeds if their complaint results in an award.” Aside from the novelty of a hedge fund’s getting into qui tam litigation (perhaps no real surprise, given the proven money-making scope afforded by that bounty-hunter’s statute) the even more noteworthy twist is that Greenlight has also taken a short position in Allied’s stock, so that it will profit if the stock falls independently of whether the litigation results in a successful recovery. (Carol S. Remond, “Greenlight Heads to a Courtroom”, Wall Street Journal, Jan. 29)(sub-only).
We’ve reported at some length previously (here and at Point of Law) about the evidence that plaintiffs and their lawyers sometimes short target companies’ stocks before filing lawsuits, and about the fairly grave implications of that both as a matter of legal/litigation ethics and for the “market integrity” rationale of securities regulation. See, for example, May 5, 2005 and Sept. 14, 2006, as well as (relatedly) Nov. 14, 2006, and at Point of Law, Feb. 6 and Mar. 3, 2006, and this Featured Discussion.
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