Discovery Ruling in District of Minnesota May Have Far-Reaching Implications for FCA Defendants

In a concise, six-page discovery order, a federal judge in Minneapolis may have just started the proverbial shifting of tectonic plates undergirding routine defense procedures in False Claims Act (FCA) litigation by requiring a defendant in an FCA lawsuit to produce the information provided to the Department of Justice (DOJ) during the DOJ’s process of determining whether to pursue the matter.

The FCA creates liability for persons or entities found to have knowingly submitted false claims to the government or having caused others to do so. Like some other federal laws, the FCA creates a private right of action; under the act, a private party—a whistleblower or “relator”—may bring a qui tam action on behalf of the government. When initially filed, the court seals the complaint pending the government’s investigation of the case. If the government chooses, it may intervene and pursue the matter. If not, the relator may pursue the case on its own. (In either case, the relator is entitled to a percentage of the government’s recovery.)

View the full Alert on the Duane Morris LLP website.

Gov’t and IPC Continue FCA Fight In Court

The Government and IPC The Hospitalist Company, Inc. (“IPC”) continue their False Claims Act (“FCA“) fight in court, now disputing the scope of discovery in light of the Northern District of Illinois’ partial denial of IPC’s motion to dismiss (detailed by Duane Morris here).  The Government has moved to strike certain of IPC’s general objections to discovery: (1) IPC’s objection to producing documents from IPC’s nationwide operations and (2) IPC’s objection to producing documents dated after December 31, 2010 (“Motion“).

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Consultants’ Communications Privileged from Discovery

In healthcare, companies often hire consultants to review billing and coding, privacy and security and a host of other technical issues that regular staff does not have the time or expertise to pursue.  A recent discovery ruling in federal court in the Eastern District of Pennsylvania holds that communications with such outside consultants are privileged from discovery if they are made for the purpose of assisting the company in securing legal advice or making legal decisions.

In Smith v. Unilife Corporation, a whistleblower brought an action under Sarbanes-Oxley and Dodd-Frank alleging shareholder fraud and failure to comply with certain FDA requirements.  The plaintiff sought discovery of two non-lawyer consultants regarding drafts of the company’s SEC Form 10-K filing.  The Court’s decision to deny the plaintiff’s motion to compel was based on the “functional equivalent” doctrine, a principle already adopted in the 8th, 9th and D.C. Circuits, but not yet in the 3rd Circuit.

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The opinions expressed on this blog are those of the author and are not to be construed as legal advice.

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