Virginia Qui Tam Law

K&G Law Group, PLLC Announces the Launch of www.VirginiaQuiTamLawyers.com

2012-05-22T12:39:56Z

Announcing the Launch of VirginiaQuiTamLawyers.com

On behalf of K&G Law Group PLLC I am happy to announce the launch of a new webpage dedicated to the Virginia Fraud Against Taxpayers Act and to qui tam litigation in Virginia -- www.VirginiaQuiTamLawyers.com

As with any webpage, it is very much a work in progress, so check back frequently for new articles and helpful information. Needless to say, all important news will be cross-indexed.

Loyal readers should also be on the lookout for a revamped version of my firm's main webpage -- www.kglawpllc.com soon.

Copyright 2011 Zachary A. Kitts

New First Circuit Opinion Holds Important Lessons for Lawyers Interested in Bringing Qui Tam Cases...

2012-05-12T20:00:35Z

New First Circuit Opinion Holds Important Lessons for Lawyers Interested in Bringing Qui Tam Cases...

An important new opinion was published this week by the U.S. Court of Appeals for the First Circuit -- the caption is US ex rel. Jones v. Brigham and Women's Hospital, et al., 2012 WL 1571232 (2nd. Cir. May 7, 2012).

The allegations focused on fraud and false claims in a grant application submitted by a team of scientists from Harvard. These academics were alleged to have falsified research data in order to receive a $15 million grant from NIH so that they could further their scientific research -- and if that sounds familiar to any of my Virginia readers I think you'll know why.

Although the opinion concerns false claims made as part of an academic grant request, it should be read by every lawyer thinking of bringing any kind of qui tam case.

Why do I say that?

As regular readers are aware, one of the on-going themes here at vaquitamlaw.com is the complexity of false claims act practice -- these cases are nearly always factually complicated and the body of case law is correspondingly complex.

This theme has been discussed for example in my post on FCA violations arising out of unclaimed property law, as well as posts discussing the factual allegations that a complaint needs to survive a motion to dismiss under Fed. R. Civ. P. 9(b).

Now that SCOVA dismissed Cuccinelli's civil investigative demand to UVa, I have already heard people saying "You can't bring a VFATA case if the false claims are predicated on a difference of scientific opinion."

That argument is false and this week's opinion from the First Circuit proves it.

The factual allegations in Brighan and Women's Hospital involved fraud in a grant proposal to conduct research on Alzheimer's Disease using NIH funds. Relator Kenneth Jones was the lead statistician on a team of scientists at Harvard University that had conducted alzheimer's research for more than 20 years.

At some point along the way Jones discovered that another scientist on the team had falsified his data -- and had then used that false data to apply for a five year grant totalling nearly $15 million.

A few choice words from the First Circuit Court of Appeals says it better than I could:

"We agree with the district court that “[e]xpressions of opinion, scientific judgments, or statements as to conclusions about which reasonable minds may differ cannot be false. ... The dispute at the heart of this case is not about resolving which scientific protocol produces results that fall within an acceptable range of 'accuracy.' Nor is it about whether ... the basis for the preliminary scientific conclusions reported in the Application, are “accurate” ... Rather, the essential dispute is about whether Killiany falsified scientific data by intentionally exaggerating the re-measurements of the EC to cause proof of a particular scientific hypothesis to emerge from the data, and whether statements made in the Application about having used blinded, reliable methods to produce those results were true.

So yes,Virginia, a difference of scientific opinion cannot be made into a false claims act case. In fact I'll go one step further and say that a difference of scientific opinion isn't even relevant to a Virginia Fraud Against Taxpayers Act case, with just one exception -- if it negates scienter on the part of the defendant.

Like the federal FCA the VFATA focuses on the knowledge of the defendant and on the defendant's efforts to deceive. So it is no defense to say that there is a difference of scientific opinion about whether part of a grant application is false if a defendant can be shown to have made a "knowingly false" claim or have made a claim with "reckless indifference" to the truth or falsity of the claim.

Abbot Laboratories Agrees to Pay $1.5 Billion to Settle Civil and Criminal Claims in the U.S. District Court for the Western District of Virginia

2012-05-09T18:40:48Z

Yesterday Attorney General Ken Cuccinelli announced a whopping $1.7 billion settlement in what he called "the largest Medicaid fraud case investigated by a state Medicaid Fraud Control Unit ever."

My regular readers know that the Virginia Medicaid Fraud Control Unit (which is shortened to MFCU in the parlance of the false claims act and pronounced as M Foo-Coo) is an elite unit, to say the least. For at least the last 8 years or so, the Virginia MFCU has led the way nationwide on some of the toughest cases ever brought.

MFCUs are state-based criminal and civil law enforcement agencies that are funded 75% by the federal government and are responsible for investigating and prosecuting providers that defraud the Medicaid program. In addition, the MFCUs can investigate complaints of abuse or neglect against residents in long-term care and board and care facilities.

When Congress created the MFCUs in 1977, it did so not only because of substantial evidence of fraud in the Medicaid program, but also because of horrendous evidence of nursing home abuse and victimization. The MFCUs are the only law enforcement agencies in the country that are specifically charged with investigating and prosecuting abuse and neglect of residents in nursing homes, other Medicaid funded health care institutions and board and care facilities.

It is important to note that none of the qui tam relators were from Virginia, and Abbott isn't headquartered here -- no, this case was brought in Virginia for two reasons. First, because the Virginia MFCU is top notch, and second, Virginia Courts are *the* place to prosecute any complex case, as a general rule.

This case was under seal for quite a long time by Virginia standards -- it was first filed in 2007 -- but that could be because it was so large.

My hat is off to the Virginia MFCU people, as well as to Attorney General Ken Cuccinelli, who really needed some good news this week after all of the bad news he's had lately....

Copyright 2011 Zachary A. Kitts

The Question the American Legislative Exchange Counsel Cannot Answer: Why Do All of the Business-Friendly States Have State False Claims Acts?

2012-04-30T12:53:17Z

The Question the American Legislative Exchange Counsel Cannot Answer: Why Do All of the Business-Friendly States Have State False Claims Acts?

As my regular readers know, this blog is about qui tam litigation under the federal False Claims Act as well as under the Virginia Fraud Against Taxpayers Act and other state false claims acts. A regular theme throughout the last four years has been the battle from state to state to pass state false claims legislation.

In Virginia, of course, we didn't have much trouble getting our Virginia Fraud Against Taxpayers Act passed in 2002 -- and we experienced only one minor bump on the road to passing one set of major revisions and one set of technical revisions.

The Virginia legislators I have spoken during our legislative attempts have almost universally said the same thing: how could anyone who wants to get re-elected be against a law that increases prosecution of fraud and false claims against the government?

Unfortunately some legislators in other states do not feel the same way -- and nor do the lobbyists that seem to hold so much sway in those states. Interestingly, the more power lobbyists hold in a given state, the less likely that state is to have a state false claims act....

One such state is Ohio, ranked by many commentators as possibly the most corrupt state in the Union according to a recent report assembled by the Center for Public Integrity.

The report breaks down the score using 15 different criteria, with Ohio failing in the categories of -- and this is a shock -- Lobbying Disclosures and Legislative Accountability among many others.

During the recent battle in Ohio, one such non-accountable legislator, Bill Seitz, a prominent Ohio Republican state senator, wrote to a fellow senior lawmaker to relay concerns about “the recent upsurge” in false-claims legislation nationwide.

And his concerns, believe it or not, were not that Ohio did NOT have a false claims act.
Rather, his concerns were that "our friend at ALEC" did not like the Ohio False Claims Act.

So who is ALEC and why does it have such power in Ohio? ALEC is short for "American Legislative Exchange Counsel -- a business-backed group that views false claims laws as encouraging "frivolous" lawsuits. (That old pet monstrosity).

ALEC’s membership includes not only corporations, but nearly 2,000 state legislators across the country — including dozens who would vote on the Ohio bill.

“The considered advice from our friends at ALEC was that such legislation is not well taken and should not be approved,” he said in a private memorandum.

As part of the same memo, he discounted the recent upsurge in False Claims Act legislation as "understandable, considering most states are broke."

ALEC also used the old ruse that state false claims act legislation is "liberal" and a "bonanza for trial lawyers."

Huh?

Lets get a few things straight -- Virginia, which is one of the most vigorous prosecutors of wrongdoing using our false claims act, isn't broke. In fact, we have a surplus in our budget.

Moreover, Virginia isn't liberal, thank you very much...(not that there is anything wrong with that, as Jerry Seinfeld would say).

I will leave it ALEC to explain why states like Virginia, which are both conservative and business friendly by any measure, are such die-hard proponents of state false claims acts. In fact, as I have blogged before, the more "business-friendly" and conservative a state is, the more likely that state is to have a false claims act.

I also think that a correlation exists between vigorous criminal prosecutions and vigorous false claims act prosecutions -- with Texas being Exhibit A and Virginia being Exhibit B.

I also think there is a correlation between corruption in state government and the power of lobbyists in the state legislative process.

I am waiting for someone -- anyone -- from ALEC to explain how liberal trial lawyers hijacked the legislative process to create a "bonanza" for themselves in Virginia and Texas (among many others) and passed state false claims acts......and then went back to being ignored.


Copyright 2011 Zachary A. Kitts

Abraham Lincoln and the federal False Claims Act -- Did Lincoln Really Say Everything He Said?

2012-04-21T17:41:37Z

It is well known to most of my regular readers that Abraham Lincoln was one of the main forces behind the enactment of the federal False Claims Act during the American Civil War (also known as the War Between the States).

Most regular readers also know that the FCA was passed during the bleakest period for the Union, in late 1862 and early 1863. In previous posts I have discussed the problems the United States government faced with procuring goods and services during the War as told in some of the Civil War literature.

For a variety of very sound reasons, the personage of Abraham Lincoln is inextricably interwoven with the federal False Claims Act. And, as "Honest Abe" was also extremely quotable, there are a large number of misquotes also floating around out there.

As the very quotable (and very misquoted) Yogi Berra once stated, "I really didn't say everything I said."

One such quote is the following:

Worse than traitors in arms are the men who pretend loyalty to the flag, feast and fatten on the misfortunes of the Nation while patriotic blood is crimsoning the plains of the South and their countrymen moldering the dust.

This quote did not come from Lincoln, but rather from a report to Congress published on March 2, 1863 from the House Select Committee on Government contracts.

As my evidence professor used to say, "Right church, wrong pew."

Copyright 2011 Zachary A. Kitts

Congressional Oversight of Agencies Now on Display -- But Who Has Oversight of State Agencies?

2012-04-19T13:55:37Z

In a recent post, I discussed a study done by the Center for Public Integrity which found State Government agencies at a high risk for fraud, waste, and abuse.

One of the major reasons for such corruption at the state level is, as I said there, the fact that state government agencies operate with more or less no oversight. I contrasted this with the federal model, and the oversight Congress exercises over federal agencies.

And this week Washington is being treated to a great example of such oversight. I am referring to the Congressional hearings on the GSA Scandal that broke very recently.

The extravagance and waste included a mind reader and fortune teller -- oops, sorry, the politically correct term is "mentalist" -- who, despite being paid an extravagant sum, completely failed to predict the disaster that was about to strike GSA.



Note, the picture above is not the mentalist hired to entertain GSA big-wigs, that is House Transportation Committee Chairman Rep. John Mica (R-Fla.) who is one of the good guys trying to clean this mess up.

To add insult to injury, this video -- made with taxpayer dollars, during working hours, by some diligent public servants who correctly named it "American Idle" -- surfaced.

So yes, it may well be the case that Congressional oversight of government agencies is better than no oversight, but all of this nonsense occurred even with such oversight.

Now, fellow Americans and state taxpayers, if this sort of nonsense can happen in a federal government agency which is overseen by Congress, think about what happens in your State government agencies, which don't have to worry about oversight.

And that is why each and every state needs a full false claims act -- individual qui tam relators and their lawyers can't clean up state government agencies, but qui tam cases often shed light on weaknesses in state government programs and expenditures.

Copyright 2011 Zachary A. Kitts

And Here It Is: The 2012 Legislative Wrap Up for State False Claims Act Legislation

2012-04-14T19:05:50Z

Now that we have reached mid-April, I think it is time for a legislative review of the state-level false claims action. The 2012 legislative session saw a renewal of the battles in Ohio, Kentucky, and Washington, together with the introduction of state false claims act legislation in Pennsylvania.

Of those four states, I am pleased to announce that Washington State actually got their legislation across the finish line and signed into law. The law will become effective on July 1, 2012. As I reported previously, Jeff Sprung of Hagens Berman led the charge in WA state -- good work Jeff.

And now for the biggest news of all -- I am also pleased to report, our own Virginia Fraud Against Taxpayers Act was amended yet again this legislative session.

While the changes were for the most part cosmetic, I was afraid to blog about the legislative effort for fear of alerting the bad guys that changes were afoot. Over the past few years I have, as most of you know, worked with a number of state legislatures and state Attorney Generals to assist them with their efforts to pass a state FCA.

If there is one thing I have learned watching the legislative process unfold, it is this -- once the legislative process is put into motion, you never quite know what you are going to get.

Copyright 2011 Zachary A. Kitts

Study by the Center for Public Integrity Finds State Governments at Risk for Corruption...Surprise Surprise

2012-03-19T14:27:39Z

Study by the Center for Public Integrity Finds State Governments at Risk for Corruption

An excellent study just released by the Center for Public Integrity finds state governments to be at risk for corruption -- you can check out a WaPo article on the topic here.

It is high time someone put a study like this together -- while the findings of this study come as little surprise, I find its methodology to be quite convincing.

It goes without saying that any form of government is susceptible to corruption, and the best anyone can do is to try to control it. State governments, however, tend to rely more on bureaucrats and those bureaucrats have on average less supervision that in a more complex system. For example, in the federal system, Congress serves as a check on the power of agency bureaucrats -- the idea of getting called before Congress for testimony is something most agency heads have nightmares about for sure.

So we have state governments relying on unsupervised bureaucrats -- certainly a recipe for corruption if there ever was one.

Take the example of Virginia. Here, most of the real power rests in the hands of the General Assembly, both by design and by tradition.

The design part is of course the Virginia Constitution, which firmly places the General Assembly in the drivers seat. In many states the Governor serves as a powerful check, but not in Virginia. In fact, because he or she is limited to a single term, the Governor is from day one a lame duck.

Unlike the United States Congress, the General Assembly is in session only 60 or 90 days each year. That gives the GA a crushing amount of work to do in such a short time, and it gives no time for supervising the agencies.

And as readers of this blog are aware, we have the less-than-wonderful tradition of the single term Attorney General. In many states the Attorney General serves as a powerful force to control corruption in state government agencies, but not here in Virginia.

Based upon my quick read of the article, the authors of this study seem to have left state false claims acts from their study, and I can see why.  Even an astute student of government might fail to see the connection between a state false claims act and government corruption. But there is a connection.

One of the things that contributes to state government corruption is that the corruption is what I call "a-typical corruption." What I mean by that is when we think of the word "corruption" in the government context, it typically implies favors being done for money or for other consideration in the legal sense.

In layman's terms, when we think of corruption we think of a person in government scratching the back of someone, and getting their back scratched in return.   It is worth noting also that most dictionary definitions of the term corruption include a reference to bribes, kickbacks, and other forms of payment.

But in our state governments (and also in the federal government) my experience has been that there is not actually much of the typical type of corruption; and when it does occur it is, relatively speaking, easy to catch. Transparency and other things will catch that type of corruption.

That's right ladies and gentlemen -- money is only part of the reason why human beings do what they do. State government agencies are also susceptible to flattery, salesmanship, and other things that show no monetary return for the individual.

The other type of corruption is a-typical corruption, and that involves a state agency person doing a favor for an outside party with no form of compensation or consideration coming back the other way.

There can be no question that a-typical corruption far outweighs typical corruption, and it is next to impossible to catch unless you have a state false claims act.

More on this to follow, but congrats to the Center on an excellent, timely, and needed study....

Copyright 2011 Zachary A. Kitts

K&G Law Group Announces the Fourth Anniversary of Virginia Qui Tam Law.com

2012-02-24T15:11:38Z

Four years ago this month I started blogging here at Virginia Qui Tam Law.com -- I'll resist the urge to say something hackneyed and sentimental about the last four years, or maybe I will reserve that right for the end of the post.

When I started this blog, I set out some simple goals. However I neglected to mention my most important goal which was to create the sort of blog I was looking for, covering the kind of topics in which I was interested.

I couldn't find what I was looking for so I went ahead and created it.

I was also hoping to provide education and helpful information about the Virginia Fraud Against Taxpayers Act (and the federal False Claims Act) with an eye towards generating interest in those topics among the Virginia Bar. I think I can definitely say that I have had some successes in that regard.

Let me also say that I am not fooling myself -- it is highly probable that all of the VFATA developments that have taken place in the last four years would have taken place with or without this blog. For example, it was only a matter of time before someone like Attorney General Ken Cuccinelli stepped up to the plate and did what needed to be done to protect the taxpayers of the Commonwealth.

Whether or not it made a difference I can't say for sure, but I would like to think it helped.

In February of 2008, there was little to no interest in the VFATA and few people outside the health care world even knew what it was. There were only two reasons why health care profession knew about VFATA, and those reasons were in no particular order (1) the award-winning Medicaid Fraud Control Unit in the Office of the Virginia Attorney General and (2) the ground-breaking work of then-United States Attorney John Brownlee in the Western District of Virginia.

That same month, I worked with the Fairfax County Bar Association to create and host the first every Continuing Legal Education seminar on the VFATA. A fair number of people showed up, but more importantly that seminar led to a second one in Richmond later that year in the Office of the Attorney General, and just under 100 people showed up.

I blogged endlessly trying to put the Virginia Fraud Against Taxpayers Act on the radar of every candidate for Virginia Attorney General in the 2009 Attorney General primary and then in the general election, and I think we can say that it worked.

More importantly we can say that Attorney General Ken Cuccinelli, who was elected to that office in November of 2009 (well, really he was elected in May of 2009 when he defeated two formidable candidates at the Republican Convention) has vigorously enforced VFATA cases and has garnered well-deserved accolades from many different corners of the Commonwealth.

In November of 2008, I settled the first non-healthcare non-intervened case under the VFATA, and it made the front page of Virginia Lawyers Weekly.

Since that time, the VFATA has graced the front pages of the Washington Post, the Wall Street Journal, the New York Times...it would take me forever to list the newspapers, so it suffices to say that every major news outlet in the USA and some abroad have covered the Bank of New York Mellon case.

Along the way, I have blogged while on vacations, from my office, from home, while sitting in coffee shops all over the USA, and so many other places I can scarcely recall them all.

I have blogged from Richmond (where we worked to obtain passage of the 2011 amendments to the VFATA) and from Annapolis (where we were unsuccessful in our fight to enact a real Maryland False Claims Act).  I have also had the privilege of working with state legislators from across the country who are eager to replicate Virginia's success.

I have traveled (always on my own dime) to other state capitals at the invitation of state AGs and legislators to carry the message that Virginia's success can be replicated in other places. And I hope that other state legislators and AGs who think I can be of assistance will ask in the future. We still have roughly 25 states to go in our battle to obtain a state FCA in each of the several states.

And I would be negligent if I didn't mention all of the great people I have met from across the Commonwealth (and in other states) through this blog. You know who you are, so I won't mention you here.

But that is all in the past -- what lies ahead? I have some plans for where to take this blog over the next four years, and they will be revealed in due time. One thing I plan to incorporate and weave into this blog is more Virginia legal history...

There is a term (which escapes me at the moment) for those people who can grow a blog -- its the blogging equivalent of a "green thumb" for gardeners. I suppose that after four years I can say I have it -- but I am always looking for ways to make this blog better over the next four years and beyond.

Thank you all for reading and for indulging my hobby -- now lets get to work!

Copyright 2011 Zachary A. Kitts

Update from the Ohio Legislative Session -- Ohio Attorney General Mike DeWine and Frederick Morgan Submit Testimony in Favor of the Ohio False Claims Act

2012-02-14T17:39:57Z

Update from the Ohio Legislative Session -- Ohio Attorney General Mike DeWine and Frederick Morgan Submit Testimony in Favor of the Ohio False Claims Act.

Ohio's battle to pass a state false claims act continues, with the most recent developments being the addition of a Republican sponsor in the state Senate (i.e., state Sen. Jim Hughes, R-Columbus) and a sponsor in the state House (i.e., Rep. Ross McGregor of Springfield).

As regular readers know, Ohio Attorney General Mike DeWine is leading this battle, and you can find a copy of his testimony here. He has received support recently from power house qui tam lawyers Frederick Morgan and Jennifer Verkamp (of the firm Morgan Verkamp, LLC in Cincinnati).

To read Rick's testimony please click here.

The usual suspects are opposing the bill in full force. The Ohio Chamber of Commerce has trotted out the usual tired arguments with an interesting twist -- the normal Chamber party line is that a false claims act will encourage frivolous lawsuits, but in Ohio the argument runs just that the Ohio False Claims Act will encourage lawsuits.

So strictly speaking, because the Ohio False Claims Act will serve as a further regulatory mechanism and ferret out fraud, that argument may well be true.

If you don't believe me, click here.

As readers know, all of the most business-friendly states have state false claims acts. Ohio, by most measures, is at the other end of the business-friendly scale, in terms of tax and otherwise.

General DeWine was smart to make reference to Texas and Virginia in his comments, because I assure you, if false claims legislation encouraged frivolous suits, it would not have lasted in Virginia or Texas so long.....

Stay tuned, more to follow....

Copyright 2011 Zachary A. Kitts