Developments in Reverse False Claims Liability Colin Huntley, Department of Justice Anna Haac, Tycko & Zavareei LLP Matthew Organ, Goldberg Kohn Ltd.

Developments in Reverse False Claims Liability Colin Huntley, Department of Justice Anna Haac, Tycko & Zavareei LLP Matthew Organ, Goldberg Kohn Ltd. 1

Pre-FERA “Reverse” False Claims Liability
The FCA imposed liability on anyone who: “knowingly makes, uses, or causes to be made or used, a false record or statement to conceal, avoid, or decrease an obligation to pay or transmit money or property to the Government” 31 U.S.C. 3729(a)(7) (1986) 2

FERA Amends “Reverse” False Claims Liability
The Fraud Enforcement and Recovery Act, Pub. Law , 123 Stat (2009) (“FERA”) significantly amended the reverse FCA provisions But whether FERA applies retroactively and to what extent is still a potential issue. 3

Post-FERA “Reverse” False Claims Liability
The FCA now imposes liability on anyone who: “knowingly makes, uses, or causes to be made or used, a false record or statement material to an obligation to pay or transmit money or property to the Government, or knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay or transmit money or property to the Government” 31 U.S.C. 3729(a)(1)(G) 4

2 Questions to Always Ask
Do you have EITHER: What is the obligation to pay $$ to the Government? No Obligation  No Reverse False Claim False record or statement? Conceal/Avoid/Decrease  What does this mean?

Post-FERA “Reverse” False Claims Liability
FERA added a definition for the term “obligation,” which is: “an established duty, whether or not fixed, arising from an express or implied contractual, grantor-grantee, or licensor- licensee relationship, from a fee-based or similar relationship, from statute or regulation, or from the retention of any overpayment” 31 U.S.C. 3729(b)(3) 6

FERA Amendments to “Reverse” False Claims Provision
FERA expanded reverse false claims liability: “This [original reverse FCA] provision is similar to the liability established under 3729(a)(2) for making ‘false records or statements to get false or fraudulent claims paid or approved.’ 31 U.S.C. Sec. 3729(a)(2)(2000). However, the provision does not capture conduct described in 3729(a)(1), which imposes liability for actions to conceal, avoid, or decrease an obligation directly to the Government. This legislation closes this loophole and incorporates an analogous provision to 3729(a)(1) for ‘reverse’ false claims liability.” S. Rep. No 7

FERA’s legislative history supports an expansive reading of the term “obligation” “Further, this legislation addresses current confusion among courts that have developed conflicting definitions of the term ‘obligation’ in Section 3729(a)(7).” S. Rep. No 8

Liquidated or Unliquidated “The term ‘obligation’ is now defined under new Section 3729(b)(3) and includes fixed and contingent duties owed to the Government – including fixed liquidated obligations such as judgments, and fixed, unliquidated obligations such as tariffs on imported goods.” S. Rep. No 9

Fixed or Non-Fixed Obligations “It is also noteworthy to restate that the Committee supports the position of the Department of Justice that current section 3729(a)(7) speaks of an ‘obligation,’ not a ‘fixed obligation.’” “By including contingent obligations such as, ‘implied contractual, quasi-contractual, grantor-grantee, licensor- licensee, fee-based, or similar relationship,’ this new section reflects the Committee's view, held since the passage of the 1986 Amendments, that an ‘obligation’ arises across the spectrum of possibilities from the fixed amount debt obligation where all particulars are defined to the instance where there is a relationship between the Government and a person that ‘results in a duty to pay the Government money, whether or not the amount owed is yet fixed.’” S. Rep. No 10

BUT…

The “Kyl” Amendment to the Bill “Obviously, we don't want the Government or anyone else suing under the False Claims Act to treble and enforce a fine before the duty to pay that fine has been formally established. It is unlikely that Justice would ever have brought suit to enforce a claim of this nature, but the FCA can also be enforced by private realtors who often may be motivated by personal gain and not always exercise the same good judgment that the Government usually does.” S. Rep. No 12

Fixed or Non-Fixed Obligations “The legislative history of the statute's other relevant language— ‘whether or not fixed’—suggests a reference to ‘whether or not the amount owed’ was fixed at the time of the violation, not ‘whether an obligation to pay was fixed.’ In discussing the meaning of ‘obligation,’ the Senate Judiciary Report explained that an ‘obligation arises across the spectrum of possibilities from the fixed amount debt obligation ... to the instance where there is a relationship between the Government and a person that results in a duty to pay the Government money, whether or not the amount owed is yet fixed.’” United States ex rel. Petras v. Simparel, Inc., 857 F.3d 497 (3d Cir. 2017) “Although FERA's new definition resolved uncertainty regarding whether the amount of an obligation needs to be fixed, it did not upset the widely accepted holding that contingent penalties are not obligations.” United States ex rel. Simoneaux v. E.I. duPont de Nemours & Co., 843 F.3d 1033 (5th Cir. 2016) United States ex rel. Petras v. Simparel, Inc., 857 F.3d 497 (3d Cir. 2017) United States ex rel. Simoneaux v. E.I. duPont de Nemours & Co., 843 F.3d 1033 (5th Cir. 2016)

“Reverse” False Claims Liability
Substantive Areas of Applicability Established Areas: Customs Duties Healthcare (Overpayment Retention) Developing Areas: Corporate Integrity Agreements Environmental Regulations Everywhere? 14

“Reverse” False Claims Liability - Customs
Customs duties = 2nd largest revenue source for U.S. Government (1st is taxes) Appx. 2% of Imports are inspected by CBP (and priority is security and drugs) Political Issue - Senator Olympia Snowe elaborating on the problems that result from customs violations: “When unscrupulous foreign exporters invent schemes to avoid paying duties it puts workers in Maine and throughout the nation at a severe disadvantage and bilks our government out of millions of dollars in uncollected fees. Regrettably, our government’s reluctance when it comes to enforcing existing trade rules has contributed to the silencing of our manufacturing industry, adding to rampant job loss and high unemployment around the nation.” 15

What are Customs Duties? Tariffs Countervailing & Antidumping Duties Marking Duties What are relevant agencies? U.S. Customs and Border Protection Agency (“CBP”)  19 U.S.C. § 1592 Penalties U.S. Department of Commerce  AD/CV Orders and Scope Rulings 16

Government-Intervened Settlements: Ranging from $275,000 to $45 million (see summary) Most big customs settlements involve AD/CV Duties A few custom settlements involve undervaluing imports for purposes of calculating duties Knoflick v. Green Bag Co., Inc. (N.D. Ca. January 6, 2015) United States v. Motives, Inc., Civ. No. 13-CV (S.D.N.Y. July 2016) Evasion of marking duties was alleged in United States ex rel. Calvin Chen v. Intertex Apparel Group, et al., No. 1:05-CV-5313 (S.D.N.Y.) ($2.8 million) 17

What is the Obligation: “Established Duty” – All Customs Duties? How does the failure to pay customs duties give rise to FCA liability? False Statement: CBP Form 7501 Omission: CFI v. Victaulic 18

CPB Form 7501 Country of Origin HTSUS Number/Rate AD/CVD Rate
Value of Goods “Other Fee” Duty Paid Declaration Form 7501 Instructions: ment/forms/form instructions

Case Study: Customs Fraud Investigations v. Victaulic 20

CFI v. Victaulic, cont. Parties: Non-insider CFI: “Conducts confidential research and analysis related to potential customs fraud.” Victaulic: Global manufacturer of pipe fittings, headquartered in Easton, Pennsylvania.

CFI v. Victaulic, cont. Facts:
CFI knew that Victaulic had sent considerable production capacity offshore over the last decade, had reduced its U.S. manufacturing operations sharply, and was selling pipe fittings with no country-of-origin markings. CFI concluded, following an investigation, that Victaulic had knowingly failed to properly mark the bulk of its imported pipe fittings with their country of origin, in violation of U.S. law.

CFI v. Victaulic, cont. CFI’s Investigation Import Analysis: CFI analyzed import data showing that, at least since the mid-2000s, Victaulic had imported vast quantities of iron and steel pipe fittings. Price Analysis: CFI determined that at such levels, Victaulic’s imports accounted for a majority of the company’s annual U.S. sales. Product Study: Through an analysis of Victaulic pipe fittings on eBay, CFI determined that less than 2 percent of Victaulic pipe fittings contained any foreign country-of-origin marking.

What is the Obligation? Marking Duties
CFI v. Victaulic, cont. What is the Obligation? Marking Duties 19 U.S.C. § 1304(a): Imports are required to be marked with their country-of-origin (COO) 19 U.S.C. § 1304(i): Imports not properly marked with COO subject to 10% marking duties.

District Court Holding WINS:
CFI v. Victaulic, cont. District Court Holding WINS: eBay sales listings not public disclosures, and import records alone did not disclose fraud1 LOSSES: CFI’s investigation unreliable and thus failed to state a claim under Rule 8(a) and 9(b)1,2 Evasion of marking duties not actionable under FCA2 1 U.S. ex rel. Customs Fraud Investigations, LLC v. Victaulic Co., Civil Action No. 13–2983, 2014 WL (E.D. Pa. Sept. 4, 2014) 2 U.S. ex rel. Customs Fraud Investigations, LLC v. Victaulic Co., Civil Action No. 13–2983, 2015 WL (E.D. Pa. April 10, 2015)

Don’t worry, we appealed and WON!
CFI v. Victaulic, cont. Don’t worry, we appealed and WON! Third Circuit Holding – Only WINS Evasion of marking duties actionable under FCA Statistical evidence admissible at 12(b)(6) stage Statistician opined that CFI’s analysis provided “overwhelming evidence” that Victauilc is “failing to mark its imported pipe fittings as required by law.” United States ex rel. Customs Fraud Investigations, LLC. v. Victaulic Co., 839 F.3d 242, 255 (3d Cir. 2016)

Breaking Down the District Court’s Marking Duty Holding
CFI v. Victaulic, cont. Breaking Down the District Court’s Marking Duty Holding Insufficient Obligation Held: Obligation to pay marking duties only accrues after importation, citing American Textile Manufacturers Institute, Inc. v. The Limited, Inc., 190 F.3d 729 (6th Cir.1999) (“ATMI”) BUT 19 USC 1304(i): (i) Additional duties for failure to mark If at the time of importation any article is not marked in accordance with the requirements of this section, and if such article is not exported or destroyed or the article marked after importation in accordance with the requirements of this section , there shall be levied, collected, and paid upon such article a duty of 10 per centum ad valorem, which shall be deemed to have accrued at the time of importation, shall not be construed to be penal, and shall not be remitted wholly or in part nor shall payment thereof be avoidable for any cause.

Third Circuit Reversed
Recognized intended abrogation of ATMI, citing legislative history: “In effect, the FERA expressly rejected ATMI's narrow interpretation of the FCA's reverse false claims provision in favor of a more broadly inclusive definition.” S. Rep. No , at 18, 34 (2008): Initial definition of obligation included “customs duties for mismarking country of origin.” S. Rep. No , n.10: The specific reference to “contingent, non- fixed” obligations was in response to United States ex rel. American Textile Manufacturers Institute, Inc. v. The Limited, Inc., 190 F.3d 729, 738 (6th Cir. 1999) (dismissing claim based on avoidance of customs duties because they were not “fixed”) “[T]he Committee decided to remove the ‘customs duties’ language in S. 386, as the Committee believes that customs duties clearly fall within the new definition of the term ’obligation’ absent an express reference and any such specific language would be unnecessary.” 28

Breaking Down the District Court’s Marking Duty Holding, cont.
CFI v. Victaulic, cont. Breaking Down the District Court’s Marking Duty Holding, cont. No False Statement Held: CPB Form 7501 does not require importer to report marking duties BUT: Under Modernization Act’s “Informed Compliance” Customs Regulatory Regime, Importers share responsibility with Customs for ensuring compliance with customs law and regulations: At or before the time of entry, an importer must use “reasonable care” to, inter alia, provide CBP the rate of duty applicable to the merchandise and “such other documentation or such information as is necessary” to enable CBP to determine (a) “whether the merchandise may be released from [CBP] custody” and (b) to “properly assess duties on the merchandise.” 19 U.S.C. § 1484(a)(1)(B). Entry Documentation = Certification of Compliance

Breaking Down the District Court’s Marking Duty Holding, cont.
CFI v. Victaulic, cont. Breaking Down the District Court’s Marking Duty Holding, cont. No additional conduct to satisfy “conceal, avoid, decrease” prong, again citing ATMI and dictionary definitions of terms. “When a course of conduct is necessary to create an obligation to pay the Government, that same course of conduct cannot also be said to ‘conceal,’ ‘avoid,’ or ‘decrease’ the obligation within the ordinary meaning of those words, even if the conduct giving rise to the obligation is fraudulent. Otherwise, the instant an obligation arises by virtue of a defendant’s fraudulent conduct, the defendant could also be said to have concealed, avoided, or decreased that same obligation without doing anything else. The ordinary meaning of the words conceal, avoid, and decrease indicate that a defendant must take some other action to prevent disclosure of or payment on the obligation or to cause that obligation to decrease after the obligation accrues.”

Third Circuit Reversed
In the pre-FERA FCA, a false statement or record was a necessary element for reverse FCA liability to attach. A false statement is no longer a required element, since the post-FERA FCA specifies that mere knowledge and avoidance of an obligation is sufficient, without the submission of a false record, to give rise to liability Indeed, the District Court's lengthy discussion of whether Victaulic filled out its customs forms in a proper manner is ultimately of no import since, under the post-FERA FCA, Victaulic need not have made any express statement to the government to give rise to reverse false claims liability. CFI need only prove that Victaulic knew its pipe fittings were improperly marked and did not notify the Bureau of Customs and Border Protection, since to do so is to conceal information customs officials needed to know in order to determine whether to release Victaulic's goods from its custody.

BUT… After finding an affirmative obligation to disclose information to customs in entry documentation, Third Circuit stated in a footnote: “Given that here, § 1484 requires importers to disclose to CBP that goods are improperly marked, we have no need to address how, if at all, the FCA would apply in the absence of an affirmative obligation to disclose separate from the obligation to pay or transmit money or property to the government.”

Supreme Court DENIED Petition for Certiorari
CFI v. Victaulic, cont. Supreme Court DENIED Petition for Certiorari Victaulic (and Amici) argued: Marking duties not included in definition of obligation because “contingent” and “arise only after the exercise of discretion by Government actors.” Split in Circuits re: 9(b) Standard between more stringent “representative samples” of “time, place, and content” (4th, 6th, 8th and 11th Circuits) versus relaxed “particular details” of fraudulent scheme with “reliable indicia” (1st, 5th, 7th, 9th, 10th, and D.C. Circuits) Victaulic Co. v. U.S., ex rel. Customs Fraud Investigations, LLC, No , 2017 WL (U.S. Oct. 2, 2017)

“Reverse” False Claims Liability - Healthcare
“Conceal,” “Avoid or Decrease” an Obligation You have concealed, avoided or decreased an obligation if you fail to return an overpayment within 60 days of identifying that overpayment. An “overpayment must be reported and returned” within “60 days after the date on which the overpayment was identified.” See 42 U.S.C. § 1320a-7k(d)(1)-(2) 34

“Identified”: Medicare Parts A & B “A person has identified an overpayment when the person has, or should have through the exercise of reasonable diligence, determined that the person has received an overpayment and quantified the amount of the overpayment.” “A person should have determined that the person received an overpayment and quantified the amount of the overpayment if the person fails to exercise reasonable diligence and the person in fact received an overpayment.” 42 C.F.R. § (a)(2) 35

“Identified”: Medicare Parts C & D “The MA organization has identified an overpayment when the MA organization has determined, or should have determined through the exercise of reasonable diligence, that the MA organization has received an overpayment.” 42 C.F.R. § ; 42 C.F.R. § (same for Part D Sponsors) Note: no “quantified the amount” language 36

“Reasonable Diligence” “‘Reasonable diligence’ includes both proactive compliance activities conducted in good faith by qualified individuals to monitor for the receipt of overpayments and investigations conducted in good faith and in a timely manner by qualified individuals in response to obtaining credible information of a potential overpayment.” 81 Fed.Reg. 29 at 7661 “[W]e adopt the standard of reasonable diligence and establish that this is demonstrated through the timely, good faith investigation of credible information, which is at most 6 months from receipt of the credible information, except in extraordinary circumstances.” 81 Fed.Reg. 29 at 7662 37

“Reasonable Diligence” “In addition, we also clarify that the quantification of the amount of the overpayment may be determined using statistical sampling, extrapolation methodologies, and other methodologies as appropriate.” “We believe that undertaking no or minimal compliance activities to monitor the accuracy and appropriateness of a provider or supplier’s Medicare claims would expose a provider or supplier to liability under the identified standard articulated in this rule based on the failure to exercise reasonable diligence if the provider or supplier received an overpayment.” 81 Fed.Reg. 29 at 7661 38

The “Overpayment Rule”: Key Cases United States v. Lakeshore Med. Clinic, Ltd., No. 11- CV-00892, 2013 WL , at *4 (E.D. Wis. Mar. 28, 2013) “If the government overpaid defendant for E/M services and defendant intentionally refused to investigate the possibility that it was overpaid, it may have unlawfully avoided an obligation to pay money to the government. Relator's allegations, however, are insufficient to state a claim under the pre-FERA FCA or the Wisconsin FCA because she does not allege that defendant made false statements to conceal overpayments for E/M services.” 39

The “Overpayment Rule”: Key Cases United States ex rel. Kane v. Healthfirst, Inc., 120 F. Supp. 3d 370, 392–93 (S.D.N.Y. 2015) (intervened) Defendants argued that “identified” means “classified with certainty,” while the Government argued that an obligation is identified when one has determined, or should have determined through the exercise of reasonable diligence, that it received an overpayment Extensive discussion of “identification,” obligation,” “avoidance,” and knowledge 40

The “Overpayment Rule”: Key Cases United States ex rel. Kane v. Healthfirst, Inc., 120 F. Supp. 3d 370, 392–93 (S.D.N.Y. 2015) (intervened) The Court denied defendants’ motion to dismiss “To define ‘identified’ such that the sixty day clock begins ticking when a provider is put on notice of a potential overpayment, rather than the moment when an overpayment is conclusively ascertained, is compatible with the legislative history of the FCA and the FERA highlighted by the Government.” Kane ex rel. U.S. v. Healthfirst, Inc., 120 F. Supp. 3d 370, 388 (S.D.N.Y. 2015) $2.95 million settlement weeks later 41

The “Overpayment Rule”: Key Cases Graves v. Plaza Med. Centers, Corp., No CIV, 2017 WL , at *10 (S.D. Fla. Feb. 27, 2017), report and recommendation adopted, No CIV, 2017 WL (S.D. Fla. Mar. 20, 2017) Novel arguments raised by both sides 42

The “Overpayment Rule”: Key Cases Graves v. Plaza Med. Centers, Corp. Humana argued on summary judgment that its “voluntary cooperation with DOJ's investigation of Relator's allegations precludes a finding that Humana ‘knowingly concealed’ or ‘knowingly and improperly avoided’ the return of alleged overpayments.” The relator argued that a 2010 Humana audit found a 35% error rate, putting Humana on notice of overpayments, but Humana wrongfully waited until 2016 to submit deletions for those codes. The relator also argued that Humana was on notice no later than the date on which it received the relator’s complaint. 43

The “Overpayment Rule”: Key Cases Graves v. Plaza Med. Centers, Corp. The Court denied summary judgment: “Given CMS's ‘good faith’ and ‘due diligence’ mandate to ensure the accuracy of the encounter data MAOs submit to CMS, Humana could not reasonably interpret CMS' silence as condoning total inactivity in response to suspected fraud. The federal regulations obligate MAOs to exercise reasonable diligence, including ‘proactive compliance activities conducted in good faith by qualified individuals to monitor for the receipt of overpayments.’” Preparing for trial 44

“Reverse” False Claims Liability – Corporate Integrity Agreements
The Issues: Can the breach of a CIA give rise to reverse FCA liability? Is a violation of the CIA a violation of an “established duty”? 45

Key Cases U.S. ex rel. Booker v. Pfizer, 9 F. Supp. 3d 34, 50 (D. Mass. 2014) (“The mere fact that [the defendant’s] failure to report ‘might result in a fine or penalty is insufficient’ to establish an ‘obligation’ to pay the government under § 3729(a)(1)(G).”) 46

Key Cases U.S. ex rel. Boise v. Cephalon, Inc., No , WL , at *1, 6 (E.D. Pa. July 21, 2015) (violation of a corporate integrity agreement created an “obligation,” even though the agreement specified that a “failure to comply may lead to the imposition of fines) Ruscher v. Omnicare, Inc., No. 4:08-cv-3396, WL , at *5 (S.D. Tex. Sept. 5, 2014) (“[T]he fact that some discretion is involved in th[e] decision [to assess penalties] does not preclude False Claims Act liability.”) 47

Key Cases – Finding No Liability United States v. Bristol-Myers Squibb Co., No. 1:11-CV- 029 (WOB), 2015 WL , at *5 (S.D. Ohio Sept. 24, 2015) (“the government's discretion with respect to whether to levy a stipulated penalty against Defendants under the explicit terms of the CIAs, combined with Defendants' rights to cure any alleged defect or to seek a hearing in front of an ALJ to contest an alleged defect, leads the Court to conclude that the stipulated-penalty provisions are contingent obligations, rather than concrete obligations of the sort envisioned by the American Textile and Chesbrough courts.”) 48

Key Cases – Finding No Liability United States ex rel. Keen v. Teva Pharm. USA Inc., No. 15 C 2309, 2017 WL 36447, at *6 (N.D. Ill. Jan. 4, 2017) (analyzing same CIA as Cephalon court, but following Booker; “Even if Teva had reported its marketing practices as potentially unlawful, it is unclear whether it would ever have had to pay anything to OIG.”) 49

Key Cases – Finding No Liability United States ex rel. Booker v. Pfizer, Inc., 847 F.3d 52, 57 (1st Cir. 2017) (acknowledging conflicting district court opinions, but affirming on the basis that relator failed to allege that Pfizer determined that a “reportable event” under the CIA occurred; nor did relator argue below that Pfizer should have reasonably considered relator’s complaint to be a reportable event) United States v. Astrazeneca Biopharmaceuticals, Inc., No (FB), 2017 WL , at *3 (E.D.N.Y. Apr. 17, 2017) (following Booker) 50

“Reverse” False Claims Liability – Environmental Issues
Can the violations of environmental regulations give rise to reverse FCA liability? Can a violation of an environmental regulation be considered a violation of an “established duty”? 51

Relevant Cases United States ex rel. Simoneaux v. E.I. duPont de Nemours & Co., 843 F.3d 1033, 1039 (5th Cir. 2016) (Toxic Substances Control Act) Section 8(e) of the TSCA requires chemical manufacturers to notify the EPA when they have “information which reasonably supports the conclusion that [a] substance or mixture presents a substantial risk of injury to health or the environment.” Although FERA's new definition resolved uncertainty regarding whether the amount of an obligation needs to be fixed, it did not upset the widely accepted holding that contingent penalties are not obligations. And a plain reading of the TSCA shows that penalties are not mandatory. 52

Relevant Cases United States v. Majestic Blue Fisheries, LLC, 196 F. Supp. 3d 436, 447 (D. Del. 2016) (Vessel Documentation Act and Act to Prevent Pollution from Ships) Misrepresenting ownership of vessels to avoid penalties or seizure Avoiding paying fines for oil and waste discharge Citing cases: “However, liability under these acts is contingent on the government's discretion to impose fines on defendants, as evidenced by the statutory language. As such, these potential obligations to pay unassessed fines are not within the scope of the FCA. Because reverse false claims do not extend to unassessed statutory fines, Moore fails to state a valid FCA claim.” 53

Relevant Cases U.S. ex rel. Harper, et al. v. Muskingum Watershed Conservancy District, 842 F.3d 430 (6th Cir. Nov. 21, 2016) (Ohio Conservancy Act; fracking leases violated deed restrictions) 54

Relevant Cases Pickens v. Kanahwa River Towing, 916 F. Supp. 702 (S.D. Ohio 1996) (nonreporting of Clean Water Act violations in log book to avoid CWA fine) “Pickens alleges that the Defendants pumped the M/V Muskogee's bilge, containing hazardous substances, into the Ohio River. Defendants also allegedly failed to record this action in the vessel's log. Defendants counter that they have no obligation to make a log. The FCA, however, does not require that the false record be one that the defendant is under an obligation by law to maintain. Therefore, even if M/V Muskogee is not required to keep a log, it may still constitute a false record or statement.The vessel's log is clearly a record. If the log excludes a major event that it should ordinarily contain, the record is a false one. If the government relies upon or otherwise reviews such logs as part of its regulatory role, then the Defendants would have submitted a false report in order to avoid an obligation to the government.” 55

Creative Environmental Applications

Pollution Two statutes cover release of pollutants into the air or U.S. waters 50% Reward Fines as high as $25,000 per day Rivers & Harbors Act of 1899 (33 U.S.C. § 411) Strict Liability Refuse Act (33 U.S.C. § 407) Act to Prevent Polution from Ships (33 U.S.C. § 1908) Willful/Knowing Violations only 50% Reward (of any fine levied as a result of a conviction)

Illegal Wildlife Trafficking (Plants, Lumber, Fish, & Animals)
Misclassifying animal goods as synthetic Foreign Corrupt Practices Act violation reported to SEC (bribing foreign officials to permit illegal trafficking) Importation of illegal wildlife? Export Smuggling? Compare U.S. ex rel. Bahrani v. Conagra, Inc., 465 F.3d 1189, 1193 (10th Cir. 2006) with United States Barrick v. Parker-Migliorini Int'l, LLC, 188 F. Supp. 3d 1231 (D. Utah 2016) Others?

“Reverse” False Claims Liability – Other Creative Applications
Other Interesting Cases United States ex rel. Landis v. Tailwind Sports Corp., 160 F. Supp. 3d 253, 270–71 (D.D.C.), reconsideration denied, 167 F. Supp. 3d 80 (D.D.C. 2016) “The Court was previously troubled by the prospect that ‘a breach of contract could never be an ‘obligation’ until a formal demand was made or a lawsuit initiated,’ which it thought ‘cannot be squared with the language or the purpose of the statute.’ This misgiving highlights the basic oversight of the Court's earlier decision: its failure to distinguish between legal instruments that actually create an obligation and those that condition indebtedness on the exercise of governmental discretion.” 59

Other Interesting Cases United States v. Newman, No. CV (CKK), 2017 WL , at *9 (D.D.C. Aug. 17, 2017) (“[T]he allegation that Defendants fraudulently concealed their original false claim for a new entrant bidding credit and thereby prevented the government from discovering that fraud is not by itself enough to establish an ‘obligation’ to return the credit for the purposes of a reverse false claim action.”) 60

Other Interesting Cases Scollick v. Narula (D.D.C. 7/31/17) (Sureties did not commit reverse False Claims Act (FCA) violations as result of their issuance of bonds in connection with government contracts that contractors fraudulently obtained, absent showing that sureties knew that contractors' bids were fraudulent, that contractors failed to complete projects in accordance with specifications, or that sureties avoided or decreased any of their obligations under bonds.) United States v. Southland Gaming of the Virgin Islands, Inc., 182 F. Supp. 3d 297, 302 (D.V.I. 2016) (Virgin Islands video lottery) 61

Developments in Reverse False Claims Liability Colin Huntley, Department of Justice Anna Haac, Tycko & Zavareei LLP Matthew Organ, Goldberg Kohn Ltd.

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Developments in Reverse False Claims Liability Colin Huntley, Department of Justice Anna Haac, Tycko & Zavareei LLP Matthew Organ, Goldberg Kohn Ltd.

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