Partner Firms:
Speaker Firms and Organization:

Presented By:

Lieff Cabraser Heimann & Bernstein, LLP
Robert J. Nelson
Pa...
 If you experience any technical difficulties during today’s WebEx session, please contact our Technical Support @ 866-77...
 About an hour or so after the event, you'll be sent a survey via email asking you for your feedback on your experience w...
Welcome to the Knowledge Group Unlimited Subscription Programs. We have Two Options Available for You:
FREE UNLIMITED: Thi...
Knowledge Group UNLIMITED PAID Subscription Programs Pricing:
Individual Subscription Fees: (3 Options)
Semi-Annual: $299 ...
Partner Firms:

Lieff Cabraser Heimann & Bernstein, LLP, is a sixty-plus attorney AVrated law firm with offices in San Fra...
Partner Firms:

From offices located in the world's principal financial centers, Fried, Frank,
Harris, Shriver & Jacobson ...
Partner Firm:

StoneTurn is a partnership of experienced accountants, economists, and
financial and technology consultants...
Brief Speaker Bios:
Robert J. Nelson
Robert J. Nelson is a partner at Lieff Cabraser and chairs Lieff Cabraser's False Cla...
Brief Speaker Bios:
Jennifer M. Wollenberg
Jennifer M. Wollenberg is a senior associate at Fried, Frank, Harris, Shriver &...
Brief Speaker Bios:
Joseph Cheriathundam
Joe Cheriathundam, a national forensic data analytics leader with the StoneTurn G...
With record recoveries, the Department of Justice, qui tam whistleblowers, and state Attorneys General
have continued to s...
Featured Speakers:

Moderator:

SEGMENT 1:

Robert J. Nelson

Michelle L. Rogers
Partner
BuckleySandler LLP

Partner and C...
Moderator:
Robert J. Nelson
Partner and Chair of the False
Claims Act Practice Group

Lieff Cabraser Heimann & Bernstein, ...
Moderator:
Robert J. Nelson
Partner and Chair of the False
Claims Act Practice Group

Lieff Cabraser Heimann & Bernstein, ...
Moderator:
Robert J. Nelson
Partner and Chair of the False
Claims Act Practice Group

Lieff Cabraser Heimann & Bernstein, ...
Moderator:
Robert J. Nelson
Partner and Chair of the False
Claims Act Practice Group

Lieff Cabraser Heimann & Bernstein, ...
Moderator:
Robert J. Nelson
Partner and Chair of the False
Claims Act Practice Group

Lieff Cabraser Heimann & Bernstein, ...
Moderator:
Robert J. Nelson
Partner and Chair of the False
Claims Act Practice Group

Lieff Cabraser Heimann & Bernstein, ...
Moderator:
Robert J. Nelson
Partner and Chair of the False
Claims Act Practice Group

Lieff Cabraser Heimann & Bernstein, ...
Moderator:
Robert J. Nelson
Partner and Chair of the False
Claims Act Practice Group

Lieff Cabraser Heimann & Bernstein, ...
Moderator:
Robert J. Nelson
Partner and Chair of the False
Claims Act Practice Group

Lieff Cabraser Heimann & Bernstein, ...
Moderator:
Robert J. Nelson
Partner and Chair of the False
Claims Act Practice Group

Lieff Cabraser Heimann & Bernstein, ...
Moderator:
Robert J. Nelson
Partner and Chair of the False
Claims Act Practice Group

Lieff Cabraser Heimann & Bernstein, ...
Moderator:
Robert J. Nelson
Partner and Chair of the False
Claims Act Practice Group

Lieff Cabraser Heimann & Bernstein, ...
Moderator:
Robert J. Nelson
Partner and Chair of the False
Claims Act Practice Group

Lieff Cabraser Heimann & Bernstein, ...
Moderator:
Robert J. Nelson
Partner and Chair of the False
Claims Act Practice Group

Lieff Cabraser Heimann & Bernstein, ...
Moderator:
Robert J. Nelson
Partner and Chair of the False
Claims Act Practice Group

Lieff Cabraser Heimann & Bernstein, ...
Moderator:
Robert J. Nelson
Partner and Chair of the False
Claims Act Practice Group

Lieff Cabraser Heimann & Bernstein, ...
Moderator:
Robert J. Nelson
Partner and Chair of the False
Claims Act Practice Group

Lieff Cabraser Heimann & Bernstein, ...
Moderator:
Robert J. Nelson
Partner and Chair of the False
Claims Act Practice Group

Lieff Cabraser Heimann & Bernstein, ...
Moderator:
Robert J. Nelson
Partner and Chair of the False
Claims Act Practice Group

Lieff Cabraser Heimann & Bernstein, ...
Moderator:
Robert J. Nelson
Partner and Chair of the False
Claims Act Practice Group

Lieff Cabraser Heimann & Bernstein, ...
Moderator:
Robert J. Nelson
Partner and Chair of the False
Claims Act Practice Group

Lieff Cabraser Heimann & Bernstein, ...
Moderator:
Robert J. Nelson
Partner and Chair of the False
Claims Act Practice Group

Lieff Cabraser Heimann & Bernstein, ...
Moderator:
Robert J. Nelson
Partner and Chair of the False
Claims Act Practice Group

Lieff Cabraser Heimann & Bernstein, ...
Moderator:
Robert J. Nelson
Partner and Chair of the False
Claims Act Practice Group

Lieff Cabraser Heimann & Bernstein, ...
Moderator:
Robert J. Nelson
Partner and Chair of the False
Claims Act Practice Group

Lieff Cabraser Heimann & Bernstein, ...
Moderator:
Robert J. Nelson
Partner and Chair of the False
Claims Act Practice Group

Lieff Cabraser Heimann & Bernstein, ...
Moderator:
Robert J. Nelson
Partner and Chair of the False
Claims Act Practice Group

Lieff Cabraser Heimann & Bernstein, ...
Moderator:
Robert J. Nelson
Partner and Chair of the False
Claims Act Practice Group

Lieff Cabraser Heimann & Bernstein, ...
Moderator:
Robert J. Nelson
Partner and Chair of the False
Claims Act Practice Group

Lieff Cabraser Heimann & Bernstein, ...
Moderator:
Robert J. Nelson
Partner and Chair of the False
Claims Act Practice Group

Lieff Cabraser Heimann & Bernstein, ...
Moderator:
Robert J. Nelson
Partner and Chair of the False
Claims Act Practice Group

Lieff Cabraser Heimann & Bernstein, ...
Moderator:
Robert J. Nelson
Partner and Chair of the False
Claims Act Practice Group

Lieff Cabraser Heimann & Bernstein, ...
Moderator:
Robert J. Nelson
Partner and Chair of the False
Claims Act Practice Group

Lieff Cabraser Heimann & Bernstein, ...
Moderator:
Robert J. Nelson
Partner and Chair of the False
Claims Act Practice Group

Lieff Cabraser Heimann & Bernstein, ...
Moderator:
Robert J. Nelson
Partner and Chair of the False
Claims Act Practice Group

Lieff Cabraser Heimann & Bernstein, ...
Moderator:
Robert J. Nelson
Partner and Chair of the False
Claims Act Practice Group

Lieff Cabraser Heimann & Bernstein, ...
Moderator:
Robert J. Nelson
Partner and Chair of the False
Claims Act Practice Group

Lieff Cabraser Heimann & Bernstein, ...
Moderator:
Robert J. Nelson
Partner and Chair of the False
Claims Act Practice Group

Lieff Cabraser Heimann & Bernstein, ...
Moderator:
Robert J. Nelson
Partner and Chair of the False
Claims Act Practice Group

Lieff Cabraser Heimann & Bernstein, ...
Moderator:
Robert J. Nelson
Partner and Chair of the False
Claims Act Practice Group

Lieff Cabraser Heimann & Bernstein, ...
Moderator:
Robert J. Nelson
Partner and Chair of the False
Claims Act Practice Group

Lieff Cabraser Heimann & Bernstein, ...
Moderator:
Robert J. Nelson
Partner and Chair of the False
Claims Act Practice Group

Lieff Cabraser Heimann & Bernstein, ...
Moderator:
Robert J. Nelson
Partner and Chair of the False
Claims Act Practice Group

Lieff Cabraser Heimann & Bernstein, ...
Moderator:
Robert J. Nelson
Partner and Chair of the False
Claims Act Practice Group

Lieff Cabraser Heimann & Bernstein, ...
SEGMENT 1:
Michelle L. Rogers
Partner
BuckleySandler LLP

Introduction
Michelle L. Rogers is a partner in the Washington, ...
SEGMENT 1:
Michelle L. Rogers
Partner
BuckleySandler LLP

Financial Fraud Redefined: How the Government Is Using the
False...
SEGMENT 1:
Michelle L. Rogers
Partner
BuckleySandler LLP

Overview






Context: Financial Fraud as Government Prior...
SEGMENT 1:
Michelle L. Rogers
Partner
BuckleySandler LLP

Financial Fraud as DOJ Priority


During FY 2012, DOJ secured m...
SEGMENT 1:
Michelle L. Rogers
Partner
BuckleySandler LLP

Financial Fraud as Government Priority






Est. 2009, the F...
SEGMENT 1:
Michelle L. Rogers
Partner
BuckleySandler LLP

Financial Fraud FCA Enforcement: Brief Background


Imposes civ...
SEGMENT 1:
Michelle L. Rogers
Partner
BuckleySandler LLP

Financial Fraud FCA Enforcement: Brief History



FCA actions ...
SEGMENT 1:
Michelle L. Rogers
Partner
BuckleySandler LLP

Evolution of Financial FCA Cases

65
January 27, 2014
SEGMENT 1:
Michelle L. Rogers
Partner
BuckleySandler LLP

Trends and Predictions









Increased suits against co...
SEGMENT 1:
Michelle L. Rogers
Partner
BuckleySandler LLP

Mitigating Risk


Knowledge is power.
–

Employees

–

Business...
SEGMENT 1:
Michelle L. Rogers
Partner
BuckleySandler LLP

For More Information, Contact:
Michelle L. Rogers
Partner
202-34...
SEGMENT 2:
Jennifer M. Wollenberg
Senior Associate
Fried, Frank, Harris, Shriver &
Jacobson LLP

Introduction
Jennifer M. ...
SEGMENT 2:
Jennifer M. Wollenberg
Senior Associate
Fried, Frank, Harris, Shriver &
Jacobson LLP

False Claims Act Exposure...
SEGMENT 2:
Jennifer M. Wollenberg
Senior Associate
Fried, Frank, Harris, Shriver &
Jacobson LLP

Overview
1.The Wartime Su...
SEGMENT 2:
Jennifer M. Wollenberg
Senior Associate
Fried, Frank, Harris, Shriver &
Jacobson LLP

FCA Statute of Limitation...
SEGMENT 2:
Jennifer M. Wollenberg
Senior Associate
Fried, Frank, Harris, Shriver &
Jacobson LLP

Wartime Suspension of Lim...
SEGMENT 2:
Jennifer M. Wollenberg
Senior Associate
Fried, Frank, Harris, Shriver &
Jacobson LLP

Concerns with Application...
SEGMENT 2:
Jennifer M. Wollenberg
Senior Associate
Fried, Frank, Harris, Shriver &
Jacobson LLP

WSLA and the FCA
•

Impor...
SEGMENT 2:
Jennifer M. Wollenberg
Senior Associate
Fried, Frank, Harris, Shriver &
Jacobson LLP

Damages Under the FCA
• L...
SEGMENT 2:
Jennifer M. Wollenberg
Senior Associate
Fried, Frank, Harris, Shriver &
Jacobson LLP

“Gross Trebling” Approach...
SEGMENT 2:
Jennifer M. Wollenberg
Senior Associate
Fried, Frank, Harris, Shriver &
Jacobson LLP

Recent “Net Trebling” Dec...
SEGMENT 2:
Jennifer M. Wollenberg
Senior Associate
Fried, Frank, Harris, Shriver &
Jacobson LLP

Practical Differences Bet...
SEGMENT 2:
Jennifer M. Wollenberg
Senior Associate
Fried, Frank, Harris, Shriver &
Jacobson LLP

Penalties under the FCA
•...
SEGMENT 2:
Jennifer M. Wollenberg
Senior Associate
Fried, Frank, Harris, Shriver &
Jacobson LLP

Recent FCA Penalties Deci...
SEGMENT 2:
Jennifer M. Wollenberg
Senior Associate
Fried, Frank, Harris, Shriver &
Jacobson LLP

Other Concerns With Fourt...
SEGMENT 2:
Jennifer M. Wollenberg
Senior Associate
Fried, Frank, Harris, Shriver &
Jacobson LLP

FCA Exposure Recent Devel...
SEGMENT 3:
Mark Dostal
Director, National Government
Contracts Practice
PwC

Introduction
Mark Dostal is a Director at PwC...
SEGMENT 3:
Mark Dostal
Director, National Government
Contracts Practice
PwC

Discussion Topics


Compliance with primary ...
SEGMENT 3:
Mark Dostal
Director, National Government
Contracts Practice
PwC

Business Systems, Controls, and Processes


...
SEGMENT 3:
Mark Dostal
Director, National Government
Contracts Practice
PwC

Sources of FCA Allegations


Allegations can...
SEGMENT 3:
Mark Dostal
Director, National Government
Contracts Practice
PwC

Sources of FCA Allegations
•

Overbillings
– ...
SEGMENT 3:
Mark Dostal
Director, National Government
Contracts Practice
PwC

FCA Damages “Would Have Paid” Model
• Applies...
SEGMENT 3:
Mark Dostal
Director, National Government
Contracts Practice
PwC

Recognizing and Mitigating Threats of FCA Vio...
SEGMENT 3:
Mark Dostal
Director, National Government
Contracts Practice
PwC

Challenges in Defending against Allegations
...
SEGMENT 4:
Joseph Cheriathundam
Managing Director
StoneTurn Group, LLP

Introduction
Joe Cheriathundam, a national forensi...
SEGMENT 4:
Joseph Cheriathundam
Managing Director
StoneTurn Group, LLP

Data Analytics in the Life-Cycle of False
Claims A...
SEGMENT 4:
Joseph Cheriathundam
Managing Director
StoneTurn Group, LLP

Number of New Matters by Year

94
January 27, 2014
SEGMENT 4:
Joseph Cheriathundam
Managing Director
StoneTurn Group, LLP

Settlement and Judgment Amounts by Year

95
Januar...
SEGMENT 4:
Joseph Cheriathundam
Managing Director
StoneTurn Group, LLP

Data Analytics in the Life-Cycle of the False Clai...
SEGMENT 4:
Joseph Cheriathundam
Managing Director
StoneTurn Group, LLP

Data Analytics in the Life-Cycle of the False Clai...
SEGMENT 4:
Joseph Cheriathundam
Managing Director
StoneTurn Group, LLP

Data Analytics in the Life-Cycle of the False Clai...
SEGMENT 4:
Joseph Cheriathundam
Managing Director
StoneTurn Group, LLP

Data Analytics in the Life-Cycle of the False Clai...
Q&A:

Moderator:

SEGMENT 1:

Robert J. Nelson

Michelle L. Rogers
Partner
BuckleySandler LLP

Partner and Chair of the Fa...
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False Claims Act in 2014: Implementation Issues LIVE Webcast

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With record recoveries, the Department of Justice, qui tam whistleblowers, and state Attorneys General have continued to step up their enforcement efforts in False Claims Act cases. Armed with enhanced legislation and stricter enforcement tools, DOJ and other agencies, are able to more easily identify and act on fraud. Now, more than ever, government contractors in various industries including defense, aerospace, healthcare, and financial services, must be mindful of this powerful statute and vigilant about compliance or face stiff penalties.

The Knowledge Group has assembled a panel of key thought leaders and practitioners to help business executives, consultants, auditors, and attorneys understand the most significant issues and recent developments with respect to the increased risks associated with the False Claims Act.

To view the webcasts go to this link: http://youtu.be/Mp7_ug5Wfn4

To learn more about the webcast visit our website: http://theknowledgegroup.org/

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False Claims Act in 2014: Implementation Issues LIVE Webcast

  1. 1. Partner Firms: Speaker Firms and Organization: Presented By: Lieff Cabraser Heimann & Bernstein, LLP Robert J. Nelson Partner and Chair of the False Claims Act Practice Group BuckleySandler LLP Michelle L. Rogers Partner Fried, Frank, Harris, Shriver & Jacobson LLP Jennifer M. Wollenberg Senior Associate PwC Mark Dostal Director, National Government Contracts Practice StoneTurn Group, LLP Joseph Cheriathundam Managing Director Thank you for logging into today’s event. Please note we are in standby mode. All Microphones will be muted until the event starts. We will be back with speaker instructions @ 11:55am. Any Questions? Please email: Info@knowledgecongress.org Group Registration Policy Please note ALL participants must be registered or they will not be able to access the event. If you have more than one person from your company attending, you must fill out the group registration form. We reserve the right to disconnect any unauthorized users from this event and to deny violators admission to future events. To obtain a group registration please send a note to info@knowledgecongress.org or call 646.202.9344. 1 January 27, 2014
  2. 2.  If you experience any technical difficulties during today’s WebEx session, please contact our Technical Support @ 866-779-3239.  You may ask a question at anytime throughout the presentation today via the chat window on the lower right hand side of your screen. Questions will be aggregated and addressed during the Q&A segment.  Please note, this call is being recorded for playback purposes.  If anyone was unable to log in to the online webcast and needs to download a copy of the PowerPoint presentation for today’s event, please send an email to: info@knowledgecongress.org. If you’re already logged in to the online webcast, we will post a link to download the files shortly.  If you are listening on a laptop, you may need to use headphones as some laptops speakers are not sufficiently amplified enough to hear the presentations. If you do not have headphones and cannot hear the webcast send an email to info@knowledgecongress.org and we will send you the dial in phone number. 2 January 27, 2014
  3. 3.  About an hour or so after the event, you'll be sent a survey via email asking you for your feedback on your experience with this event today - it's designed to take less than two minutes to complete, and it helps us to understand how to wisely invest your time in future events. Your feedback is greatly appreciated. If you are applying for continuing education credit, completions of the surveys are mandatory as per your state boards and bars. 6 secret words (3 for each credit hour) will be given throughout the presentation. We will ask you to fill these words into the survey as proof of your attendance. Please stay tuned for the secret word.  Speakers, I will be giving out the secret words at randomly selected times. I may have to break into your presentation briefly to read the secret word. Pardon the interruption. 3 January 27, 2014
  4. 4. Welcome to the Knowledge Group Unlimited Subscription Programs. We have Two Options Available for You: FREE UNLIMITED: This program is free of charge with no further costs or obligations. It includes:  Unlimited access to over 15,000 pages of course material from all Knowledge Group Webcasts.  Subscribers to this program can download any slides, white papers, or supplemental material covered during all live webcasts.  A special discount code which will give you 50% off the purchase of all Live webcasts and downloaded recordings. PAID UNLIMITED: Our most comprehensive and cost-effective plan, for a one-time fee:  Access to all LIVE Webcasts (Normally $199 to $349 for each event without a subscription). Including: Bring-a-Friend – Invite a client or associate outside your firm to attend for FREE. Sign up for as many webcasts as you wish.  Access to all of Recorded/Archived Events & Course Material includes 1,500+ hours of audio material (Normally $299 for each event without a subscription).  Free CLE/CPE/CE Processing (Normally $49 Per Course without a subscription).  Access to over 15,000 pages of course material from Knowledge Group Webcasts.  Ability to invite a guest of your choice to attend any live webcast Free of charge (Exclusive benefit only available for PAID UNLIMITED subscribers).  6 Month Subscription is $299 with No Additional Fees Other options are available.  Special Offer: Sign up today and add 2 of your colleagues to your plan for free Check the “Triple Play” box on the sign-up sheet contained in the link below. https://gkc.memberclicks.net/index.php?option=com_mc&view=mc&mcid=form_157964 4 January 27, 2014
  5. 5. Knowledge Group UNLIMITED PAID Subscription Programs Pricing: Individual Subscription Fees: (3 Options) Semi-Annual: $299 one-time fee for a 6 month subscription with unlimited access to all webcasts, recordings, and materials. Annual: $499 one-time fee for a 12 month unlimited subscription with unlimited access to all webcasts, recordings, and materials. Month-to-Month: Pay $49 monthly. Cancel anytime (No Commitment). Group plans are available. See the registration form for details. Best ways to sign up: •Fill out the sign up form attached to the post conference survey email. •Sign up online by clicking the link contained in the post conference survey email. 3. Click the link below or the one we just posted in the chat window to the right. https://gkc.memberclicks.net/index.php?option=com_mc&view=mc&mcid=form_157964 Discounts: Enroll today and you will be eligible for the “Triple Play” program and 3% off if you pay by credit card. Also we will waive the $49 CLE/CPE processing fee for today’s conference. See the form attached to the post conference survey email for details. Questions: Send an email to: info@knowledgecongress.org with “Unlimited” in the subject. 5 January 27, 2014
  6. 6. Partner Firms: Lieff Cabraser Heimann & Bernstein, LLP, is a sixty-plus attorney AVrated law firm with offices in San Francisco, New York, and Nashville. Representing plaintiffs in a wide range of federal False Claims Act and other whistleblower cases, Lieff Cabraser has taken on many of the world's largest corporations, holding them accountable for their behavior. Lieff Cabraser also represents plaintiffs in the fields of personal injury and mass torts, securities and financial fraud, employment discrimination and unlawful employment practices, product defect, antitrust and intellectual property, consumer protection, environmental and toxic exposure, and human rights. With 150 attorneys in Washington, DC, Los Angeles, New York, and Chicago, BuckleySandler is among the leading financial services law firms in the county. BuckleySandler attorneys have a track record of successfully assisting clients in regulatory, enforcement, litigation, transactional, and public policy matters. Currently, BuckleySandler represents the top 10 largest banks in the United States, nine of the top 10 mortgage lenders, the top 10 mortgage servicers, the top 10 credit card issuers, and numerous community banks and non-bank financial services companies. 6 January 27, 2014
  7. 7. Partner Firms: From offices located in the world's principal financial centers, Fried, Frank, Harris, Shriver & Jacobson LLP's lawyers provide advice to clients regarding their most critical legal and business needs. Fried Frank's False Claims Act attorneys have extensive experience in every facet of the civil False Claims Act, and have been on the cutting edge of litigation and debate about the FCA's interpretation and scope. The Firm regularly represents financial industry, defense, health care, and other government contractors in high stakes cases. The Firm's False Claims Act practitioners also assist and represent entities not normally associated with federal and state fraud investigations, such as municipal airport authorities, computer manufacturers, private and state universities, academic medical centers, import and export companies, major accounting and consulting firms, magazine publishers, and oil and gas exploration companies. About PwC US PwC US helps organizations and individuals create the value they're looking for. We're a member of the PwC network of firms in 158 countries with more than 180,000 people. We're committed to delivering quality in assurance, tax and advisory services. Tell us what matters to you and find out more by visiting us at www.pwc.com/US About PwC's Forensic Services PwC Forensic Services team of experienced professionals is dedicated to meeting the challenges caused by fraud allegations, financial crimes and other irregularities. Our portfolio of services includes: Financial Crime Examinations, Forensic Technology Solutions, Regulatory Compliance Reviews, Fraud Risk Management and Fraud Prevention, Dispute Analysis and Litigation Support. The Forensic Services team also manages the PwC Fraud Forum, an exclusive community where members can gain knowledge, participate in events and share important insights on preventing, detecting and investigating fraud, corruption and economic crime. See www.pwc.com/us/forensics and http://usfraudforum.pwc.com for more information. 7 January 27, 2014
  8. 8. Partner Firm: StoneTurn is a partnership of experienced accountants, economists, and financial and technology consultants supporting corporate and individual clients and their advisors, engaged in the most challenging and complex business transactions, disputes and financial investigations. Our work ranges from behind-the-scenes advice, to deep financial analysis, to full service dispute resolution support. 8 January 27, 2014
  9. 9. Brief Speaker Bios: Robert J. Nelson Robert J. Nelson is a partner at Lieff Cabraser and chairs Lieff Cabraser's False Claims Act practice group. Mr. Nelson has been the lead lawyer on numerous whistleblower cases, including a $46 million settlement involving Sutter Health in 2013, as well as a $78.5 million settlement involving the University of Phoenix. Mr. Nelson was recognized in 2010 as California Lawyer magazine's Attorney of the Year for his work on the University of Phoenix case. Mr. Nelson previously achieved the same recognition in 2008 in connection with a verdict he obtained against Chrysler for $54 million, including $50 million in punitive damages. Mr. Nelson has been courtappointed class counsel in more than two dozen class actions in state and federal courts around the country, and is a frequent lecturer on class action and whistleblower issues. He is a 1987 graduate of NYU School of Law, where he was admitted to the Order of the Coif and was an Articles Editor on the NYU Law Review. Following law school, Mr. Nelson served as a judicial clerk to Judge Stephen Reinhardt on the Ninth Circuit Court of Appeals. Michelle L. Rogers Michelle L. Rogers is a partner in the Washington, DC office of BuckleySandler LLP. Ms. Rogers represents institutions in a wide range of litigation matters, including government enforcement actions, class action litigation, regulatory examinations, and corporate internal investigations. She currently is representing several financial institutions in ongoing False Claims Act (FCA) and Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) matters. She has also represented clients in matters involving the Program Fraud Civil Remedies Act (PFCRA), Truth in Lending Act, Fair Housing Act, Equal Credit Opportunity Act, Civil Rights Act, and unfair and deceptive trade practices statutes involving the Department of Justice (DOJ), Consumer Financial Protection Bureau (CFPB), Department of Housing and Urban Development (HUD), Federal Housing Finance Agency (FHFA), federal and state bank regulators, and state attorneys general. 9 January 27, 2014
  10. 10. Brief Speaker Bios: Jennifer M. Wollenberg Jennifer M. Wollenberg is a senior associate at Fried, Frank, Harris, Shriver & Jacobson LLP. Located in Fried Frank’s Washington, D.C. office, she is a member of the Firm's False Claims Act and Qui Tam practice group. Jenny represents corporations in a variety of complex civil litigation matters, with an emphasis on cases arising under the civil FCA and, in particular, cases involving the aerospace, financial, and defense industries. She has been a contributing co-author of FraudMail Alert®, which regularly reports on significant developments in the FCA arena, and has published articles on various aspects of the FCA. Jenny received her JD from Cornell Law School and is admitted to practice in the District of Columbia, New York, various United States Courts of Appeals (Second, Ninth, and District of Columbia Circuits), the United States Court of Federal Claims, and the United States District Court for the District of Columbia. Mark Dostal Mark Dostal is a Director at PwC. He has over 32 years of extensive and diversified experience in government contract accounting and auditing, including 8 years with PwC, 8 years with another Big 4 national government contracting practice, and 16 years with the Defense Contract Audit Agency (DCAA). He specializes in the requirements of the Federal Acquisition Regulation (FAR), Agency FAR Supplements, and Cost Accounting Standards (CAS). Mark began his career conducting DCAA audits, directing field office operations, and managing Agency responsibilities at large and medium sized defense contractors from locations in the Midwest, Southwest, and Agency Headquarters. After leaving Federal service, Mark leveraged his unique experiences and relationships to develop consultative approaches with clients that support compliant, yet practical considerations for meeting government contracting and cost accounting practices. He has also assisted many commercial market-based clients with transitioning to and navigating the FAR/DFARS and CAS requirements when entering the federal marketplace. As a member of defense and space industry associations, he actively promotes open dialogue of perspectives and issues affecting industry and senior government acquisition officials. Mark is a Certified Public Accountant in Illinois and Iowa, and member of the American Institute of Certified Public Accountants, National Defense Industrial Association, and National Contract Management Association. 10 January 27, 2014
  11. 11. Brief Speaker Bios: Joseph Cheriathundam Joe Cheriathundam, a national forensic data analytics leader with the StoneTurn Group, has over 20 years of experience supporting companies and organizations in matters of conflict, change and regulatory compliance. He has led projects pertaining to the False Claims Act, anti-fraud consulting, anti-money laundering, mergers and acquisitions, investment/trading improprieties, and international business compliance in industries as diverse as finance, retail, life sciences/healthcare, automotive, and real estate. Joe recently earned an Advanced Business Analytics Certification from the Kelley School of Business at Indiana University and has frequently written and spoken on the topic of Forensic Data Analytics. ► For more information about the speakers, you can visit: http://www.knowledgecongress.org/speakers_2014_False_Claims_Act.html 11 January 27, 2014
  12. 12. With record recoveries, the Department of Justice, qui tam whistleblowers, and state Attorneys General have continued to step up their enforcement efforts in False Claims Act cases. Armed with enhanced legislation and stricter enforcement tools, DOJ and others are able to more easily identify and act on fraud. Now, more than ever, government contractors in various industries including defense, aerospace, healthcare, and financial services, must be mindful of this powerful statute and vigilant about compliance or face stiff penalties. The Knowledge Group has assembled a panel of key thought leaders and practitioners to help business executives, consultants, auditors, and attorneys understand the most significant issues and recent developments with respect to the increased risks associated with the False Claims Act. 12 January 27, 2014
  13. 13. Featured Speakers: Moderator: SEGMENT 1: Robert J. Nelson Michelle L. Rogers Partner BuckleySandler LLP Partner and Chair of the False Claims Act Practice Group Lieff Cabraser Heimann & Bernstein, LLP SEGMENT 2: SEGMENT 3: Jennifer M. Wollenberg Senior Associate Mark Dostal Director, National Government Contracts Practice PwC Fried, Frank, Harris, Shriver & Jacobson LLP SEGMENT 4: Joseph Cheriathundam Managing Director StoneTurn Group, LLP 13 January 27, 2014
  14. 14. Moderator: Robert J. Nelson Partner and Chair of the False Claims Act Practice Group Lieff Cabraser Heimann & Bernstein, LLP Introduction Robert J. Nelson is a partner at Lieff Cabraser and chairs Lieff Cabraser's False Claims Act practice group. Mr. Nelson has been the lead lawyer on numerous whistleblower cases, including a $46 million settlement involving Sutter Health in 2013, as well as a $78.5 million settlement involving the University of Phoenix. Mr. Nelson was recognized in 2010 as California Lawyer magazine's Attorney of the Year for his work on the University of Phoenix case. Mr. Nelson previously achieved the same recognition in 2008 in connection with a verdict he obtained against Chrysler for $54 million, including $50 million in punitive damages. Mr. Nelson has been court-appointed class counsel in more than two dozen class actions in state and federal courts around the country, and is a frequent lecturer on class action and whistleblower issues. He is a 1987 graduate of NYU School of Law, where he was admitted to the Order of the Coif and was an Articles Editor on the NYU Law Review. Following law school, Mr. Nelson served as a judicial clerk to Judge Stephen Reinhardt on the Ninth Circuit Court of Appeals. 14 January 27, 2014
  15. 15. Moderator: Robert J. Nelson Partner and Chair of the False Claims Act Practice Group Lieff Cabraser Heimann & Bernstein, LLP Part I: Overview 15 January 27, 2014
  16. 16. Moderator: Robert J. Nelson Partner and Chair of the False Claims Act Practice Group Lieff Cabraser Heimann & Bernstein, LLP Background • Signed by President Lincoln during the height of the Civil War to combat rampant profiteering • “For sugar [the government] often got sand; for coffee, rye; for leather, something no better than brown paper; for sound horses and mules, spavined beasts and dying donkeys[.]” United States ex rel. Newsham v. Lockheed Missiles & Space Co., 722 F. Supp. 607, 609 (N.D. Cal. 1989) (quoting Tomes, Fortunes of War, 29 Harper’s Monthly Mag. 228 (1864)). • The FCA’s reach has since extended to Medicare, Medicaid, Social Security, and other federal programs 16 January 27, 2014
  17. 17. Moderator: Robert J. Nelson Partner and Chair of the False Claims Act Practice Group Lieff Cabraser Heimann & Bernstein, LLP General Structure • Private/public partnership • Cases may be initiated by whistleblowers, and the government has an opportunity to investigate and intervene • If successful, the whistleblower may recover a portion of the government’s damages 17 January 27, 2014
  18. 18. Moderator: Robert J. Nelson Partner and Chair of the False Claims Act Practice Group Lieff Cabraser Heimann & Bernstein, LLP Why Whistleblowers? • Congress has long recognized that the government, with limited resources, is overmatched in the fight against fraud. U.S. ex rel. Marcus v. Hess, 317 U.S. 537, 560 (1943) (Jackson, J., dissenting) • The bill is predicated on the “old-fashioned idea” of “setting a rogue to catch a rogue.” Cong. Globe, 37th Cong., 3d Sess. 955-56 (1863) (remarks of Sen. Howard). 18 January 27, 2014
  19. 19. Moderator: Robert J. Nelson Partner and Chair of the False Claims Act Practice Group Lieff Cabraser Heimann & Bernstein, LLP What is the Whistleblower’s Role? • Whistleblowers gather evidence and organize the case • Whistleblowers bring potential fraud cases to the government’s attention • Cases are filed under seal in order to give the government a chance to investigate (and potentially intervene in the litigation) 19 January 27, 2014
  20. 20. Moderator: Robert J. Nelson Partner and Chair of the False Claims Act Practice Group Lieff Cabraser Heimann & Bernstein, LLP What Is the Government’s Role? • The government has unique tools to investigate potential claims • If the government formally joins the litigation by intervening, it bears primary responsibility for prosecuting the action. See 31 U.S.C. § 3730(c)(1). • The government can also dismiss the action or settle the lawsuit over the whistleblower’s objection. See 31 U.S.C. § 3730(c)(2). 20 January 27, 2014
  21. 21. Moderator: Robert J. Nelson Partner and Chair of the False Claims Act Practice Group Lieff Cabraser Heimann & Bernstein, LLP What Do Parties Stand to Gain? • The government may recover treble damages and significant statutory penalties • Whistleblowers may obtain a percentage of the government’s damages 21 January 27, 2014
  22. 22. Moderator: Robert J. Nelson Partner and Chair of the False Claims Act Practice Group Lieff Cabraser Heimann & Bernstein, LLP Part II: Navigating the Statute 22 January 27, 2014
  23. 23. Moderator: Robert J. Nelson Partner and Chair of the False Claims Act Practice Group Lieff Cabraser Heimann & Bernstein, LLP Who is Liable Under the FCA? • In general, any person who knowingly submits a false claim to the government • Any person, such as a subcontractor, who causes another to submit a false claim to the government • Any person who knowingly conceals or avoids an obligation to pay money to the government (“reverse false claims”) • Individuals who conspire to violate the False Claims Act 23 January 27, 2014
  24. 24. Moderator: Robert J. Nelson Partner and Chair of the False Claims Act Practice Group Lieff Cabraser Heimann & Bernstein, LLP Key Term: “False Claim” • Any “request or demand, whether under a contract or otherwise, for money or property” that is “presented to an officer, employee, or agent of the United States” or to a contractor working on a government program. See 31 U.S.C. § 3129(b)(2). 24 January 27, 2014
  25. 25. Moderator: Robert J. Nelson Partner and Chair of the False Claims Act Practice Group Lieff Cabraser Heimann & Bernstein, LLP Five Most Common Types of Civil False Claims Act Cases • • • • • • • • • • • • The “mischarge” case “Upcoding” Double-billing The “fraud-in-the-inducement” case Bid rigging Kickbacks The “false certification” case Express and implied “Materiality” questions The “substandard product or service” case Common in procurement, health care cases The “reverse false claim case” 25 January 27, 2014
  26. 26. Moderator: Robert J. Nelson Partner and Chair of the False Claims Act Practice Group Lieff Cabraser Heimann & Bernstein, LLP Most Common Federal Programs Affected by the FCA • • • • • • Medicare Medicaid Social Security Defense Procurement Federal Loan Guarantees/Mortgage Fraud Other government programs involving federal grants (e.g., USAID, Department of Education grants, etc.) 26 January 27, 2014
  27. 27. Moderator: Robert J. Nelson Partner and Chair of the False Claims Act Practice Group Lieff Cabraser Heimann & Bernstein, LLP Key Term: “knowingly” • • • • Actual knowledge, Deliberate ignorance of the truth, or Reckless disregard of the truth. See 31 U.S.C. § 3729(b)(1)(A). No need to prove specific intent to defraud. See 31 U.S.C. § 3729(b)(1)(B). 27 January 27, 2014
  28. 28. Moderator: Robert J. Nelson Partner and Chair of the False Claims Act Practice Group Lieff Cabraser Heimann & Bernstein, LLP Damages Explained • • • Statutory penalties: an automatic fine of $5,500 to $11,000 for each and every false claim Treble damages: if the government suffers any damages due to the fraud, the amount of damages is tripled Recent development: “Gross” or “Net” Trebling? See United States v. Anchor Mortg. Corp., 711 F.3d 745, 748-49 (7th Cir. 2013) 28 January 27, 2014
  29. 29. Moderator: Robert J. Nelson Partner and Chair of the False Claims Act Practice Group Lieff Cabraser Heimann & Bernstein, LLP Calculating the Whistleblower’s Share • • • • If the government intervenes: 15-25% If the government chooses not to intervene: 25-30% The whistleblower’s share may be lowered if the whistleblower participated in the fraud Recent development: the whistleblower may not recover more than 10% if the suit was primarily based on a public disclosure 29 January 27, 2014
  30. 30. Moderator: Robert J. Nelson Partner and Chair of the False Claims Act Practice Group Lieff Cabraser Heimann & Bernstein, LLP Key Term: “Public Disclosure Bar” • • • • Until recently, courts did not have jurisdiction to hear cases that were based on “public disclosures,” which were broadly defined. 31 U.S.C. § 3130(e)(4)(A). Recent development: the FCA now defines the term “publicly disclosed” narrowly. Facts learned during state-court litigation or federal litigation between private parties may now be used as the basis for a whistleblower suit. Recent development: dismissal is no longer automatic. 30 January 27, 2014
  31. 31. Moderator: Robert J. Nelson Partner and Chair of the False Claims Act Practice Group Lieff Cabraser Heimann & Bernstein, LLP Key Term: “Original Source” • • Even if a whistleblower suit is based on facts that are publicly available, the lawsuit may proceed if the whistleblower can show that he or she was the “original source” of the information. 31 U.S.C. § 3130(e)(4)(B). Recent development: A whistleblower once needed to demonstrate “direct and independent knowledge” of the information underlying the allegations. Now, a whistleblower need only demonstrate “knowledge that is independent of and materially adds to the publicly disclosed” information. Id. 31 January 27, 2014
  32. 32. Moderator: Robert J. Nelson Partner and Chair of the False Claims Act Practice Group Lieff Cabraser Heimann & Bernstein, LLP Key Term: “First to File” Rule • • • The False Claims Act provides that “no other person other than the Government may intervene or bring a related action based on the facts underlying the pending action.” 31 U.S.C. § 3730(b)(5). This “first-to-file” rule encourages whistleblowers to report fraud as soon as possible At the same time, whistleblowers must conduct a thorough investigation and put forth detailed factual allegations, otherwise the case will be dismissed 32 January 27, 2014
  33. 33. Moderator: Robert J. Nelson Partner and Chair of the False Claims Act Practice Group Lieff Cabraser Heimann & Bernstein, LLP Anti-Retaliation Provisions • • It is illegal to discharge, demote, suspend, threaten, harass, or in any other manner discriminate against employees because of their lawful efforts to bring a whistleblower claim. See 31 U.S.C. § 3130(h). An employee’s remedies include reinstatement, double back pay (plus interest), and compensation for any “special damages” (including attorneys’ fees). Id. 33 January 27, 2014
  34. 34. Moderator: Robert J. Nelson Partner and Chair of the False Claims Act Practice Group Lieff Cabraser Heimann & Bernstein, LLP Part III: Recent Amendments 34 January 27, 2014
  35. 35. Moderator: Robert J. Nelson Partner and Chair of the False Claims Act Practice Group Lieff Cabraser Heimann & Bernstein, LLP Fraud Enforcement and Recovery Act of 2009 (“FERA”): • • • • Broadens the definition of a “false claim” Lowers the threshold for proving intent Strengthens the FCA’s anti-retaliation provisions Increases the Department of Justice’s power to investigate fraud 35 January 27, 2014
  36. 36. Moderator: Robert J. Nelson Partner and Chair of the False Claims Act Practice Group Lieff Cabraser Heimann & Bernstein, LLP Elimination of “Presentment” Requirement • • Expands the scope of potential FCA liability by eliminating the “presentment” requirement (overruling the Supreme Court’s opinion in Allison Engine Co. v. United States ex rel. Sanders, 128 S. Ct. 2123 (2008)). Now, a subcontractor may be liable for defrauding a contractor using federal funds; there is no need to show a subcontractor’s intent to defraud the government 36 January 27, 2014
  37. 37. Moderator: Robert J. Nelson Partner and Chair of the False Claims Act Practice Group Lieff Cabraser Heimann & Bernstein, LLP FERA: Intent Redefined • • No longer necessary to prove intent to defraud Plaintiffs are only required to show that the false claim was “material,” meaning that it was capable of influencing payment on a claim. 31 U.S.C. § 3129(b)(4). 37 January 27, 2014
  38. 38. Moderator: Robert J. Nelson Partner and Chair of the False Claims Act Practice Group Lieff Cabraser Heimann & Bernstein, LLP FERA: Anti-Retaliation Provisions • Now, in addition to employees, contractors and agents are protected from retaliation for lawful efforts to initiate or investigate whistleblower claims. 31 U.S.C. § 3130(h). 38 January 27, 2014
  39. 39. Moderator: Robert J. Nelson Partner and Chair of the False Claims Act Practice Group Lieff Cabraser Heimann & Bernstein, LLP FERA: Civil Investigative Demands • • • • A subpoena duces tecum may compel production of documents, but a CID is broader A CID may require the recipient to answer interrogatories (formal questions) or to give oral testimony under oath The government may issue a CID whenever there is “reason to believe that any person may be in possession, custody, or control of documentary material or information relevant to a false claims law investigation.” 31 U.S.C. § 3733. Authority delegated to each of 93 U.S. Attorney’s Offices; Attorney General’s approval no longer necessary 39 January 27, 2014
  40. 40. Moderator: Robert J. Nelson Partner and Chair of the False Claims Act Practice Group Lieff Cabraser Heimann & Bernstein, LLP The Patient Protection and Affordable Care Act of 2010 (“PPACA”) • • • • • Narrows Public Disclosure Bar Broadens Original Source Requirement Statutory Anti-Kickback Liability Includes Overpayments Health Care Exchanges 40 January 27, 2014
  41. 41. Moderator: Robert J. Nelson Partner and Chair of the False Claims Act Practice Group Lieff Cabraser Heimann & Bernstein, LLP PPACA: Narrower Public Disclosure Bar • • • Dismissal is no longer mandatory No longer bars a lawsuit based on facts discovered during state court litigation No longer bars a lawsuit based on facts discovered during federal litigation between private parties 41 January 27, 2014
  42. 42. Moderator: Robert J. Nelson Partner and Chair of the False Claims Act Practice Group Lieff Cabraser Heimann & Bernstein, LLP PPACA: Original Source Expanded • • Previously, an original source must have had “direct and independent knowledge of the information on which the allegations are based.” Now, an original source is one who has “knowledge that is independent of and materially adds to the publicly disclosed allegations or transactions.” See 31 U.S.C. 3730(e)(4)(B). 42 January 27, 2014
  43. 43. Moderator: Robert J. Nelson Partner and Chair of the False Claims Act Practice Group Lieff Cabraser Heimann & Bernstein, LLP PPACA: Overpayments • The FCA now imposes liability on health care providers who receive Medicare/Medicaid overpayments (accidentally or otherwise) and fail to return the money to the government within 60 days 43 January 27, 2014
  44. 44. Moderator: Robert J. Nelson Partner and Chair of the False Claims Act Practice Group Lieff Cabraser Heimann & Bernstein, LLP PPACA: Anti-Kickback Statute • • • The Anti-Kickback statute prohibits anyone from knowingly or willfully paying or receiving remuneration in exchange for referrals or the purchase of any item or service that may be paid for by a federal health care program. A claim to the government is now automatically rendered “false” for purposes of the FCA if the medical services or items were furnished in violation of the Anti-Kickback Statute. 42 U.S.C. § 1320a-7b(g). Even unintentional violations of the statute can give rise to liability. 44 January 27, 2014
  45. 45. Moderator: Robert J. Nelson Partner and Chair of the False Claims Act Practice Group Lieff Cabraser Heimann & Bernstein, LLP Part IV: The View From 10,000 Feet 45 January 27, 2014
  46. 46. Moderator: Robert J. Nelson Partner and Chair of the False Claims Act Practice Group Lieff Cabraser Heimann & Bernstein, LLP Statistics – Overview of Qui Tam Actions Total Qui Tam Actions from 1987 – 2013 = 9,244 Total Qui Tam Actions in 2013 = 753 46 January 27, 2014
  47. 47. Moderator: Robert J. Nelson Partner and Chair of the False Claims Act Practice Group Lieff Cabraser Heimann & Bernstein, LLP Total Qui Tam Settlements and Judgments from 1987–2013 = $27,201,587,782 Total Settlements and Judgments in 2013 = $2,979,370,977 47 January 27, 2014
  48. 48. Moderator: Robert J. Nelson Partner and Chair of the False Claims Act Practice Group Lieff Cabraser Heimann & Bernstein, LLP Amount that has been paid to Whistleblowers Total Amount Paid to Relators from 1987 – 2013 = $4,272,156,638 Total Amount Paid to Relators in 2013 = $387,825,711 48 January 27, 2014
  49. 49. Moderator: Robert J. Nelson Partner and Chair of the False Claims Act Practice Group Lieff Cabraser Heimann & Bernstein, LLP Total Settlements for HHS from 1987–2013 = $20,941,742,791 Total Settlements for HHS in 2008 = $969,313,659 Total Settlements for HHS in 2013 = $2,615,643,504 49 January 27, 2014
  50. 50. Moderator: Robert J. Nelson Partner and Chair of the False Claims Act Practice Group Lieff Cabraser Heimann & Bernstein, LLP Total Settlements for DOD from 1987–2013 = $2,717,816,264 50 January 27, 2014
  51. 51. Moderator: Robert J. Nelson Partner and Chair of the False Claims Act Practice Group Lieff Cabraser Heimann & Bernstein, LLP Total Settlements for Non-DOD, Non-HHS from 1987–2013 = $3,542,028,797 51 January 27, 2014
  52. 52. Moderator: Robert J. Nelson Partner and Chair of the False Claims Act Practice Group Lieff Cabraser Heimann & Bernstein, LLP Recent Trends • • “Mini-FCAs”: At least 32 states have passed statutes mirroring the Federal False Claims Act The SEC, IRS, and CFTC have also created whistleblower programs 52 January 27, 2014
  53. 53. Moderator: Robert J. Nelson Partner and Chair of the False Claims Act Practice Group Lieff Cabraser Heimann & Bernstein, LLP Recent Trends: Off-Label Marketing • • • • • • Off-label marketing consisted several of the largest cases of 2013: Johnson & Johnson (Risperdal) – $2.2 Billion Amgen (Aranesp) – $762 Million Wyeth (Rapamune) – $491 Million Nevertheless, the Second Circuit recently held that the First Amendment protected off-label marketing. See United States v. Cariona, 09-cr-5006 (2d Cir. 2012). GlaxoSmithKline recently banned the practice of paying physicians to promote its drugs. 53 January 27, 2014
  54. 54. Moderator: Robert J. Nelson Partner and Chair of the False Claims Act Practice Group Lieff Cabraser Heimann & Bernstein, LLP Recent Trends: Mortgage Insurance Fraud • • • • • The 50-state, $25 billion mortgage settlement relating to mortgage fraud contained claims for relief under the False Claims Act; six whistleblowers collectively recovered over $225 million United States v. Bank of America/Countrywide (E.D.N.Y.): Bank of America agreed to pay $1 billion as part of the 50-state global settlement United States v. Deutsche Bank & MortgageIt (S.D.N.Y.): Settled for $202.5 million United States v. CitiMortgage, Inc. (S.D.N.Y.): Settled for $158.3 million United States v. Flagstar Bank (S.D.N.Y.): Settled for $132.8 million 54 January 27, 2014
  55. 55. Moderator: Robert J. Nelson Partner and Chair of the False Claims Act Practice Group Lieff Cabraser Heimann & Bernstein, LLP Recent Trends: Implied Certification • • • • Implied Certification: when an entity falsely certifies that it has complied with a statute, regulation, or contractual term that is a prerequisite for payment FERA imposed a new “materiality” standard, but courts are divided as to its implementation Question of law? Question of fact? 55 January 27, 2014
  56. 56. Moderator: Robert J. Nelson Partner and Chair of the False Claims Act Practice Group Lieff Cabraser Heimann & Bernstein, LLP Future Trends: the False Claims Act and State Health Care Exchanges • • • • The Affordable Care Act creates state-run health care exchanges intended to provide a marketplace for individuals to compare insurance policies. Section 1313 of the Affordable Care Act specifies that any payments made “by, through, or in connection with” a state insurance exchange are subject to the FCA if they fail to comply with federal regulations. See 42 U.S.C. § 18033(a)(6)(A). Any damages may be multiplied by six. See 42 U.S.C. § 18033(a)(6)(B). In sum: Health insurers that participate in state insurance exchanges will be subject to close scrutiny for potential violations of the False Claims Act. 56 January 27, 2014
  57. 57. Moderator: Robert J. Nelson Partner and Chair of the False Claims Act Practice Group Lieff Cabraser Heimann & Bernstein, LLP Conclusion: Whither the FCA? • • • Last year, the DOJ recovered $2,979,370,977 in whistleblower cases under the False Claims Act. The DOJ also recovered $829,912,477 in non-whistleblower claims brought under the False Claims Act. What new developments will 2014 bring? 57 January 27, 2014
  58. 58. SEGMENT 1: Michelle L. Rogers Partner BuckleySandler LLP Introduction Michelle L. Rogers is a partner in the Washington, DC office of BuckleySandler LLP. Ms. Rogers represents institutions in a wide range of litigation matters, including government enforcement actions, class action litigation, regulatory examinations, and corporate internal investigations. She currently is representing several financial institutions in ongoing False Claims Act (FCA) and Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) matters. She has also represented clients in matters involving the Program Fraud Civil Remedies Act (PFCRA), Truth in Lending Act, Fair Housing Act, Equal Credit Opportunity Act, Civil Rights Act, and unfair and deceptive trade practices statutes involving the Department of Justice (DOJ), Consumer Financial Protection Bureau (CFPB), Department of Housing and Urban Development (HUD), Federal Housing Finance Agency (FHFA), federal and state bank regulators, and state attorneys general. Ms. Rogers is a frequent author and speaker about matters involving the financial fraud enforcement statutes, including the False Claims Act. 58 January 27, 2014
  59. 59. SEGMENT 1: Michelle L. Rogers Partner BuckleySandler LLP Financial Fraud Redefined: How the Government Is Using the False Claims Act To Target Financial Services Providers 59 January 27, 2014
  60. 60. SEGMENT 1: Michelle L. Rogers Partner BuckleySandler LLP Overview      Context: Financial Fraud as Government Priority Financial Fraud FCA Enforcement Evolution of FCA Cases Trends and Predictions Mitigating Risk 60 January 27, 2014
  61. 61. SEGMENT 1: Michelle L. Rogers Partner BuckleySandler LLP Financial Fraud as DOJ Priority  During FY 2012, DOJ secured more than $1 billion in settlements from 5 financial institution settlements –  Excluding the $25 billion mortgage servicer settlement from February 2012, which also included FCA claims For FY 2014, DOJ sought a $55 million budget increase “to support the Department’s investigation and prosecution of the broad range of illegal conduct that fall under the definition of financial fraud. . .” – This increase includes a request for 184 additional attorneys 61 January 27, 2014
  62. 62. SEGMENT 1: Michelle L. Rogers Partner BuckleySandler LLP Financial Fraud as Government Priority    Est. 2009, the FFETF coordinates activities between DOJ, SEC, the states, OIGs, and regulators Includes fraud working groups for RMBS, Mortgage, and Securities and Commodities Actively seeking whistleblowers: 62 January 27, 2014
  63. 63. SEGMENT 1: Michelle L. Rogers Partner BuckleySandler LLP Financial Fraud FCA Enforcement: Brief Background  Imposes civil liability for knowingly presenting a false claim to the government, or making a false record/statement material to a false claim – Broadly defines “knowingly” to include deliberate ignorance and reckless disregard for the truth or falsity – Statute of limitations: Generally 6 years, up to 10 years; subject to the Wartime Suspension of Limitations Act (WSLA)  – Treble damages and civil penalties of $5,500 to $11,000 for each claim; subject to the decision in U.S. v. Anchor Mortgage Corp.  – Discussion to come. Discussion to come. Whistleblower recovery: 15-30%, depending on whether US intervenes 63 January 27, 2014
  64. 64. SEGMENT 1: Michelle L. Rogers Partner BuckleySandler LLP Financial Fraud FCA Enforcement: Brief History   FCA actions of 2011 and early 2012 relied on a recklessness standard based on compliance failures Recent expansion includes use of FCA to target long-time program participants for less egregious conduct and conventional loan sales to the GSEs by relying on the Fraud Enforcement and Recovery Act’s (FERA) FCA amendments – Allows FCA liability for indirect receipt of government funds – Expands potential “reverse” FCA exposure by:  Imposing liability when one “knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay or transmit money or property to the Government”  Adding a broad definition of “obligation” to retention of any overpayment 64 January 27, 2014
  65. 65. SEGMENT 1: Michelle L. Rogers Partner BuckleySandler LLP Evolution of Financial FCA Cases 65 January 27, 2014
  66. 66. SEGMENT 1: Michelle L. Rogers Partner BuckleySandler LLP Trends and Predictions       Increased suits against corporate officers and employees Increased filing of qui tam suits More filings in the SDNY to take advantage of the large FCA settlements and fast intervention decisions Increased likelihood of DOJ settlements including admissions of misconduct Increased number of suits with non-governmental victims Increased coordinated initiatives 66 January 27, 2014
  67. 67. SEGMENT 1: Michelle L. Rogers Partner BuckleySandler LLP Mitigating Risk  Knowledge is power. – Employees – Business – Customers  Culture is key.  Policies and procedures matter. – –  Internal reporting Protections for whistleblowers Think strategically when issues arise. –  Independence and speed are both important Self report when appropriate. 67 January 27, 2014
  68. 68. SEGMENT 1: Michelle L. Rogers Partner BuckleySandler LLP For More Information, Contact: Michelle L. Rogers Partner 202-349-8013 mrogers@buckleysandler.com BuckleySandler LLP 1250 24th Street NW, Suite 700 Washington, DC 20037 www.buckleysandler.com www.infobytesblog.com 68 January 27, 2014
  69. 69. SEGMENT 2: Jennifer M. Wollenberg Senior Associate Fried, Frank, Harris, Shriver & Jacobson LLP Introduction Jennifer M. Wollenberg is a senior associate at Fried, Frank, Harris, Shriver & Jacobson LLP. Located in Fried Frank’s Washington, D.C. office, she is a member of the Firm's False Claims Act and Qui Tam practice group. Jenny represents corporations in a variety of complex civil litigation matters, with an emphasis on cases arising under the civil FCA and, in particular, cases involving the aerospace, financial, and defense industries. She has been a contributing co-author of FraudMail Alert®, which regularly reports on significant developments in the FCA arena, and has published articles on various aspects of the FCA. Jenny received her JD from Cornell Law School and is admitted to practice in the District of Columbia, New York, various United States Courts of Appeals (Second, Ninth, and District of Columbia Circuits), the United States Court of Federal Claims, and the United States District Court for the District of Columbia. 69 January 27, 2014
  70. 70. SEGMENT 2: Jennifer M. Wollenberg Senior Associate Fried, Frank, Harris, Shriver & Jacobson LLP False Claims Act Exposure: Recent Developments Regarding Statute of Limitations, Damages, and Penalties 70 January 27, 2014
  71. 71. SEGMENT 2: Jennifer M. Wollenberg Senior Associate Fried, Frank, Harris, Shriver & Jacobson LLP Overview 1.The Wartime Suspension of Limitations Act Threatens the FCA's Statute of Limitations 2.The Seventh Circuit Takes On the Overreaching “Gross Trebling” Approach to FCA Damages 3. Constitutional “Excessive Fines” Analysis May No Longer Offer the Same Penalties Protection 71 January 27, 2014
  72. 72. SEGMENT 2: Jennifer M. Wollenberg Senior Associate Fried, Frank, Harris, Shriver & Jacobson LLP FCA Statute of Limitations / Statute of Repose • Language of the FCA: § 3731. False claims procedure (b) A civil action under section 3730 may not be brought— (1) more than 6 years after the date on which the violation of section 3729 is committed, or (2) more than 3 years after the date when facts material to the right of action are known or reasonably should have been known by the official of the United States charged with responsibility to act in the circumstances, but in no event more than 10 years after the date on which the violation is committed, whichever occurs last. • Six-Year Statute of Limitations and Ten-Year Statute of Repose • Recent Development: DOJ and Relators Attempt to Invoke Wartime Suspension of Limitations 72 Act January 27, 2014
  73. 73. SEGMENT 2: Jennifer M. Wollenberg Senior Associate Fried, Frank, Harris, Shriver & Jacobson LLP Wartime Suspension of Limitations Act (“WSLA”) • Brief History of the WSLA • Current Language of the WSLA (18 U.S.C. § 3287): When the United States is at war or Congress has enacted a specific authorization for the use of the Armed Forces, as described in section 5(b) of the War Powers Resolution . . ., the running of any statute of limitations applicable to any offense (1) involving fraud or attempted fraud against the United States or any agency thereof in any manner, whether by conspiracy or not, or (2) committed in connection with the acquisition, care, handling, custody, control or disposition of any real or personal property of the United States, or (3) committed in connection with the negotiation, procurement, award, performance, payment for, interim financing, cancelation, or other termination or settlement, of any contract, subcontract, or purchase order which is connected with or related to the prosecution of the war or directly connected with or related to the authorized use of the Armed Forces, or with any disposition of termination inventory by any war contractor or Government agency, shall be suspended until 5 years after the termination of hostilities as proclaimed by a Presidential proclamation, with notice to Congress, or by a concurrent resolution of Congress. 73 January 27, 2014
  74. 74. SEGMENT 2: Jennifer M. Wollenberg Senior Associate Fried, Frank, Harris, Shriver & Jacobson LLP Concerns with Application of the WSLA • WSLA-FCA Application Concerns o Full Defenses Against Application:  Only applies to Title 18 “offenses”  Not all modern-FCA violations require “fraud” o Partial Defenses Against Application:   Meant for the Government, not relators  • Statute should be limited to conduct involving wartime contracting/fraud Statute of repose Other Concerns with WSLA Application (not limited to FCA context) 74 January 27, 2014
  75. 75. SEGMENT 2: Jennifer M. Wollenberg Senior Associate Fried, Frank, Harris, Shriver & Jacobson LLP WSLA and the FCA • Important, Recent WSLA-FCA Decisions o BNP Paribas SA o Halliburton/KBR o Wells Fargo • Ramifications of Current Holdings o repose Effectively eviscerate the FCA’s statute of limitations, and potentially also the statute of o industry Would affect a wide-range of FCA claims, beyond wartime contracting and the defense o Could spur increased litigation, including by relators 75 January 27, 2014
  76. 76. SEGMENT 2: Jennifer M. Wollenberg Senior Associate Fried, Frank, Harris, Shriver & Jacobson LLP Damages Under the FCA • Language of the FCA: o 31 U.S.C. § 3729(a)(1) o “[A]ny person who [violates the FCA] is liable to the United States Government for…3 times the amount of damages which the Government sustains because of the act of that person.” • Treble Damages are a Key Feature of the FCA o Important to DOJ, relators, and defendants o Trebling required if liability found, absent timely voluntary disclosure (then doubling) o Multiplier a component of any FCA settlement • Recent Development: Question of Which “Damages” – Net or Gross – are Multiplied Revisited 76 January 27, 2014
  77. 77. SEGMENT 2: Jennifer M. Wollenberg Senior Associate Fried, Frank, Harris, Shriver & Jacobson LLP “Gross Trebling” Approach • Prevailing Method: “Gross Trebling” o First trebling the claim amount and only then deducting the value of goods or services provided • Advocated and Employed by DOJ, Relators, and Courts o In a variety of contexts o Relying primarily on Supreme Court decision in United States v. Bornstein (1976)  “[D]amages should be [multiplied] before any compensatory payments are deducted, because that method of computation most faithfully conforms to the language and purpose of the Act.” • Key Concern with “Gross Trebling” Approach o Distorts Government’s actual damages because severely diminishes the value of any benefit 77 obtained by the Government January 27, 2014
  78. 78. SEGMENT 2: Jennifer M. Wollenberg Senior Associate Fried, Frank, Harris, Shriver & Jacobson LLP Recent “Net Trebling” Decision • United States v. Anchor Mortgage Corporation (7th Cir. 2013) o Found proper approach to be “net trebling”  Accounts for benefit to the Government prior to multiplying o Ruled DOJ’s position unsupported by statutory language or policy o Found DOJ’s position based on misreading of Bornstein  Bornstein footnote re contract measure of loss  Third party settlement payments should be subtracted after applying the multiplier o Relied on several post-Bornstein appellate decisions • Potential Circuit Split: United States v. Eghbal (9th Cir. 2008) 78 January 27, 2014
  79. 79. SEGMENT 2: Jennifer M. Wollenberg Senior Associate Fried, Frank, Harris, Shriver & Jacobson LLP Practical Differences Between “Gross Trebling” and “Net Trebling” • In Anchor Mortgage example, Government paid $131,643.05 on the guaranty of loan and recovered $68,200 on the subsequent sale of the mortgaged property Gross Trebling Approach Net Trebling Approach Treble the Payment $131,643.05 x 3 = $394,929.15 Subtract the Credit $131,643.05 - $68,200 = $63,443.05 Subtract the Credit $394,929.15 - $68,200 = $326,729.15 Treble the Balance $63,443.05 x 3 = $190,329.15 Trebled Damages $326,729.15 Trebled Damages $190,329.15 • Gross trebling approach rejected by the Seventh Circuit resulted in $136,400 greater FCA damages • Just a single example—imagine difference when applied across all claims in a case 79 January 27, 2014
  80. 80. SEGMENT 2: Jennifer M. Wollenberg Senior Associate Fried, Frank, Harris, Shriver & Jacobson LLP Penalties under the FCA • FCA Penalties o Between $5,500 and $11,000 for each false claim (31 U.S.C. § 3729(a)(1)) • Excessive Fines Analysis o Generally understood that the total penalty assessment has been subject to the Eighth Amendment’s Excessive Fines Clause o FCA cases have borrowed “grossly disproportionate” test from 1998 Supreme Court forfeiture case o Key component of test has been economic comparison  Need for some correlation between total penalties and damages • Recent Development: Appellate Court Decision Granting $24MM Penalties Where No FCA Damages 80 January 27, 2014
  81. 81. SEGMENT 2: Jennifer M. Wollenberg Senior Associate Fried, Frank, Harris, Shriver & Jacobson LLP Recent FCA Penalties Decision • United States ex rel. Bunk v. Gosselin World Wide Moving, N.V. (4th Cir. 2013) o District Court decision o Fourth Circuit decision • Fourth Circuit Missed Opportunity o Potential tie to economic factors but focus on subjective “deterrence” factor o No repeatable methodology for “grossly disproportionate” analysis • Primary Concern With Fourth Circuit Decision o FCA not intended to be a penalty-only statute  See United States v. McNinch, 356 U.S. 595 (1958); Marcus v. Hess, 317 U.S. 537 (1943) 81 January 27, 2014
  82. 82. SEGMENT 2: Jennifer M. Wollenberg Senior Associate Fried, Frank, Harris, Shriver & Jacobson LLP Other Concerns With Fourth Circuit’s Penalty Decision • Raises Additional Issues o Could lead to a groundswell of penalties-only qui tam cases  Already an extraordinary amount of qui tam complaints filed every year o Would enabling relators in this way be prudent or viable?  In penalties-only FCA world, relator and Government interests diverge  Article III standing question when vindicating “public rights” rather than proprietary injury  Article II Appointments and Take Care clauses  Fourth Circuit gave this issue little attention 82 January 27, 2014
  83. 83. SEGMENT 2: Jennifer M. Wollenberg Senior Associate Fried, Frank, Harris, Shriver & Jacobson LLP FCA Exposure Recent Developments: Lay of the Land and What to Watch • Statute of Limitations o Application of WSLA o Halliburton/KBR case • Damages o “Net Trebling” methodology o Potential circuit split • Penalties o Not “excessive fines” violation even where no damages o Impact of Fourth Circuit’s decision 83 January 27, 2014
  84. 84. SEGMENT 3: Mark Dostal Director, National Government Contracts Practice PwC Introduction Mark Dostal is a Director at PwC. He has over 32 years of extensive and diversified experience in government contract accounting and auditing, including 8 years with PwC, 8 years with another Big 4 national government contracting practice, and 16 years with the Defense Contract Audit Agency (DCAA). He specializes in the requirements of the Federal Acquisition Regulation (FAR), Agency FAR Supplements, and Cost Accounting Standards (CAS). Mark began his career conducting DCAA audits, directing field office operations, and managing Agency responsibilities at large and medium sized defense contractors from locations in the Midwest, Southwest, and Agency Headquarters. After leaving Federal service, Mark leveraged his unique experiences and relationships to develop consultative approaches with clients that support compliant, yet practical considerations for meeting government contracting and cost accounting practices. He has also assisted many commercial market-based clients with transitioning to and navigating the FAR/DFARS and CAS requirements when entering the federal marketplace. As a member of defense and space industry associations, he actively promotes open dialogue of perspectives and issues affecting industry and senior government acquisition officials. Mark is a Certified Public Accountant in Illinois and Iowa, and member of the American Institute of Certified Public Accountants, National Defense Industrial Association, and National Contract Management Association. 84 January 27, 2014
  85. 85. SEGMENT 3: Mark Dostal Director, National Government Contracts Practice PwC Discussion Topics  Compliance with primary business systems and processes - a defense to limit FCA exposure  Areas of potential violations that are commonly alleged by qui tam realtors  Understanding your threats and risks to potentially resolve allegations before it becomes a FCA case  Challenges in successfully defending against allegations . 85 January 27, 2014
  86. 86. SEGMENT 3: Mark Dostal Director, National Government Contracts Practice PwC Business Systems, Controls, and Processes  Contractor business systems and internal controls - the first line of defense against waste, fraud, & abuse  Weak control systems increase the risk of unallowable and unreasonable costs on Government contracts − Proposal Estimating and Contract Management − Cost Accounting, Labor Timekeeping, and Billing − Others depending upon nature of business (e.g., Material Management/Accounting, Purchasing, Property)  Compliance management to provide reasonable assurance that controls are working and can be relied upon: − Establish processes that are carried out and executed by knowledgeable employees − Develop appropriate management review and approval at prescribed levels within the Company − Verify/monitor controls over processes and formally remediate findings − Conduct periodic Internal Audit evaluations, follow-ups, and reporting; follow through with corrective actions − Provide regular employee training; emphasize individual ethics and compliance responsibilities 86 January 27, 2014
  87. 87. SEGMENT 3: Mark Dostal Director, National Government Contracts Practice PwC Sources of FCA Allegations  Allegations can surface from many sources, but most are from qui tam relators − Labor Charging, Material Transfers − Overbillings / Billing Errors − Truth in Negotiations Act (Defective Pricing); Certification of Cost or Pricing Data at price agreement − Proposal Certifications – Pricings, Requests for Equitable Adjustments, Incurred Costs, Termination Settlements − Failure to Perform Work / Defective Workmanship − GSA Schedule Contracts and Price Reduction Clause  Look to issues likely being affected by management influence and disgruntled employees  Consider possible motivation behind the allegation to uncover evidence and information about the issue  Determine “appearance” or perception that Company is “ripping off” the government  Manage FCA risk by identifying exposures to supplement business systems controls . 87 January 27, 2014
  88. 88. SEGMENT 3: Mark Dostal Director, National Government Contracts Practice PwC Sources of FCA Allegations • Overbillings – Knowledge of a false claim or reckless disregard of the truth will give rise to an FCA violation. No specific intent to defraud is required (see U.S. v. TDC Management Corp., Inc., U.S. Court of Appeals, District of Columbia Circuit, 39 CCF ¶76,670, No. 92-5369, June 3, 1994, 24 F3d 292). – Negligent recordkeeping that leads to overbilling can be construed as a false claim (see Miller v. U.S., 23 CCF ¶81,036, 213 CtCl 59, 550 F.2d 17, 1977). • Violations of Truth in Negotiations Act (Defective Pricing) – P.L. 87-653 - “A prime contractor or any subcontractor shall be required to submit cost or pricing data … and shall be required to certify that, to the best of his knowledge and belief, the cost or pricing data he submitted was accurate, complete and current.” • Requests for Equitable Adjustment – False certifications in a request for equitable adjustment give rise to a cause of action under the FCA (see U.S., ex rel. Patrick Wilkins v. North American Construction Corp., el al., U.S. District Court, S.D. Texas, 44 CCF ¶77,656, No. H-95-5614, June 13, 2000, 101 F.Supp.2d 500) • Failure to Perform / Defective Work – Submission of cross-sections and quantity surveys that did not accurately reflect work actually performed was a false statement under the False Claims Act (see Commercial Contractors, Inc. v. United States, 42 CCF ¶77,374, U.S. Court of Appeals, Federal Circuit, No. 97-5005, September 4, 1998, 154 F.3d 1357) 88 . January 27, 2014
  89. 89. SEGMENT 3: Mark Dostal Director, National Government Contracts Practice PwC FCA Damages “Would Have Paid” Model • Applies to cases involving overcharges • Base damages = Amount paid less the amount that would have been paid absent the overcharges – FCA damages for a defective military helicopter were the difference between the market value of the unit as promised and the market value as delivered (see United States, ex rel. Brett Roby v. Boeing Co., 46 CCF ¶77,962, U.S. Court of Appeals, Sixth Circuit, No. 00-4157, September 12, 2002, 302 F.3d. 637) • Key issues – Amount paid vs. price offered – Use of original pricing assumptions vs. most current actual information – Extent of re-pricing (limited to fraudulent assertions vs. all pricing factors) . 89 January 27, 2014
  90. 90. SEGMENT 3: Mark Dostal Director, National Government Contracts Practice PwC Recognizing and Mitigating Threats of FCA Violations  Seek appropriate counsel and other professional help and advice  Consider nature of the industry and applicable government regulations (i.e., A&D, Healthcare, Pharma, Non-profits) – – – Maturity of Company – traditional vs. nontraditional government contractor Contract types, solicitation process, and negotiation/award circumstances Funding levels, billing terms, withholdings, rescinding invoices, provisional payments  Determine supporting documentation requirements, quality, and availability  Understand which government organizations may be involved (e.g., Contracting Officer, Agency investigative services or divisions, government auditors, FBI, DOJ)  Consider potential for offsets to mitigate cost impact/harm to government: – – Underestimating, errors and omissions, negotiation concessions Discounts, repayments, billing adjustments, undercharging on other contracts . 90 January 27, 2014
  91. 91. SEGMENT 3: Mark Dostal Director, National Government Contracts Practice PwC Challenges in Defending against Allegations  Assemble Company documentation supporting its understanding of compliance with the RFP/Solicitation, proposal response, negotiation results, required contract clauses, and terms/conditions − Determine operational and administrative understanding of the meaning of solicitation and SOW, contractor response to the solicitation and described work scope, and acceptance of contract clauses  Support appropriate context around cost accounting data and records: − Determine compliance with internal cost accounting and contract administration polices and procedures, including supplemental email correspondence; develop key information that refutes or supports the allegation − Perform comparisons of proposal with actual contract performance and contract administration records − Perform reconciliations of recorded job cost data to General Ledger and disclosed cost accounting practices for charging costs to government contracts  Document contract interpretations; FAR 31.201 reasonableness and prudent person definition is subjective − Contractor’s motion to dismiss a qui tam False Claims Act action was denied in part because the relator’s allegations supported an inference the contractor acted with at least reckless disregard or willful ignorance of whether its interpretation of a contract clause was correct (see United States, ex rel. Karen Chilcott v. KBR, Inc., et al., 57 CCF ¶80,187. U.S. District Court, C.D. Illinois, No. 09-cv-4018, October 25, 2013) • Objective reviewers and investigatory resources are essential 91 January 27, 2014
  92. 92. SEGMENT 4: Joseph Cheriathundam Managing Director StoneTurn Group, LLP Introduction Joe Cheriathundam, a national forensic data analytics leader with the StoneTurn Group, has over 20 years of experience supporting companies and organizations in matters of conflict, change and regulatory compliance. He has led projects pertaining to the False Claims Act, anti-fraud consulting, anti-money laundering, mergers and acquisitions, investment/trading improprieties, and international business compliance in industries as diverse as finance, retail, life sciences/healthcare, automotive and real estate. Joe recently earned an Advanced Business Analytics Certification from the Kelley School of Business at Indiana University and has frequently written and spoken on the topic of Forensic Data Analytics. 92 January 27, 2014
  93. 93. SEGMENT 4: Joseph Cheriathundam Managing Director StoneTurn Group, LLP Data Analytics in the Life-Cycle of False Claims Act January 27, 2014 Joe Cheriathundam 93 January 27, 2014
  94. 94. SEGMENT 4: Joseph Cheriathundam Managing Director StoneTurn Group, LLP Number of New Matters by Year 94 January 27, 2014
  95. 95. SEGMENT 4: Joseph Cheriathundam Managing Director StoneTurn Group, LLP Settlement and Judgment Amounts by Year 95 January 27, 2014
  96. 96. SEGMENT 4: Joseph Cheriathundam Managing Director StoneTurn Group, LLP Data Analytics in the Life-Cycle of the False Claims Act • Question: A company is seeking a General Services Administration (GSA) contract to sell to government customers. When should they start involving their Data Analytics Team? a) When they begin negotiating b) When they win the contract c) When they begin selling via the contract d) When the government performs an audit e) When an FCA issue is identified f) What is Data Analytics? 96 January 27, 2014
  97. 97. SEGMENT 4: Joseph Cheriathundam Managing Director StoneTurn Group, LLP Data Analytics in the Life-Cycle of the False Claims Act • Data and Auditability – Examples of things to consider during negotiations  Do your technology systems capture all of the data necessary to retroactively confirm the appropriate pricing of product? a) If contract based on agreed upon discounts, are you capturing the standard prices from which discounts are applied? b) If pricing is based on an Most Favored Customer (“MFC”) provision, are there mechanisms in place to ensure that the prices to government customers are not surpassed by other customers? c) If Commercial Sales Practices Format (“CSPF”) presents exceptions, concessions, discounts to pricing plan, can the data systems track these occurrences? d) Can you easily identify purchases made under the GSA schedule? (e.g., some government entities will not purchase from the GSA schedule, but rather will negotiate their own deal) 97 January 27, 2014
  98. 98. SEGMENT 4: Joseph Cheriathundam Managing Director StoneTurn Group, LLP Data Analytics in the Life-Cycle of the False Claims Act • Data Analytics during contract activity  Do your technology policies and procedures maintain the auditability and test for anomalies of the contract? a) When making new technology implementations, are the required data in the legacy system maintained? b) Do you store the relevant data throughout the term of the FCA statute of limitations? c) As changes occur to relevant data (e.g., billing rates or list prices), can these changes be recreated across time as opposed to being replaced in the system. d) If there is a Basis Of Award (“BOA”) customer, can you periodically/continuously test their purchasing activity against government customers 98 January 27, 2014
  99. 99. SEGMENT 4: Joseph Cheriathundam Managing Director StoneTurn Group, LLP Data Analytics in the Life-Cycle of the False Claims Act • Data Analytics during an issue  Are your technology teams equipped to handle an audit/investigation/conflict? a) b) a) Do you have internal teams who are familiar with the relevant data systems? When do you use Internal vs External Teams for Analysis? 1. Privilege 2. Bandwidth 3. Capability 4. Experience 5. Industry 6. Legal Understanding 7. Cost 8. Data access How do you make decisions on when to use complete data versus sampling/extrapolation? 99 January 27, 2014
  100. 100. Q&A: Moderator: SEGMENT 1: Robert J. Nelson Michelle L. Rogers Partner BuckleySandler LLP Partner and Chair of the False Claims Act Practice Group Lieff Cabraser Heimann & Bernstein, LLP SEGMENT 2: SEGMENT 3: Jennifer M. Wollenberg Senior Associate Mark Dostal Director, National Government Contracts Practice PwC Fried, Frank, Harris, Shriver & Jacobson LLP SEGMENT 4: Joseph Cheriathundam Managing Director StoneTurn Group, LLP ► You may ask a question at anytime throughout the presentation today. Simply click on the question mark icon located on the floating tool bar on the bottom right side of your screen. Type your question in the box that appears and click send. ► Questions will be answered in the order they are received. 100 January 27, 2014
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