Here at the Monitor, we frequently report on developments concerning the False Claims Act. (For recent examples of our coverage, please see here, here and here.)  As we have noted in the past, the United States continues to aggressively expand its use of the False Claims Act, racking up impressive recoveries. In fact, last year alone, the U.S. Department of Justice obtained a record $5.69 billion in settlements and judgments from civil cases involving fraud and false claims against the government.  And as recoveries under the False Claims Act continue, so to does the transformation of the statute into a formidable all-purpose anti-fraud tool, despite admonitions from, inter alia, the Supreme Court in Allison Engine Co., Inc. v. United States ex rel. Sanders, 128 S.Ct. 2123, 2130 (2008). But not all is doom and gloom when it comes to the False Claims Act: the overwhelming majority of recoveries by the United States are obtained through settlements, not trials.  Recent defense verdicts suggest that settlement need not be a foregone conclusion for defendants in False Claims Act disputes; depending on the circumstances, going to the mat could merit a second look.

Two cases come to mind.  First, in a “groundbreaking use” of the False Claims Act, a jury in Louisiana took just eight hours to reject a relator’s allegations of submission of false claims and unlawful retaliation against DuPont. At its root, the case concerned an attempt to recover an obligation believed to be owed to the United States for fines under the Toxic Substances Control Act, 15 U.S.C. sections 2601-2629.  Second, a California federal jury recently cleared Natera Inc. of False Claims Act allegations that it had lied to the government about tracking its workers’ time on projects that received $3.5 million in grants from the National Institutes of Health.

While admittedly anecdotal, these two verdicts illustrate that even where the federal government intervenes, False Claims Act cases that go to trial are not slam dunks for the government, particularly when they are pending outside of Washington, DC. Of course, there are very real countervailing business and risk considerations, and the need for corporations to make decisions based on the specific circumstances of their case, but corporations should be open to evaluating the possibility that those circumstances may merit considering whether to put the government to its proof.