October 25, 2020

Volume X, Number 299

Advertisement

October 23, 2020

Subscribe to Latest Legal News and Analysis

Fifth Circuit Limits FCA Liability Due to Lack of “Materiality” in Highway Guardrails Case

Earlier this week we released a Health Care Enforcement Advisory about a recent decision from the U.S. Court of Appeals for the Fifth Circuit that may have a significant impact on the element of “materiality” in False Claims Act (FCA) cases.  A panel of judges on the Fifth Circuit overturned a district court decision after a jury found the defendant, Trinity Industries, Inc. (Trinity), liable under the FCA for changing its highway guardrail design without disclosing such changes to the Federal Highway Administration (“FHWA”).  The Fifth Circuit decided as a matter of law that the case lacked the element of “materiality” required in FCA cases.

Joshua Harmon, a Trinity competitor, filed suit in the U.S. District Court for the Eastern District of Texas against Trinity under the qui tam provision of the FCA.  The government declined to intervene in the case. At trial, the jury concluded that Trinity’s failure to disclose to FHWA changes to its guardrails caused Trinity to become ineligible for federal reimbursement, thereby resulting in false claims being submitted to the government. A final judgment was entered against Trinity for a staggering $663.4 million. The district court then denied Trinity’s request for a new trial, which Trinity appealed to the Court of Appeals.

Following a hearing, the Fifth Circuit issued a 40-page ruling on September 29, 2017, in Trinity’s favor.  In its decision, the Fifth Circuit cited a memorandum submitted by FHWA during discovery for trial in which the agency stated that there was “an unbroken chain of eligibility for Federal-aid reimbursement [for Trinity’s guardrails] [that] has existed since September 2, 2005, and the [guardrail system] continues to be eligible today.”  The Fifth Circuit relied heavily on the government’s repeated conclusions that it had never been defrauded by Trinity and stated that the plaintiff failed to rebut the “very strong evidence” of FHWA’s continued payment for Trinity’s product. As a result, the court ruled that the alleged facts did not satisfy the element of materiality required in FCA cases.

The decision provides a useful tool in defending FCA cases involving the government’s continued payment for the items and services at issue.  

©1994-2020 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. All Rights Reserved.National Law Review, Volume VII, Number 334
Advertisement

TRENDING LEGAL ANALYSIS

Advertisement
Advertisement

About this Author

Laurence J. Freedman, Litigation Attorney, Mintz, Enforcement Defense Law
Member

Larry has a deep understanding of what drives government enforcement actions, and how to defend against them, in the health care and life sciences industries. As a trial lawyer and then official in the Civil Fraud Section of the U.S. Department of Justice, he litigated and supervised hundreds of False Claims Act and qui tam cases nationally. In his litigation practice, Larry has successfully represented hospitals and health care systems, laboratories, pharmaceutical and device manufacturers, and health care executives against fraud and abuse allegations and investigations brought by...

202-434-7372
Samantha P. Kingsbury Associate Health Care Compliance, Fraud & Abuse, and Regulatory Counseling
Associate

Samantha’s practice focuses on health care enforcement defense matters. These matters often involve criminal and administrative actions brought against health care providers and companies by state and federal governmental and regulatory agencies. She also has experience in assisting clients with internal investigations of potential violations of the federal anti-kickback statute, the Stark law, and the False Claims Act, among other statutes and regulations. Samantha also has experience preparing self-disclosures and other reports relating to such enforcement matters, as well as developing internal compliance programs.

In addition to enforcement defense matters, Samantha handles licensure and regulatory filings for a variety of health care clients, with a focus on hospitals and clinical laboratories. In this capacity, she has worked on several large transactions in Massachusetts involving the change of ownership of major hospital systems. Similarly, Samantha has assisted national clinical laboratories with respect to licensure and reimbursement issues resulting from a change of ownership.

Samantha also handles a wide variety of pro bono matters at Mintz. She helps manage the firm’s Lawyers Clearinghouse program, through which Mintz attorneys provide legal representation to residents of Boston-area homeless shelters. She also represents victims of domestic violence through the firm’s Domestic Violence Project.

Before joining Mintz, Samantha completed a fellowship as a Special Assistant District Attorney for the Suffolk County District Attorney’s Office. In this role she prosecuted several jury and bench trial matters, handled evidentiary motions and conducted arraignments and pre-trial hearings.

During law school, Samantha served as a legal intern at Casa Myrna Vazquez, Inc., a nonprofit organization working to end domestic violence in the lives of women and children. At Mintz, Samantha continues to work with victims of domestic violence through the firm’s Domestic Violence Project. She also participates in a variety of other pro bono matters.

617-348-1829
Sarah Beth S. Kuyers, Mintz Levin, nonprofit affiliation lawyer, health care systems attorney
Associate

Sarah Beth’s practice involves a variety of regulatory, transactional, and enforcement defense matters for clinical laboratories, hospitals, pharmacies, insurers, and other health care clients.

Sarah Beth routinely advises clients on a wide variety of federal and state health care regulatory issues, including anti-kickback and self-referral laws, licensure and scope of practice rules, telemedicine, certificate of need applications, food and drug law, and HIPAA compliance. She also handles licensure and regulatory filings for clinical laboratories and other health care providers....

202.434.7453
Advertisement
Advertisement