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Senator Grassley and TAFEF File Amicus Briefs in CVS Caremark Case

An amicus curiae brief has been filed, in US ex. Rel Anthony Spay v. CVS Caremark Corp et al, by Senator Chuck Grassley and TAF Members: Jeffrey F. Keller and Kathleen R. Scanlan (Keller Grover), Joy P. Clairmont (Berger & Montague) and, Gordon Schnell (Constantine Cannon). The brief argues against the earlier dismissal by the Eastern Pennsylvania District Court.


The brief contends:

“The District Court erred as a matter of law in creating a “government knowledge inference” based on generalized knowledge of an industry practice without any knowledge of the defendant’s particular misconduct. Such a standard directly conflicts with the broad reach of the False Claims Act and undermines Congress’s clear intent to strictly limit government knowledge as a basis for barring whistleblower suits. Indeed, if left intact, the District Court’s decision would go a long way in resurrecting the government knowledge defense that Congress specifically amended out of the statute”


The resurrection of “government knowledge inference” will have serious consequences:

“First, it would seriously weaken the False Claims Act by shifting to the Government a major portion of the burden of ensuring its contractors comply with their contractual and regulatory obligations.”


“Rather than encouraging full disclosures and cooperation (as the case law requires), it would encourage Government contractors to conceal their own misconduct while hiding behind misconduct of others in the industry and the Government’s failure to stop it.”

Lastly, the brief warns about the alarming inclusion of three CMS employee testimonies:

“The Supreme Court and Third Circuit have cautioned that civil servants do not speak for the Government except as specifically authorized, especially in complex programs such as Medicare, in which thousands of employees interact with thousands of government contractors.”


You can read the full brief here.


TAFEF has also filed an amicus curiae brief in this case with Emily Stabile and Claire M. Sylvia (Phillips and Cohen) taking the lead, with crucial input from Jennifer Verkamp (Morgan Verkamp), David Chizewer (Goldberg Kohn), Colette Matzzie (Phillips and Cohen), Mark Kleiman (NYU), and TAFEF’s Acting Director of Legal Education, Jacklyn DeMar.

This brief also notes the troubling development of “government knowledge inference,” arguing:


“As every circuit court to consider the question has concluded, when a defendant submits a false or fraudulent claim for payment to the government, the government’s possession of overlapping knowledge about the defendant’s conduct is not itself a defense to the FCA. While information in the government’s possession about the underlying allegations may in some cases be among the several factors the jury may consider in evaluating the defendant’s state of mind, the government’s mere awareness of the defendant’s conduct does not automatically disprove a prima facie showing of knowledge. Nor is a defendant absolved of responsibility merely because the government pays the claim while some government agents were on notice of its falsity. As both the statute and its legislative history make clear, the FCA addresses the conduct of the person knowingly submitting the false or fraudulent claim for payment and not whether the government could or should have prevented the misappropriation of its funds.”


“When Congress amended the FCA in 1986, it “replac[ed] the government knowledge defense with the less restrictive public disclosure bar.”


The full brief can be read here.

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