Where defenses usually lie
A False Claims Act defense rarely depends on showing that every claim was perfect. More often it turns on what the company and its people actually knew and believed at the time, whether the requirement that was broken mattered to the government's decision to pay, and how damages and the number of claims are counted. The Supreme Court has held that a defendant's own understanding at the time is what counts, so a reasonable reading of an ambiguous rule developed later does not by itself defeat a finding of knowledge. Evidence that the government kept paying with full knowledge of the issue can weigh on materiality. Procedural defenses, such as the public disclosure bar, the first-to-file rule, and the requirement to plead fraud with particularity, may also apply.
Protecting the record and the business
Put a legal hold in place covering billing data, contracts, compliance reports, and the communications of the people named, and suspend routine deletion. Do not take adverse action against an employee you believe may be the relator, since retaliation claims stand on their own and can be costly. Gather the regulations, contract clauses, and agency guidance as they stood when the claims were submitted, along with any communications with the government about the issue. Consider parallel risks, such as a criminal referral, exclusion or suspension from government programs, or claims under a state false claims law, because each affects how the defense is run.
Early strategy
In a first meeting we review the complaint or demand, identify which claims and periods are at issue, and discuss whether an internal review should be conducted under privilege. We consider whether a motion to dismiss is realistic, whether there is value in presenting information to the government before litigation intensifies, and whether disclosure and cooperation credit are worth weighing. We also estimate the exposure the damages model could create and what a resolution might require beyond money, such as a corporate integrity agreement in health care matters. Because the interests of the company and individual employees can diverge, we raise the question of separate counsel early.
