Exhibit Group 26.

LEGAL ARTICLES not cases

EXHIBIT
GROUP 20
LEGAL
ARTICLES
Contents
Exhibit Group 26. LEGAL ARTICLES not cases...........................................................................................1
500. Brian Walsh (2010) Without Intent The Heritage Foundation.....................................................4
501. Seeking More Scienter: The Effect of False Claims Act Interpretations.......................................6
502. Fraud Enforcement and Recovery Act (“FERA”), Cooks and Perla...............................................8
503. THE OVERCRIMINALIZATION PHENOMENON............................................................................12
504. “BECAUSEOF”:FCA DAMAGES AND PENALTIES..........................................................................14
505. Procuring Audit Services in Government...................................................................................16
506. US ex rel Miller v Bill Harbert DC Circuit Joins The Retroactivity Debate Over FERA.................22
507. The False Claims Act Amendments: The Curious Conundrum of Retroactivity..........................24
508. The Newly-Amended False Claims Act is Beginning to Stir Trouble in Courts............................26
509. Common Law Claims As Adjuncts To A False Claims Action.......................................................28
510. False Claims Act: Wave of the Future........................................................................................38
511. TESTIMONY OF ALFRED J. LONGHI.............................................................................................40
512. Unlikely Source May Be Raising Summary Judgment Bar..........................................................42
513. Eleventh Circuit Affirms Dismissal of FCA Case under FRCP 9(b)...............................................46
514. FRAUD Basic Legal Concepts......................................................................................................50
515. Fraud by Hindsight.....................................................................................................................52
516. Pleading Securities Fraud...........................................................................................................56
517. UNUSED.....................................................................................................................................58
518. UNUSED...................................................................................................................................59
519. With Respect to CAMPBELL.......................................................................................................60
520. US ex rel Miller v Bill Harbert Int’l Constr DC Circuit Joins The Retroactivity Debate Over
FERA 62
521. Contract Fraud One Year After FERA OOPS 2010.......................................................................64
522. BuildingNYCsInnovationEconomy..............................................................................................66
523. A Ruling That Applies Some Common Sense To The False Claims Act Government Contracts
Blog 70
524. When ‘Molehills’ Become ‘Mountains’—The Implications Of US ex rel Longhi v Lithium Power
Techs For SBIR Grantees And Beyond....................................................................................................72
 525. Litigating Qui Tam Actions: Doctors, Double Jeopardy, Excessive Fines and The False Claims Act
82
526. United States v. Santos: “Proceeds” in Federal Criminal Money Laundering Statute, 18 U.S.C.
Section 1956, Means “Profits,” Not “Gross Receipts”...........................................................................84
527. Over-Criminalization of Conduct/Over-Federalization of Criminal Law.....................................86
528. Courts Reject Application of FERA’s Retroactivity Provision to Pending Cases..........................88
529. Allison Engine, The False Claims Act, and Healthcare Fraud......................................................90
530. THE DANGERS OF SUMMARY JUDGMENT: GENDER AND FEDERAL CIVIL LITIGATION...............92
531. Eleventh Circuit Affirms Dismissal of FCA Case under FRCP 9(b)...............................................96
532. New Compliance Challenges: False Claims Act Amendments FERA With More Pending...........98
533. Summary Judgment and the Vanishing Trial: Implications of the Litigation Matrix.................100
534. The Unconstitutionality of Summary Judgment: A Status Report............................................104
535. Information Infrastructure for Healthcare...............................................................................106
536. Technologies for Advanced Imaging Systems..........................................................................108
Exhibit Group 27. References without Articles.....................................................................................110
537. Beatson, J. (1991) The use and abuse of unjust enrichment: essays on the law of restitution 111
538. Neyers, Jason W. McInnes, M., Pitel, Stephen G. A.; (2004) Understanding unjust enrichment.
112
539. Smith, L. D. (1997)The law of tracing.......................................................................................113
540. Oliver Wendell Holmes (1920) Rock Island v US......................................................................114
541. Rule of Lenity...........................................................................................................................115
 500. Brian Walsh (2010) Without Intent The Heritage
Foundation

Page 9

The third problem, regulatory criminalization, occurs when Congress delegates its legislative
authority to define criminal offenses to another body, typically an executive branch agency.
Delegation empowers the unelected officials who direct that agency, such as the Department of the
Treasury or the Environmental Protection Agency, to decide what conduct will be punished
criminally, rather than requiring Congress to make that determination itself. In this way, the
executive branch of the federal government plays a substantial role in causing overcriminalization,
far beyond the President’s constitutional authority to veto or sign legislation.

In the usual case of regulatory criminalization, Congress delegates its criminal lawmaking authority
by passing a statute that establishes a criminal penalty for the violation of any regulation, rule, or
order promulgated by the agency or an official acting on behalf of that agency. Some of these
provisions include mens rea terminology; for example, criminal responsibility might extend to
“anyone who knowingly violates any regulation.”56 However, statutes authorizing regulatory
criminalization often fail to include any mens rea terminology, and nothing guarantees that the
resulting criminal regulations will themselves include a mens rea requirement, let alone adequate
ones.

Beyond the constitutional concerns inherent in this delegation of criminal lawmaking authority, the
actual practice of regulatory criminalization significantly increases the scope and the complexity of
federal criminal law. In addition to the thousands of criminal offenses spread through the 49 titles of
the United States Code, according to estimates tens of thousands of criminal offenses are similarly
scattered throughout the over 200 volumes of federal regulations. 57 These regulations almost always
proscribe conduct that is, at least in part, malum prohibitum. As a result, vast expanses of conduct are
criminalized without any systematic congressional oversight and without providing any form of
notice to the ordinary person that his everyday activities may be subject to criminal punishment.

The practice of regulatory criminalization compounds the problems created by unclear, imprecise
legislative drafting. Some or all of the elements of a particular criminal offense may be codified in
regulations far removed from the actual statute that contains the mens rea requirement. Further, the
elements that make up the complete offense can be spread across numerous regulations. For example,
section 506(g)(2) of H.R. 3968 would impose a criminal penalty on any person “who knowingly…
violates any other environmental protection requirement set forth in title III or any regulation issued
by the Secretaries to implement this Act, any provision of a permit issued under this Act (including
any exploration or operations plan on which such permit is based), or any condition or limitation
thereof.”58 While the mens rea requirement, “knowingly,” is located in the statutory provision, all of
the prohibited conduct would be defined in any number of regulations and even individual permits
issued as part of the regulatory and statutory scheme.
 501. Seeking More Scienter: The Effect of False Claims Act
Interpretations

Murray, Michael F., Seeking More Scienter: The Effect of False Claims Act Interpretations (March 1,
2008). Yale Law Journal, Vol. 117, No. 981, 2008. Available at SSRN: http://ssrn.com/abstract=1338602
 502. Fraud Enforcement and Recovery Act (“FERA”), Cooks
and Perla

http://www.profilermag.com/Downloads/Article-Issue3_FERA_2009_web.pdf

Profiler Magazine Page 24-28, 2009

The Fraud Enforcement and Recovery Act (“FERA”), enacted on May 20th, 2009,

expanded the federal government’s ability to investigate and prosecute fraud by amending key

civil and criminal fraud provisions and appropriating nearly half a billion dollars for increased

enforcement. FERA’s most far reaching change, however, will likely be its amendments to the

False Claims Act (“FCA”). Because of these provisions, a wide range of previously exempt

business transactions are now subject to potential liability.

Before FERA, the FCA imposed liability for false statements made to the government or

false statements made to induce the government to pay a false claim. After FERA, the FCA

purports to impose liability for false claims made to any recipient of federal funds, regardless of

whether the entity presented the false claim to the government or otherwise meant for the

government to pay the allegedly false claim.

FERA also purports to expand liability for retaining money owed to the government.

Before FERA, retaining money owed to the government could result in liability only if the entity

used a false statement for the purpose of concealing, avoiding, or decreasing an obligation to the

government. After FERA, plaintiffs in FCA actions (known as “relators”) likely will argue that

any entity that failed to repay the government may be liable under the FCA even without having

made any false statement whatsoever.

 Before FERA, most courts had held that only false statements “material” to the

government’s decision to pay a claim could be actionable under the FCA. FERA, however, made

materiality an explicit element for two of the FCA’s seven liability subsections. FERA also

resolved a split among the courts on how such a materiality requirement should be applied. Some

courts regarded a false statement as material only if the government would not have paid the

claim if it had known of the inaccuracy. FERA rejected that and defined “material” as anything

“having a natural tendency to influence, or being capable of influencing, the payment or receipt

of money or property.” Under FERA, a falsity may now be considered “material” even if it had

no impact on the government’s payment decision. Additionally, FERA removed the language “to

get a false or fraudulent claim paid or approved by the Government” from the former subsection

(a)(2), directly abrogating the Supreme Court’s decision in Allison Engine Co. v. United States

ex rel. Sanders, 128 S.Ct. 2123, 2129-30 (2008). Relying on the language that FERA deleted, a

unanimous Court in Allison Engine held that imposing liability without evidence of an intent to

extract payment from the government “would expand the FCA well beyond its intended role of

combating fraud against the Government.” Id. at 2128. After FERA, however, relators may

contend that the FCA now provides a cause of action for false statements made to virtually any

recipient of federal money regardless of whether the entity ever intended to induce payment by

the government.

[ *** ]

FERA codified a broadly defined “materiality” element into subsections (a)(1)(B) and (a)

(1)(G). In suits under those subsections, FERA makes alleged false statements actionable only if

they “hav[e] a natural tendency to influence, or [are] capable of influencing, the payment or
receipt of money or property.” This change resolved a split among the courts. Under this

definition, a falsity may be considered material even if it had no actual impact on the

government’s payment decision. At least in some cases, this may lessen significantly the

evidentiary burden on the government or the relator.

Most of FERA’s amendments apply to suits based on conduct occurring on or after May

20, 2009. FERA, however, purports to make its changes to subsection (a)(1)(B) apply

retroactively to cases pending on June 7, 2008, two days before the Supreme Court announced its

decision in Allison Engine. The changes to the FCA specific relation-back provisions apply

retroactively to cases pending on May 20, 2009. At best, these retroactive provisions threaten to

resurrect previously determined lawsuits.

FERA’s changes to the FCA, coupled with the half a billion dollars appropriated for

enforcement, underscore the government’s intent to pursue perceived fraud against the United

States. This has implications for anyone who does business with the myriad entities now

receiving federal funds. Companies that have not previously considered their exposure to

liability from the government should take a hard look at their potential liability. Under the new

law, any person or entity that submits a claim to virtually any recipient of federal funds faces a

potential FCA lawsuit without regard to whether the underlying allegedly improper conduct had

any impact on the United States treasury.

FERA will undoubtedly lead to increased litigation risk and attendant costs. When

coupled with the government’s investment in enforcement, it makes good business sense to

review existing compliance programs as soon as possible.

503. THE OVERCRIMINALIZATION PHENOMENON
 504. “BECAUSEOF”:FCA DAMAGES AND PENALTIES

The remarkable recoveries generated by the False Claims Act are attributable in part to its

somewhat unique damages and penalties provisions. These provisions can yield forfeitures

vastly out of proportion to the alleged violation and, because of this heightened litigation risk,

tend also to force settlements in cases that defendants might otherwise litigate and win. Much of

the FCA's power therefore derives from its potential for quasi-criminal sanctions that have less to

do with remediation than with simple punishment. Because of the potential for draconian

sanctions under the FCA, its damages and penalties provisions are often vigorously contested.

This paper surveys the evolving state of the law as courts struggle to interpret and apply these

provisions to an ever-broadening range of conduct.

 505. Procuring Audit Services in Government
AGA CPAG Research Series:
Report No. 19
February 2009

Page 4

While the term “audit” has broad meaning, in this research paper the term audit is used in

the manner intended in Government Auditing Standards (commonly referred to as GAGAS),

which is issued by the U.S. Government Accountability Office (GAO). In short, in government

an audit is an engagement performed by an independent auditor that adheres to all the

requirements of GAGAS. These standards include (1) ethical principles, (2) general standards,

such as auditor independence, competence, and quality control and assurance, and (3) field work

and reporting standards, such as the standards of the American Institute of Certified Public

Accountants (AICPA) for financial audits and attestation engagements and the requirement to

obtain sufficient, appropriate evidence. GAGAS covers a broad range of engagements from the

audit of the financial statements to an audit of the performance of a program or operation to the

performance of specific agreed-to procedures. GAGAS requires professional rigor and the

application of specialized skills when performing an engagement.

For all intents and purposes, GAGAS can only be met by (1) an independent government

auditor, such as GAO, a federal Inspector General (IG), an appointed or elected state or local

auditor or a government internal audit organization or (2) a CPA firm. Government auditors and

CPA firms are subject to oversight of their work through external peer review. Government

auditors are also subject to oversight by legislative and/or government regulatory bodies. The

work of CPA firms is also subject to regulatory oversight from state licensing boards. Whether
government auditors or CPA firms, the auditing profession is characterized by independence and

a dedication to providing high-quality professional work that is subject to strong ethical

requirements and grounded in rigorous professional standards. The requirement to adhere to

rigorous professional standards in performing an engagement along with a legal and regulatory

oversight structure governing the performance of the work are what distinguish audits and

attestation engagements from other types of evaluative engagements.

The goal of this guide is to help government managers make the right decision when

procuring audit services. The guide provides a resource to help non-auditors understand the

distinction between audit and other professional services that have an evaluative nature. Readers

will have a better understanding of what they are buying when they procure an audit. They will

know the differences between types of engagements provided by auditors and between audits

and non-audit evaluative services. They will learn that audit organizations also provide non-audit

services and how they differ from audit engagements performed in accordance with GAGAS.

Readers will also know what they may not be getting when they procure a non-audit evaluative

services or consulting engagement.

2. Are there legal, regulatory or contractual requirements or any expectations of outside stakeholders, such as the
U.S. Congress, a state legislature, or a city council or local board of supervisors, which would require or favor a
GAGAS audit rather than another type of evaluative service? If yes, an audit under GAGAS should be procured.
Go to step 5

Can Government Audit Organizations and CPA Firms Perform Non-Audit or

Advisory Services?

This brings us to the question of whether government

 auditors and CPA firms can provide non-audit advisory services in addition to conducting

audits. The answer is yes. In fact, it happens every day. What an audit organization cannot do is

cite adherence to GAGAS in reporting on this work. GAGAS does not cover professional

services other than audits and attestation engagements. Government auditors and CPA firms

regularly provide non-audit or advisory services. However, the range and amount of such

services may vary greatly and there are limits if the organization wishes to retain its ability to

audit the entity for which the non-audit services are being provided.

While GAGAS does not provide standards for non-audit services, it does cover the

situation when audit organizations provide non-audit services for an entity for which the audit

organization also provides audit services. Because auditor independence is one of the linchpins

of auditing, GAGAS provides criteria for evaluating whether non-audit services would cause an

impairment, in fact or appearance, to the audit organization’s ability to subsequently perform

audits of the entity. (See paragraphs 3.01 to 3.30 of GAGAS for a full discussion of auditor

independence requirements.) This is very important because management of an entity may go to

its auditor for non-audit advisory services and should understand where the line is drawn.

As a rule of thumb, GAGAS provides two overarching principles to assess the impact on

independence if an auditor performs non-audit services for an entity it may currently audit or

wishes to audit in the future. These two principles are simple in construct, while getting to the

heart of auditor independence:

• Auditors must not provide non-audit services that involve performing

management functions or making management decisions.

• Auditors must not audit their own work or provide nonaudit services in

situations in which the non-audit services are significant or material to the

subject matter of the audits (meaning, those audits performed by the auditor now

or in the future).
 506. US ex rel Miller v Bill Harbert DC Circuit Joins The
Retroactivity Debate Over FERA

Conclusion—In Allison Engine, Judge Rose meticulously examined the intent and

application of the FCA under applicable Supreme Court precedent to conclude that the act is

punitive in both respects and, thus, cannot be applied retroactively under the Ex Post Facto

Clause of the Constitution. The D.C. Circuit, in taking an apparently contrary position in Miller,

entirely bypassed the Allison Engine analysis by seizing solely on the fact that the FCA is not a

criminal statute to conclude that its retroactive application does not implicate constitutional

concerns. However, this conclusion ignores the fact that the history, objective and remedies of

the FCA all speak to the punishment of individuals who violate its provisions as opposed to any

solely remedial purpose to compensate the Government for the losses it incurs. Finally, as

Allison Engine has been certified for interlocutory appeal to the Sixth Circuit, the D.C. Circuit’s

entrance into the fray may well have also set the stage for a circuit split that will require the

Supreme Court’s intervention to resolve

 507. The False Claims Act Amendments: The Curious
Conundrum of Retroactivity

Volume 22, Number 5, June 2010 The Health Lawyer

In December 2009, in Hopper v. Solvay Pharmaceuticals, the only circuit court opinion thus
far dealing with the retroactivity issue, the Eleventh Circuit agreed with the district courts in
Science Applications and Allison Engine that the retroactivity language of FERA applies to
“claims” that were pending on or before June 7, 2008 and not “cases” that were pending.63
Although those courts have found that “claim” has the meaning defined in the FCA, none
have analyzed what it means for a claim to be “under the FCA” and whether that qualifying
language alters the meaning of “claim” in the FCA. Given that issue, the host of other issues
discussed above, and the recent decisions in Science Applications, Allison Engine, and Solvay
Pharmaceuticals, courts are certainly only at the beginning of scrutinizing the application of
§4(f)(1) of the 2009 Amendments.

Conclusion
Congress’s implementation language in section 4(f) of FERA leaves a good deal of wiggle room
for FCA plaintiffs and defendants to fight over whether the changes to the FCA apply
retroactively and to a given case.
 508. The Newly-Amended False Claims Act is Beginning to
Stir Trouble in Courts
http://www.natlawreview.com/article/newly-amended-false-claims-act-beginning-to-stir-trouble-
courts-0

Stacey A. Borowicz

With the passage of the Fraud Enforcement and Recovery Act of 2009 (“FERA”) on May 20,
2009, several landmark changes to the False Claims Act were signed into law (an analysis of
those changes is found here). Early indications are that Congress’s attempt to make the newly-
amended False Claims Act retroactive is proving troublesome in federal courts.

It is no secret that FERA’s changes were efforts by Congress to rebuke several noteworthy
federal cases, such as Allison Engine Co., Inc. v. U.S. ex rel. Sanders, 128 S.Ct. 2123 (2008),
that increased the government's burden of proof. In Allison Engine, the Supreme Court required
the government to prove fraudulent intent in order to establish liability under the False Claims
Act. With FERA, Congress attempts to nullify the Allison Engine decision by removing the
intent requirement under the False Claims Act.

Although FERA’s amendments to the False Claims Act were signed into law on May 20, 2009,
Congress also integrated a retroactivity clause that made the amendments applicable to all
“claims” pending on or after June 7, 2008, just two days before the Allison Engine decision. The
application of the retroactivity clause was immediately brought to the surface because Allison
Engine was already on remand to the District Court.

On October 27, 2009, the District Court granted the defendants’ motion to preclude the
retroactive application of the newly-amended False Claims Act, or alternatively to declare
FERA’s retroactivity clause unconstitutional. The District Court interpreted the retroactive
clause in FERA to apply only to pending “claims” rather than pending “cases.” The District
Court also concluded that, even if the retroactivity clause was interpreted to apply to cases, its
application would violate the Ex-Post Facto Clause of the U.S. Constitution. The District Court’s
interpretation is consistent with decisions in other federal courts, such as United States v. Science
Applications International Corp., No. 04-1543(RWR), 2009 WL 2929250 (D.D.C. Sept. 14,
2009).

The dispute is far from over. On December 28, 2009, the government intervened in Allison
Engine and joined the relators in filing motions seeking an interlocutory appeal to the Sixth
Circuit Court of Appeals to review the District Court’s decision. Dinsmore & Shohl will
continue to monitor these developments.
 509. Common Law Claims As Adjuncts To A False Claims
Action

Common Law Claims As Adjuncts To A False Claims Action

By Steven D. Gordon1

When the Government files an action under the False Claims Act2 or intervenes in a qui

tam FCA action filed by a whistleblower, it frequently adds common law claims. Most often,

these are claims for payment by mistake and unjust enrichment.3 Because the focus of the action

is the statutory FCA claim, these common law claims typically are treated as “tagalongs.”

Despite the profusion of judicial decisions addressing the FCA, there are relatively few cases

discussing these adjunct common law claims. This article reviews and analyzes these alternative

claims for relief.

Standing

Initially, it should be noted that only the Government has standing to bring these common

law claims. Although private relators (whistleblowers) have standing to file an FCA claim in the

name of the Government, they lack standing to file the common law claims. The congressional

grant of private standing to sue in FCA cases does not extend to common law causes of action.

Accordingly, such common law claims are subject to dismissal if filed by a relator.4

Governing Law

A threshold issue in analyzing these claims is whether they are governed by state or

federal law. In some cases, the common law claims are asserted by the Government, or treated

by the court, as arising under state common law.5 More often, however, they are asserted and

treated as claims arising under federal common law. Some courts have suggested that the power
of the U.S. to recover sums illegally or erroneously paid is part of the U.S.’ inherent authority,

albeit asserted through a common law cause of action.6 Other courts have reasoned that remedies

involving the rights of the U.S. arising under a nationwide federal program are governed by

federal, not state, law.7 Nonetheless, state law still may be utilized in some circumstances as a

reference for fashioning the federal remedy.8

Elements of the Claims

Payment by Mistake

The essence of the common law claim of payment by mistake, also known as payment

under mistake of fact, is that the Government is entitled to recover payments made under an

erroneous belief that was material to the decision to pay.9 The elements of the claim are that

(1) payments were made,

(2) under the belief that they were properly owed,

(3) the belief was erroneously formed, and

(4) the mistaken belief was material to the decision to pay.10

There is no requirement that the defendant know that the payments were mistaken.11

Recovery may be had even if payments were received by the defendant without knowledge of

their inappropriateness.12

Although not confined to situations involving Government contracts, this doctrine covers

most mistakes in contract performance, such as erroneous overcharges or delivery of non-

conforming goods. But it may not reach certain mistakes that occur in the formation of a

Government contract. For example, it does not apply to a contractor’s mistakenly inflated bid for

a fixed-price contract because that does not involve a mistaken belief by the Government that

influenced payment of the contract price.

The Government got the fixed price it bargained for, even if that price was higher than

the contractor had intended.13 In contrast, the doctrine should permit recovery if a contractor

miscalculates its costs in bidding for a cost-reimbursable contract because the Government relies

on the contractor’s mistaken representation when it makes payment.

Unjust Enrichment

The elements of a federal common law claim for unjust enrichment are:

(a) the Government had a reasonable expectation of payment,

(b) the defendant should reasonably have expected to pay, or

(c) society’s reasonable expectations regarding person and property would be defeated by

nonpayment.14

An alternative formulation is that the Government must establish

(1) that it conferred a benefit on the defendant,

(2) an appreciation or knowledge by the defendant of the benefit, and

(3) the acceptance or retention by the defendant of the benefit under such circumstances

as to make it inequitable for the defendant to retain the benefit without payment of its value.15
 Restitution may be appropriate without regard to the recipient’s innocence, provided he

or she had knowledge of the circumstances giving rise to the unjust enrichment claim.16

The general rule is that an action for unjust enrichment will not lie if there is an express

contract between the parties, although there are some exceptions to this rule.17

Relationship between Common Law Claims and the FCA

Claims for payment by mistake and unjust enrichment are essentially alternatives to each

other.18 Payment by mistake usually involves payments made pursuant to a contract, whereas the

doctrine of unjust enrichment applies to situations in which there is no legal contract.19 Thus, the

theories appear to be mutually exclusive,20 although some decisions do not acknowledge this

limitation. Moreover, if recovery is obtained on an FCA claim, no relief can be obtained on these

equitable claims because (a) an adequate remedy has been had at law and (b) any further

recovery would be duplicative and unwarranted. 21 Nonetheless, because federal rules allow

pleading in the alternative, courts have permitted the simultaneous pursuit of these common law

claims along with FCA claims, and despite the existence of a contract.22

Use of Common Law Claims to Expand Liability

From the Government’s perspective, there are two principal reasons to assert claims for

payment by mistake and unjust enrichment in addition to or in lieu of an FCA claim. First is a

fallback theory of liability, permitting recovery in situations in which the evidence is insufficient

to prove that the defendant had the culpable knowledge or intent necessary to sustain an FCA

claim. Second, the Government sometimes uses common law claims to pursue recovery from

individuals who did not participate in an FCA violation, but allegedly benefited from it.
 Liability under the FCA turns on the defendant’s state of mind. “[T]he False Claims Act

condemns fraud but not negligent errors or omissions.”23 “The notion of presenting a claim

known to be false does not mean the claim is incorrect as a matter of proper accounting, but

rather means it is a lie.”24 Thus, “[w]here there are legitimate grounds for disagreement over the

scope of a contractual or regulatory provision, and the claimant’s actions are in good faith, the

claimant cannot be said to have knowingly presented a false claim.”25 In contrast, the

defendant’s knowledge and intent are irrelevant to a claim for payment by mistake. The only

issue is whether the Government had a mistaken belief that was material to the decision to make

a contested payment.

Similarly, the FCA does not reach persons who did not participate in a violation of the

Act, even though they may have known about the violation or benefited from it. Mere knowledge

of a fraudulent claim with nothing more does not constitute an FCA violation.26 Indeed, an

allegation that a defendant knew about and benefited financially from a fraud and did nothing to

stop it is insufficient as a matter of law to state a claim under the FCA.27 But the Government

can cast a wider net with common law claims.

Limitations Period

The FCA contains its own limitations provision, which requires that an action be brought

within

(1) six years after the violation occurred or

(2) three years after the date when facts material to the right of action are (or should be)

known, but
 (3) in no event more than 10 years after the date of the violation.48

The limitations period for common law claims brought by the U.S. is established by 28

USCA § 2415, which sets a six-year period for contract claims and a three-year period for tort

claims.49 A tolling provision excludes from these time limits all periods during which facts

material to the right of action are not known and reasonably could not be known.50 Although a

few decisions hold that the three-year tort limitations period applies to claims for unjust

enrichment, the great weight of authority is that the six-year limit for contract claims applies.51

Claims for payment by mistake also are subject to this six-year limit.52 In contrast, a common

law fraud claim is subject to the three-year limit.53

Generally, causes of action for unjust enrichment and payment by mistake accrue upon

the occurrence of the wrongful act giving rise to the duty of restitution. 54 Accordingly, some

courts have held that the cause of action accrues when the defendant submits the claim for

payment,55 although others have held that a new cause of action accrues with each payment

actually made by the Government.56 In any event, in applying the appropriate time limit, courts

have been willing to invoke the tolling provision. For example, they have excluded the period

until completion of a Government audit that disclosed alleged overcharges on a Government

contract.57 Because of the operation of this tolling provision, the limitations period for common

law claims could be even longer than the period for an FCA claim arising from the same nucleus

of facts.

A final limitations issue, in circumstances in which the Government intervenes in a qui

tam case and adds common law claims, is whether those claims “relate back” to the filing date of

the relator’s original complaint for purposes of determining whether they are time-barred.
Previously, there was a split in authority as to whether such common law claims should relate

back.58 But the amendments to the FCA enacted as part of the Fraud Enforcement and Recovery

Act of 2009 resolve this issue. Congress provided that if the Government intervenes and files its

own complaint or amends a relator’s complaint, the Government pleading shall relate back to the

filing date of the original complaint to the extent that the claims therein arise out of the conduct,

transactions or occurrences set forth, or attempted to be set forth, in the original complaint.59

Pleading Issues

Federal Rule of Civil Procedure 9(b) requires that, in alleging fraud or mistake, a party

must state with particularity the circumstances constituting fraud or mistake. This rule applies to

claims of payment by mistake.60 It is less clear whether it also applies to claims for unjust

enrichment that are premised on fraud or mistake.61 One court has held that a claim for unjust

enrichment must allege that (a) the plaintiff conferred a benefit upon the defendant, (b) the

defendant accepted and retained the benefit, and (c) it would be unjust for the defendant not to

pay the plaintiff the value of the benefit. The court went on to rule that the third element of

unjustness is sufficiently established for pleading purposes by the companion FCA claim.62

Certainly, as a practical matter, a complaint that adequately alleges an FCA claim should also

sufficiently set forth adjunct common law claims of payment by mistake and unjust

enrichment.63

Conclusion

As a practical matter, in most cases the importance of these common law claims will be

inversely proportional to the strength of the FCA claim. In cases in which the FCA claim is

strong, the common law claims are likely to be treated as surplus. But in those cases in which the
FCA claim is weak or nonexistent, the common law claims assume a central role. Familiarity

with the law governing these claims then is at a premium.

 510. False Claims Act: Wave of the Future

Small, Dan;( October 2009). Compliance & Ethics Professional. False Claims Act: Wave of the
Future. www.corporatecompliance.org, Page 30 ff.

The second case, Longhi, comes on the government’s grant side. The case involved research
grants so, like the recovery programs, the government was not buying a specific product or
service. The Fifth Circuit’s July 9, 2009 opinion upholds a 2007 District Court FCA decision, so
the FERA amendments were not in effect. But, the court references those amendments, and gives
a glimpse of their likely use in three key respects. First, as to false documents, the work was
actually done, and there were no real false invoices, but the court held that there were false
statements in the original application, therefore the entire contract amount was fraudulently
induced. Second, as to materiality, the court held that the government need not show that the
false statements actually caused the government to act, only that they, “have the potential to
influence the government’s decisions.” Finally, since the defendant did the work required under
the contract, they argued that any damages should be reduced by the value of that work.
However, in a holding we are likely to see repeatedly in recovery funds cases (where unlike
traditional cases, the government did not end up with a specific product or service), the Court
disagreed. Without the fraudulent inducement, the funds might have gone to another more
worthy recipient. Thus, the Court upheld damages of triple the entire original contract amounts.
511. TESTIMONY OF ALFRED J. LONGHI
 512. Unlikely Source May Be Raising Summary Judgment Bar

Brody, Steven G. and Chow, Gary K.,

November 16, 2009

New York LAW Journal.

Unlikely Source May Be Raising Summary Judgment Bar High Court’s three
pleadings rulings begin to impact
By Steven G. Brody and Gary K. Chow

DURING THE PAST three years, the U.S. Supreme Court has raised the standards for the
specificity of pleadings in Ashcroft v. Iqbal,1 Tellabs Inc. v. Makor Issues & Rights, Ltd.,2 and
Bell Atlantic Corp. v. Twombly.3 Courts and commentators have focused generally on the
implications of those decisions for motions to dismiss, rather than motions for summary
judgment.

But the reasoning underlying Iqbal, Tellabs and Twombly also has affected summary judgment
analysis, notwithstanding that courts traditionally have deemed the standards for these two
motions to be separate and distinct.

While the full impact of the decisions has yet to be realized, it appears that Iqbal and Twombly
will make it more difficult for plaintiffs to rely on conclusory allegations when confronted with
summary judgment motions. Tellabs, if taken to its logical conclusion, should have a profound
impact on summary judgment motions in the federal securities law context, with plaintiffs being
required to show that the inference of scienter that they attempt to draw from the evidence is at
least as compelling as any opposing inference.

Important procedural differences exist between motions to dismiss and motions for summary
judgment. Federal Rule of Civil Procedure 12(b)(6) permits a court to grant a motion to dismiss
for “failure to state a claim” where a plaintiff has failed to allege facts sufficient to sustain a
claim under applicable law.4

In contrast, summary judgment may be rendered only “if the pleadings, the discovery and
disclosure materials on file, and any affidavits show that there is no genuine issue as to any
material fact and that the movant is entitled to judgment as a matter of law.”5

Unlike Rule 12(b)(6) motions, summary judgment motions are typically brought after the
conclusion of discovery and involve a review of evidence. Where the non-movant bears the
burden of proof at trial, the movant may discharge its initial responsibility by showing that “there
is an absence of evidence to support the non-moving party’s case”6 or by identifying evidence
that would negate the non-movant’s claims.7 The non-moving party may defeat the motion by
raising a triable issue of material fact.8

Implications of ‘Twombly’ and ‘Iqbal’

In Twombly, an antitrust case, the Supreme Court altered the notice pleading requirements of
Rule 8(a)(2) by establishing a more stringent standard for the specificity of pleadings (and
thereby more stringent standards for motions to dismiss under Rule 12(b)(6)).9

Previously, the Court in Conley v. Gibson permitted motions to dismiss for failure to state a
claim only where “it appears beyond doubt that the plaintiff can prove no set of facts in support
of his claim which would entitle him to relief.”10 In other words, courts only required factual
allegations to render claims “conceivable” for plaintiff

to avoid dismissal.11 Twombly overruled Conley and instituted a stricter, “plausibility” standard,
which requires “enough fact[s] to raise a reasonable expectation that discovery will reveal
evidence of illegal agreement.”12

Subsequently, in Iqbal, the Supreme Court clarified that Twombly’s “plausibility” standard
applies beyond the antitrust context.13 Iqbal also emphasized the insufficiency of conclusory
allegations, noting that they are not “entitled to the assumption of truth.”14 Moreover, Iqbal
extended both these principles to allegations of malice, intent, knowledge and other states of
mind, notwithstanding Rule 9(b)’s provision that such elements can be pled “generally.”15

Commentators have suggested that the heightened pleading standards articulated in Twombly
and Iqbal have blurred the procedural distinction between motions to dismiss and summary
judgment.16 While the focus typically has been on the increased rigor of the motion to dismiss
standard, those two decisions also have been used to enhance a plaintiff’s burden on summary
judgment, particularly where a moving defendant challenges the sufficiency of the pleadings.
Because conclusory allegations are insufficient at the motion to dismiss stage under Iqbal and
Twombly, they certainly are insufficient at the summary judgment stage.17

[…]

Second Circuit Case Law Trends

There has been a subtle, and still uncertain, development in summary judgment law in the
Second Circuit.

In Miner v. Clinton County, the Circuit held that “[a]lthough the burden of demonstrating that no
material fact exists lies with the moving party, ‘[u]nless the nonmoving party offers some hard
evidence showing that its version of the events is not wholly fanciful, summary judgment is
granted to the moving party.’”35 Lower courts in the Second Circuit have increasingly cited to
this “wholly fanciful” language in ruling on summary judgment motions,36 particularly where a
plaintiff has failed to provide evidence to support a claim.

For example, in Bender v. Alvarez, a §1983 case, plaintiff brought suit against defendant law
enforcement officers for false arrest, alleging that defendants planted evidence.37 In granting
summary judgment, the court cited the “wholly fanciful” language and found that “[p]laintiff
fails to provide any evidence demonstrating that the evidence was planted in his residence except
for his unsupported statement.”38

It is too early to tell whether the “wholly fanciful” language will have a significant impact on
summary judgment decisions in the Second Circuit. Regardless, no court has applied that
language in a PSLRA scienter determination, and there is no indication that any court would do
so. Indeed, if the comparative evaluation requirement articulated in Tellabs were extended to
summary judgment motions in the PSLRA context, that evaluation would be incompatible with
the “wholly fanciful” language.

Conclusion

The general trend in the law has been to make pretrial dispositive motions a more useful tool for
disposal of weak or frivolous lawsuits. That trend dates back at least to the Supreme Court’s
1986 triumvirate of summary judgment decisions (Celotex, Liberty Lobby and Matsushita), and
has been advanced recently by the Court’s decisions in Twombly, Tellabs and Iqbal, as well as
by statutes such as the PSLRA.

Future decisions will tell whether the recent enhancements in Rule 12(b)(6) law will have a
lasting impact on summary judgment law.
 513. Eleventh Circuit Affirms Dismissal of FCA Case under
FRCP 9(b)
http://www.martindale.com/government-contracts-law/article_King-Spalding-LLP_930838.htm

Eleventh Circuit Affirms Dismissal of FCA Case under FRCP 9(b)

by Michael E. Paulhus View Biography

King & Spalding LLP View Firm Credentials

Atlanta Office

March 2, 2010 Previously published on February 22, 2010

In United States ex rel. Sanchez v. Lymphatx, Inc., No. 09-14275 (11th Cir. Feb. 18, 2010), the Eleventh
Circuit affirmed the district court’s dismissal of a relator’s allegations of False Claims Act violations
arising from Medicare billing fraud, finding the relator failed to plead specific details of false claims. Slip
Op. at 4. The relator alleged Lymphatx billed Medicare for uncovered services provided by massage
therapists to treat lymphedema, “swelling caused by impairments in the body’s lymphatic system.” Slip
Op. at 3 n.2. Medicare does not pay for massage treatment for this condition if provided by a massage
therapist. Id. The decision bolsters defendants’ Federal Rule of Civil Procedure 9(b) arguments in the
Eleventh Circuit by undermining the holding of United States ex rel. Walker v. R&F Properties of Lake
County, Inc., 433 F.3d 1349 (11th Cir. 2005), which allowed a relator to survive a Rule 9(b) motion
without pleading specific details of false claims.

In Walker, the court affirmed a district court’s decision permitting a nurse practitioner to survive a Rule
9(b) motion even though she could not plead details of individual fraudulent claims. Id. at 1360. The
court in that case examined the context of the relator’s understanding of the defendant’s billing
practices and found it significant that the relator knew she did not have a Unique Provider Identification
Number and had discussed the company’s billing practices with the office administrator. Id. In Sanchez,
the relator claimed to be the defendant’s office manager with personal knowledge of billing practices,
which under Walker might have been sufficient to survive a Rule 9(b) motion even in the absence of
pleading the submission of specific false claims. The court in Sanchez, however, focused on the relator’s
failure “to allege at least some examples of actual false claims,” and her inability to “lay a complete
foundation for the rest of [her] allegations,” rather than Sanchez’s status as purported office manager.
Id. at 4-5 (quoting United States ex. rel. Clausen v. Lab Corp. of Am., 290 F.3d 1301, 1314 n.25 (11th Cir.
2002)). The court stated in a footnote:
Sanchez’s vague allegations that she “found [unspecified] documentation” and “discovered” or
“learned” that the defendants had submitted false claims, by contrast, leaves us “wondering whether
[she] has offered mere conjecture or a specifically pleaded allegation on an essential element of the
lawsuit,” Clausen, 290 F.3d at 1313. In any event, to the extent that Walker conflicts with the specificity
requirements of Clausen, our prior panel-precedent rule requires us to follow Clausen. See Walker v.
Mortham, 158 F.3d 1177, 1188¿89 (11th Cir. 1998).

Slip op. at 5 n.4. The court affirmed dismissal of Sanchez’s four counts alleging Medicare fraud, but
remanded a fifth count alleging retaliation under 31 U.S.C. § 3730(h), which it found only had to meet
the pleading standard of Federal Rule of Civil Procedure 8(a).
514. FRAUD Basic Legal Concepts
 515. Fraud by Hindsight
http://scholarship.law.cornell.edu/cgi/viewcontent.cgi?article=1025&context=lsrp_papers

by Mitu Gulati , Jeffrey J. Rachlinski , Donald C. Langevoort

INTRODUCTION

"In sum, the complaint is an example of alleging fraud by hindsight."

-Judge Henry Friendly, in his 1978 opinion Denny v. Barber1

Most people today believe that Enron's CEO, Ken Lay, knew his subordinates were rigging the corporate
books. Likewise, it is not hard to believe that the managers at MCI, WorldCom, and Tyco knew their
businesses were performing badly even as they issued rosy forecasts. It also is hard to believe that
twenty years ago the management at Apple failed to predict that the Macintosh predecessor, "Lisa," was
a doomed product, whose release was a futile act intended only to boost stock prices. Most of us
recognize, however, that hindsight colors these beliefs. Events tend to seem more predictable than may
have been the case.2 One could recount this tale for a thousand other corporate failures. What looks
today like fraud, in many circumstances might have once been nothing more than misplaced optimism.
Small wonder then that courts worry about "fraud by hindsight" in cases alleging securities fraud.

Hindsight blurs the distinction between fraud and mistake. People consistently overstate what could
have been predicted after events have unfolded-a phenomenon psychologists call the hindsight bias.3
People believe they could have predicted events better than was actually the case and believe that
others should have been able to predict them. Consequently, they blame others for failing to have
foreseen events that reasonable people in foresight could not have foreseen.4 In the context of
securities regulation, hindsight can mistakenly lead people to conclude that a bad outcome was not only
predictable, but was actually predicted by managers.5 Even in the absence of any misconduct, a bad
outcome alone might lead people to believe that corporate managers committed securities fraud. The
hindsight bias thus creates a considerable obstacle to the fundamental task in securities regulation of
sorting fraud from mistake.

Punishing mistakes as if they were fraud undermines the deterrent function of securities regulation.6 If
corporate managers are as likely to be punished for bad decisions as for acts of fraud, then the securities
laws provide little real disincentive to engage in fraud. The recent financial scandals raise precisely this
concern. How could managers at Enron and others who were manipulating revenue reports have
thought that they could continue to do so indefinitely? Indeed, given the high likelihood of getting
caught, few instances of alleged securities fraud make much sense.7 This question has many answers,
but one of them might well be the inability of the courts in securities fraud cases to sort fraud from
mistake accurately.8
Courts' difficulties with sorting fraud from mistake accurately is not the result of ignorance of the basing
effects of hindsight. Courts cite concerns with hindsight in nearly one-third of all published opinions in
securities class action cases.9 As the epithet at the beginning of this Article shows, courts seem generally
aware of the problem posed by judging securities fraud cases in hindsight. judges routinely admonish
plaintiffs not to rely on hindsight to support allegations of fraud in pleading securities claims.
Increasingly, the doctrine against "fraud by hindsight" ("FBH") has become a hurdle that plaintiffs in
securities cases must overcome

The FBH doctrine arises from judges' awareness that knowledge of the bad outcome biases judgments in
favor of concluding that fraud had occurred, even if it had not.10 Arguably, the FBH doctrine reveals
judges to be intuitive psychologists, struggling to correct for the influence of the hindsight bias on
litigation.11 A properly debiased system of litigation would accurately sort the cases of fraud from
innocently mistaken predictions, thereby maintaining the deterrent function of the securities fraud
system. The FBH doctrine might thus reflect an effort to debias the adjudication process in securities
cases.

The relationship between the FBH doctrine and the hindsight bias, however, might be epiphenomenal.
The notion that a serious bias in judgment affects the system, however, gives judges a legitimate
justification for departing from the notice pleading system and actively judging cases on the merits at an
early stage of litigation. Several aspects of both securities litigation and the hindsight bias support this
"case management" over a "debiasing" account of the FBH doctrine. First, the influence of hindsight on
judgment is notoriously difficult to avoid.12 It might be unrealistic to suppose that courts have
developed a sensible response in just the few decades of active private securities litigation. second,
although securities cases often include high-profile claims that might be attractive for judges to resolve,
these cases also commonly produce a quagmire of discovery disputes and time-consuming procedural
motions. Third, judges are also somewhat suspicious of these cases and might be motivated to police
them early in the litigation process. Rather than a debiasing effort, the FBH doctrine might be one of
several mechanisms courts have developed for managing securities fraud actions in the federal
courts.13
 516. Pleading Securities Fraud
Abstract:      
In the roughly five years since the Private Securities Litigation Reform Act of 1995 became law, courts
and commentators have devoted considerable attention to two questions relating to the requirement, set
forth in section 21D(b)(2), that a complaint alleging securities fraud must "state with particularity facts
giving rise to a strong inference that the defendant acted with the required state of mind." Those
questions concern: (1) What constitutes "the required state of mind" in suits under section 10(b) and Rule
10b-5? And (2) Are facts indicating a defendant had a motive and the opportunity to engage in fraud,
standing alone, sufficient to create a strong inference that that defendant acted with the required state of
mind? 

Courts and commentators have devoted far less attention to what I call the Basis Requirement - the
portion of section 21D(b)(1) that requires a plaintiff to specifying not only "each statement alleged to have
been misleading" and "the reason or reasons why the statement is misleading," but also, with respect to
every allegation made on information and belief, "all facts on which that belief is formed." This article
argues that issues relating to the Basis Requirement in the long run will prove to be far more significant
than the issues relating to motive, opportunity and degrees of recklessness that have preoccupied courts
and commentators to date. 

A threshold question is the amount and quality of corroborating information a plaintiff must include in her
complaint. The article explains why, in order to implement Congress' goal of discouraging the filing and
prosecution of speculative claims of securitiesfraud, courts must adopt an interpretation of the Basis
Requirement similar to that adopted by the Ninth and First Circuits in In re Silicon Graphics Securities
Litigation and Greebel v. FTP Software, respectively. Only by doing so will courts prevent plaintiffs from
continuing to make speculative allegations of fraud and then relying on the discovery process to seek
evidence to support their claims. 
517. UNUSED
518. UNUSED
519. With Respect to CAMPBELL
520. US ex rel Miller v Bill Harbert Int’l Constr DC Circuit Joins
The Retroactivity Debate Over FERA
521. Contract Fraud One Year After FERA OOPS 2010
 522. BuildingNYCsInnovationEconomy

Page 3
Despite all of this, New York City has only
scratched the surface when it comes to tapping the
economic potential of its scientific research institutions.
Elsewhere, universities and research centers
have helped spark the emergence and growth of
technology sectors by producing a steady flow of new
start-ups that locate and expand nearby. That high
rate of new business formation helped those regions
establish a critical mass of tech-related businesses,
which in turn attracted entrepreneurially-minded
faculty and students to local institutions and prompted
venture capital firms that specialize in technology
enterprises to open offices there. This pattern has
never taken hold in New York, however, and largely
as a result, the city has never managed to develop a
decent-sized innovation economy

Page 3
Limited support among institutional leaders for
entrepreneurship is apparent in other crucial ways.
For example, New York research institutions offer
comparatively fewer opportunities for their scientists
to access entrepreneurship training and advice; there
are only limited examples of collaboration and crosspollination
between science departments and business
schools here. Some New York institutions have
a reputation for driving a hard bargain with their scientists
during the licensing process, an approach that
sometimes deters faculty and post-doctoral researchers
from going the entrepreneurial route. And city institutions
have not been as accommodating to faculty
who wish to take a temporary leave of absence to pursue
a business opportunity associated with their research
discovery—in stark contrast to Stanford, MIT
and other institutions that often go to great lengths to
encourage their scientists to start businesses.
Page 14
A 2008 report by the Ewing Marion Kauffman
Foundation confirms that New York universities have
not played a major role in seeding high-tech firms.
According to the report, no New York City university
ranked among the top ten institutions in the nation
at which more than 600 key U.S.-born tech founders
received their terminal (highest) degree.47 “After the
top universities, each school on the list had one or two
founders,” says Vivek Wadhwa, the primary author of
the study. “The fact that New York didn’t figure anywhere
on the list is the only significant fact.”
A final problem is that too many of the technology
start-ups that are hatched by local scientists
inside the halls of city research institutions end up
being established elsewhere—from Boston and San
Diego to Northern New Jersey. Out of 84 companies
spun off from Columbia between 1983, when it
produced its first start-up company, and the middle
of 2008, 60 are still in business but only seven of
them maintain significant operations in the city. 48
Even worse, just one of the 14 start-ups produced
by Rockefeller University over the last 15 years remains
in the city.49
The shame of this is that New York City frequently
misses out on the tremendous economic
benefits of technology start-ups that were created
here. One missed opportunity is the jobs: while many
tech startups never succeed, some end up achieving
phenomenal growth and creating dozens or hundreds
of jobs, with revenue benefits accruing to the
city through taxes. Another is the chance to establish
a critical mass of technology companies as well
as a community of seasoned entrepreneurs, both of
which are fundamental to the formation of an entrepreneurial
ecosystem.
Reasons for the city’s longtime failure to retain
companies spun out of local research institutions
include everything from the high cost of living and
pricy real estate to a dearth of commercial lab space.
Many previous studies have pointed out that space
issues were at the heart of the problem, including a
1999 report by the Center for an Urban Future and
a 2001 study by the New York City Investment Fund,
which concluded: “Lack of affordable commercial
lab space is the primary reason why New York City
has failed to develop a biotechnology industry cluster.
New York City-based companies have had to look
outside the city and state for space to accommodate
growth, primarily moving their research and manufacturing
facilities to Massachusetts and New Jersey
… The lack of space is consistently cited as a reason
for their departure.”50
523. A Ruling That Applies Some Common Sense To The False
Claims Act Government Contracts Blog
 524. When ‘Molehills’ Become ‘Mountains’—The Implications Of
US ex rel Longhi v Lithium Power Techs For SBIR Grantees And
Beyond

In U.S. ex rel. Longhi v. Lithium Power Techs. Inc., 513 F.Supp.2d 866 (S.D. Tex. 2007),

2008 WL 62207 (S.D. Tex. Jan. 3, 2008), the U.S. District Court for the Southern District of

Texas ruled that a small business that made false statements to obtain Small Business Innovation

Research (SBIR) grants violated the False Claims Act and must pay the Government treble

damages on all amounts received under the grants, plus the maximum civil fine per grant.

Identifying what it considered a “novel issue of law,” the Court addressed for the first time the

“proper way to calculate damages for a fraudulently induced research grant.” The defendant

urged the Court to adopt the “benefit of the bargain” theory, arguing that the Government

received what it paid for, i.e., high-quality research, and therefore was not damaged. The Court,

however, determined that the grant work was “valueless” to the Government.

This Feature Comment analyzes the liability and damages decisions in Longhi and discusses

the impact on SBIR grantees, as well as other recipients of research and development (R&D)

funding

[,,,]

Legal Analysis—The first issue facing the Court was whether LPT was liable under the

FCA for making false statements in its proposals for the four SBIR grants in question. On cross-

motions for partial summary judgment, the Court ruled that LPT violated the FCA by making in

its SBIR proposals several “knowingly false” statements and misrepresentations that were

“crucial and material “to the Government’s decision to select LPT’s proposals. LPT:
  misrepresented its corporate status and history in the ASMDC Phase I proposal by

claiming that it had been in business since 1992, although it did not incorporate as

a business until five months after proposal submission;

 • made false statements about its available facilities in the ASMDC Phase I grant

proposal;

 misrepresented “cooperative arrangements” that it claimed to have with the

University of Houston and Polyhedron Laboratories in all four SBIR proposals;

and

 misrepresented the amount of related work it had performed in the Air Force

SBIR proposals by not disclosing the funding received for the ASMDC Phase I

and BMDO Phase II grants.

Noting that the falsity of a claim is determined at the time of submission, the Court found

that a number of these statements were not true when LPT submitted the proposals. Moreover,

the Court determined that LPT made these statements either with actual knowledge of their

falsity or with a “reckless disregard for their truth.” The Court also accepted the Government’s

argument that a false statement made in a Phase I proposal “tainted” the Phase II proposal

because, under SBIR terms and conditions, a Phase I grant is a precondition to the receipt of a

Phase II grant.

To demonstrate that LPT’s false statements were material under the FCA, the

Government provided declarations from the scientists who evaluated the ASMDC Phase I and

Air Force proposals. The scientists asserted that the false statements made by LPT were “crucial
and material” to their decision to fund LPT’s SBIR proposals. In response, the defendant argued

that the Government “has made a mountain out of a group of small molehills” in arguing that the

allegedly false statements were material. The Court, however, found that LPT “embellished a

whole series of molehills so it could present a mountain of experience, facilities, and novelty to

attract the reviewers.” Therefore, the Court found that LPT fraudulently induced the

Government to award the SBIR projects.

In its damages decision, the Court first recognized that no other circuit had addressed the

proper way to calculate damages for a “fraudulently induced research grant.” In arguing that the

Government was not damaged, the defendant urged the Court to adopt a “benefit of the bargain”

theory or the closely related “no harm, no foul” approach because the Government got what it

paid for—the research proposed in the SBIR proposals. Thus, according to LPT, the

Government was not damaged.

The Court found that the Government did not receive the benefit of its bargain for two

primary reasons. First, the Court noted, in most cases in which courts apply the benefit of the

bargain approach, the contract at issue is a procurement contract with a tangible end product such

as a “bridge” or “widget.” In contrast, the SBIR projects, according to the Court, produced no

tangible end product. Second, the Court described the congressional intent underlying the SBIR

program as providing assistance “to small business concerns to enable them to undertake and to

obtain the benefits of research and development in order to maintain and strengthen the

competitive free enterprise system and the national economy.” 15 USCA § 638(a). According to

the reviewing scientists, they would not have selected LPT for award if its proposals had been

truthful. Thus, by submitting false proposals, LPT prevented the Government from receiving the
“intangible” benefit that it had anticipated, e.g., helping deserving small businesses develop

innovative new products. Although the Court rejected LPT’s position that the Government

received the benefit of the bargain, it nonetheless examined the “value” of the work LPT

performed. On this issue, the Court concluded that “since the legislative history of the SBIR

demonstrates that the value of the program lies not in innovation, but in innovation by eligible

small businesses, it is clear that any alleged end-product of the Four Contracts is valueless from

the government’s standpoint.”

Because the Government received nothing of value, the Court found that the proper

amount of actual damages was three times the $1.66 million value of the grants—or $4.97

million. However, the Court rejected the Government’s request for civil penalties on each of the

54 invoices submitted under the four projects, determining that the fine should attach only once

to each project. Specifically, the Court noted that in its earlier decision it made no finding on the

falseness of the individual invoices. Rather, the Court found that the false statements were the

four projects themselves and that falseness was imputed to the invoices. Because the defendant’s

fraud was “systematic and knowing,” the Court assessed the maximum penalty per grant, for a

total of $43,000.

Implications and Conclusions—Longhi’s impact on SBIR recipients and the broader

R&D community is potentially far-reaching. As the Court noted in its damages decision,

“today’s SBIR is big business.” For instance, in fiscal year 2007, the Department of Defense and

the National Institutes of Health awarded over $1.7 billion in SBIR grants. As SBIR dollars

grow, the Phase I SBIR grant process becomes increasingly competitive. In 2001, nearly 30

percent of all Phase I applications at NIH received funding, but in 2006, only 19 percent of NIH
SBIR applicants were successful. With greater competition and the growing importance of early

stage R&D funds, the pressure to produce a competitive proposal is intensifying.

The Longhi decision is a wake-up call to small businesses aggressively “marketing”

themselves to SBIR funding agencies. First, the liability decision’s discussion of LPT’s

proposals shows that what an applicant might consider “shading” or “puffery” if pushed too far,

can become a knowingly false statement. Applicants should be certain that the assertions made in

their SBIR proposals are true and accurate at the time of proposal submission, not when they

receive SBIR funding. This is particularly relevant as the decision holds that a “tainted” Phase I

proposal can spill over into a Phase II proposal, thereby potentially broadening FCA liability.

Second, the Court’s analysis on what constitutes a material false statement logically can

extend to other aspects of an SBIR proposal. Applicants often struggle with SBIR eligibility

rules, especially if they have received venture capital funding. For example, determining whether

a company meets the Small Business Administration’s ownership and control test set forth at 13

CFR 121.702 can be difficult. Under the Longhi Court’s analysis, if an applicant is found to have

incorrectly represented its status to meet that test, it could be found to have violated the FCA.

Likewise, the Longhi Court’s analysis could be applied to other federally funded research

programs. For example, the widely used Public Health Service 398 grant application requires

applicants to complete numerous certifications and assurances. Similarly, there are eligibility

criteria such as citizenship requirements, research experience and degree requirements for other

federal grant programs. And there are certifications and assurances that apply to traditional R&D

contracts. In light of Longhi, one can imagine the Government asserting that a false certification
on any of those types of requirements induced the award and that, as a result, the full amount of

the funding is the appropriate damages in an FCA suit.

Third, the damages model applied by the Longhi Court yields essentially the maximum

available FCA damages (putting aside the penalties) inasmuch as LPT received no “credit” for

any work it performed. Thus, decisions such as Longhi create an incentive for a potential relator

to file qui tam actions against participants in the SBIR program. Defending against an FCA case

is burdensome for even the largest companies; for a small business, it likely will be even more

so. In short, SBIR awardees should be aware that being a small business does not mean that they

are immune to FCA suits, especially qui tam actions filed by former or disgruntled employees.

Although some aspects of the Longhi decision are potentially far-reaching, there are

reasons why the case should be afforded only narrow application. Perhaps most significant is that

the Longhi decision involved the fraudulent inducement of an award intended to benefit only

eligible small businesses. Most research programs do not have the strict eligibility criteria that

govern the SBIR program and, therefore, are not as susceptible to a fraudulent inducement

argument.

It also is important to bear in mind that the allegedly false statements in Longhi were

made during the application process. If an FCA complaint were based, for example, on allegedly

fraudulent postaward accounting activity instead of on misstatements made during the

application process, the Government or a qui tam relator likely would not be able to argue

successfully that the Longhi damages model should be applied.

 In addition, among the false statements the Longhi Court identified was LPT’s failure to

identify its Army support in the SBIR proposal submitted to the Air Force. Applicants for grant

support generally must disclose to funding agencies what is referred to as “other support,”

although the presence of related or overlapping work does not mean that a second project will be

denied funding. NIH, for example, makes clear that it will work with an applicant to resolve

financial, budgetary or scientific overlap between projects. It therefore seems likely that the

testimony of the scientific reviewers in the Longhi decision was integral to the Court’s

conclusion. Absent such unequivocal and unchallenged testimony, the Government could not

establish the direct causality between a false statement and a funding decision on which the

Longhi Court relied.

More generally, the Longhi Court’s conclusion that the research LPT provided was

valueless is in some respects difficult to square with the purposes underlying federal R&D

support. The Court acknowledged a distinction between the procurement of goods or services

and the award of funds for research purposes, but arguably discounted that difference in

assessing the appropriate measure of damages. For example, although R&D work is not

necessarily expected to produce “bridges” or “widgets,” the Court remarked that the absence of a

“bridge” or “widget” at the end of a project supported its finding that LPT’s work produced no

tangible benefit to the Government.

Federal Acquisition Regulation 35.002 provides that the “primary purpose of contracted

R&D programs is to advance scientific and technical knowledge and apply that knowledge to the

extent necessary.” Similarly, NIH’s description of its SBIR program is to “us[e] small businesses

to stimulate technological innovation, strengthen[] the role of small business in meeting Federal
R/R&D needs, [and] increase[] private sector commercialization of innovations developed

through Federal SBIR R&D.” To discount the value of work performed under a SBIR award or

any other R&D project because it does not generate something tangible seems inconsistent with

the purpose of R&D.

The Court also noted that any value to the Government was lessened or eliminated

because LPT would own any battery technology developed and could market it to non-

Government customers. That finding overlooks Congress’ intent, through the Bayh-Dole Act, to

create a regulatory regime under which small businesses are encouraged to take title to

patentable inventions developed with federal support. Moreover, the Government receives a

permanent royalty-free license for any such invention and is free to provide that license to other

contractors to produce the technology for Government purposes. So although LPT may “own”

the technology, the Government can derive benefit out of the license if it so chooses.

Overall, the Longhi decision could be significant for SBIR applicants. It also has

potentially broad effect on other R&D programs and institutions performing basic research.

However, the Longhi damages model is not easily applied to many FCA cases involving basic

research or R&D work.

525. Litigating Qui Tam Actions: Doctors, Double Jeopardy,
Excessive Fines and The False Claims Act
526. United States v. Santos: “Proceeds” in Federal Criminal
Money Laundering Statute, 18 U.S.C. Section 1956, Means
“Profits,” Not “Gross Receipts”
527. Over-Criminalization of Conduct/Over-Federalization of
Criminal Law
 528. Courts Reject Application of FERA’s Retroactivity
Provision to Pending Cases

Courts Reject Application of FERA’s Retroactivity Provision to Pending “Cases”

October 30, 2009

Since the Fraud Enforcement and Recovery Act of 2009 (FERA) was signed into law by

President Obama on May 20, three federal courts have rejected the application of FERA’s

retroactivity provision to “cases” pending on June 7, 2008. Collectively, these three courts held

that FERA’s amendment to former 31 U.S.C. § 3729(a)(2) (now renumbered and codified at 31

U.S.C. § 3729(a)(1)(B)) does not apply retroactively to “cases” because (i) Congress did not

explicitly provide for such “retroactive effects” per the Supreme Court’s Landgraf analysis; (ii)

Section 4(f)(1) of FERA applies only to “claims” pending, not “cases”; and (iii) the retroactive

application of the False Claims Act (FCA) would violate the U.S. Constitution’s Ex Post Facto

Clause. FERA’s retroactivity provision and these three cases are discussed below.1 While this

question will continue to be litigated, the developing case law provides important and compelling

precedent that will aid in the assessment and defense of FCA matters.
 529. Allison Engine, The False Claims Act, and Healthcare
Fraud

Scott R. Ebner

Cleveland-Marshall College of Law

http://works.bepress.com/scott_ebner/

SelectedWorks™ is a trademark of The Berkeley Electronic Press.

 530. THE DANGERS OF SUMMARY JUDGMENT:
GENDER AND FEDERAL CIVIL LITIGATION

Summary judgment in the federal courts is an area of civil practice in which there has been
considerable change over many years.3 Rule 56 of the Federal Rules of Civil Procedure (FRCP)
provides that summary judgment can only be granted if there is “no genuine issue as to any
material fact and . . . the moving party is entitled to a judgment as a matter of law.”4 Historically,
summary judgment was disfavored, and was not to be granted liberally because of the preference
for jury trial. Cases that presented issues of credibility and weight of evidence were deemed
inappropriate for summary judgment. However, the trilogy of Supreme Court decisions in 1986
—Matsushita,5 Liberty Lobby,6 and Celotex7—provided impetus and encouragement to district
courts to grant summary judgment.8 Federal trial judges are now more likely to grant summary
judgment,9 depriving litigants of the opportunity for jury trial (and the chance to have the merits
of their claims determined by a more diverse group of decision makers).10 For this reason, the
federal “summary judgment industry”11 has been the subject of much recent scholarly
attention.12 Increasing concern with “the vanishing trial” in federal civil cases13 makes
summary judgment a particularly important subject of inquiry.

[...]

The critical role of summary judgment in cases involving women plaintiffs discussed in this
Article is a new dimension of research on civil litigation, gender discrimination, and gender bias
in the federal courts. As a teacher and scholar of procedure and gender and law, and a former
civil rights lawyer, much of my teaching and writing has centered on the intersection of gender
and procedure.40 This Article details this intersection in the context of summary judgment in
order to deepen understanding of both gender cases and procedure. Looking at summary
judgment through the lens of gender focuses on the troubling operation of current summary
judgment practice in concrete contexts. Examining cases of women plaintiffs through the lens of
summary judgment offers new insights to analysis of gender discrimination litigation. Many
major women’s rights cases that have brought about important changes in the law were originally
dismissed on summary judgment. Some of these cases were recuperated on appeal or in the
Supreme Court, where there was ultimate recognition of the merits and, indeed, the significance,
of the legal claim.41 If the litigants had not been able to appeal, and there had not been reversal
on appeal, those claims would have been lost. Many other innovative claims concerning issues of
gender may have been lost because they were dismissed on summary judgment and were not
appealed. Thus, as Judge Wald has cautioned, the role that summary judgment plays in cutting
off the development of the law warrants concern.42 In cases that involve subtle aspects of gender
bias, there are special risks.
In this Article, I explore the way in which gender plays a role in cases involving summary
judgment in federal court, utilizing both qualitative and quantitative analysis, and focusing on a
range of cases involving women plaintiffs.43 I argue that judicial decision making in gender
cases illustrates the way in which current summary judgment practice permits subtle bias to go
unchecked, and reveals the dangers of summary judgment generally. I do not suggest that cases
involving women plaintiffs are the only, or even the worst, examples of these problems. My
concern is with both the troubling development and use of summary judgment to dismiss cases
involving gender claims and problems with summary judgment practice generally; the
application of summary judgment in cases involving women plaintiffs in ways that suggest
gender bias, as well as the implications of increased use of summary judgment for the American
civil justice system
 531. Eleventh Circuit Affirms Dismissal of FCA Case under
FRCP 9(b)
In United States ex rel. Sanchez v. Lymphatx, Inc., No. 09-14275 (11th Cir. Feb. 18, 2010), the

Eleventh Circuit affirmed the district court’s dismissal of a relator’s allegations of False Claims Act

violations arising from Medicare billing fraud, finding the relator failed to plead specific details of false

claims. Slip Op. at 4. The relator alleged Lymphatx billed Medicare for uncovered services provided

by massage therapists to treat lymphedema, “swelling caused by impairments in the body’s lymphatic

system.” Slip Op. at 3 n.2. Medicare does not pay for massage treatment for this condition if provided

by a massage therapist. Id. The decision bolsters defendants’ Federal Rule of Civil Procedure 9(b)

arguments in the Eleventh Circuit by undermining the holding of United States ex rel. Walker v. R&F

Properties of Lake County, Inc., 433 F.3d 1349 (11th Cir. 2005), which allowed a relator to survive a

Rule 9(b) motion without pleading specific details of false claims.

 532. New Compliance Challenges: False Claims Act
Amendments FERA With More Pending

Hot Issues Alerts - Law Firms New Compliance Challenges: False Claims Act Amendments –
FERA With More Pending
Published: June 30, 2009
The Editor interviews Sheryl J. Willert, Managing Director and Member in the Seattle office,
Williams Kastner.

Editor: Both H.R. 1788 and S. 458 eliminate the need for qui tam relators to meet the

requirements of FRCP Rule 9(b).

Willert: The elimination of the requirements of FRCP Rule 9(b) is of great significance.

FRCP Rule 9(b) requires that an allegation of fraud or mistake be pled with particularity with

respect to the circumstances that constitute the fraud or mistake. This means that a qui tam case

can now be brought based on a generalized statement that says this person has engaged in a

course of conduct that constitutes fraud without being specific as to what the fraudulent action is.

The elimination of the requirement that the specific facts be pled will encourage fishing

expeditions. Relators will hope to obtain through discovery either enough facts to proceed with

the case or to achieve a settlement based on the defendant's desire to avoid the costs of discovery

.
 533. Summary Judgment and the Vanishing Trial:
Implications of the Litigation Matrix.

Martin H. Redish; Stanford Law Review, Vol. 57, 2005

Summary Judgment and the Vanishing Trial: Implications of the Litigation Matrix.

by Martin H. Redish

INTRODUCTION There can be little question that, at least in the federal courts, trials are

vanishing. The statistics make this conclusion inescapable.

Far more troublesome, however, are two key, as yet unresolved issues that are triggered

by this seemingly indisputable empirical insight: (1) why has this development taken place, and

(2) is this development good or bad for the litigation system? While the empirical conclusion

seems relatively uncontroversial, the causal and normative issues to which it gives rise are

considerably more difficult to resolve. The purpose of this Article is to suggest answers to both

of these "second level" questions.

[…]

CONCLUSION

Empiricists have informed us that trials in the federal courts are vanishing. (101) But

questions remain: why has this happened, and is it a good or a bad development? As to the

question of why, it is reasonable to infer some connection between the dramatic decline in trials

since the mid-1980s and the Supreme Court's significant expansion in the availability of
summary judgment at the very same time. The connection appears reasonable not only

temporally but as a matter of common sense. After all, the very purpose of summary judgment is

to screen cases to prevent unnecessary trials, so an expansion in the availability of a device

designed to prevent trials quite probably at least played a role in the dramatic reduction in trials.

Whether this result is a positive development turns out to be a far more complex question.

In answering it, I have sought to shape and then draw upon what I call the litigation matrix, the

intersecting set of fundamental moral, sociopolitical, and economic precepts that provide a

normative framework on which our procedural system should be premised. (102) Of course, one

person's litigation matrix may not be identical to another person's matrix, but I believe I have

selected a group of goals and values that should elicit something approaching a moral consensus.

(103) I have sought to apply that matrix to the central issues of summary judgment analysis, the

ones that have probably led to the dramatic reduction in federal trials.

While empirical inquiry has focused on the "vanishing" trial, summary judgment focuses

on ferreting out the "unnecessary" trial. The two are, of course, not necessarily the same. Our

goal in shaping summary judgment doctrine must be to separate the necessary from the

unnecessary trial. Resort to the foundational values of the litigation matrix can help substantially

in achieving that end.

This analysis gives rise to complex, and not always consistent, conclusions. I neither

unwaveringly favor expansion of summary judgment nor unhesitatingly oppose it. The issues are

far too complicated for such facile and reflexive answers. Initially, I draw an important

distinction between what I describe as the "external" and "internal" barriers to a trial court's

consideration of summary judgment analysis. External barriers are restrictions imposed on a

court's ability even to reach the merits of a summary judgment motion. Internal barriers, on the

other hand, involve the burden of persuasion that naturally lies with the movant to convince the

court that summary judgment is appropriate in the individual case. Application of the litigation

matrix establishes that while we should be extremely cautious about reducing the internal

burdens on a movant, lest we undermine the central political legitimacy of the adjudicatory

process, the existence of any external barriers other than the bare minimum required to assure

fairness to the nonmovant must be removed. (104)

 534. The Unconstitutionality of Summary Judgment: A Status
Report
Iowa Law Review - Nbr. 93-5, July 2008
Suja A. Thomas - Visiting Professor, Vanderbilt University Law School

Read more: http://vlex.com/vid/unconstitutionality-summary-judgment-43732309?
ix_resultado=2&query[ct_resultados]=604&query[frase]=summary%20judgment
%20trilogy&query[pais_id]=US&query[textolibre]=summary%20judgment
%20trilogy&sort=score#ixzz0yoUqtzl2
 535. Information Infrastructure for Healthcare
Information Infrastructure for Healthcare
An Evaluation of Government- Industry Technology Development Initiative

Henry Etzkowitz and Richard N. Spivack

October 1999

http://www.atp.nist.gov/eao/ir-6404.pdf
 536. Technologies for Advanced Imaging Systems

Schen, Michael, Lorel Wisniewski, Stephanie Shipp, and Frank Barros (Editors), Grinspon,
Carlos, Thomas Lettieri, David Swanson, Barbara Cuthill, Purabi Mazumdar, and Eric
Samuleson (Contributors),

Technologies for Advanced Imaging Systems: A Historical Review of ATP Funded Innovation,
September 2007.

http://www.atp.nist.gov/iteo/tis_fact_sheet_final_%209_25_2007.pdf
Exhibit Group 27. References without Articles
 537. Beatson, J. (1991) The use and abuse of unjust
enrichment: essays on the law of restitution

http://books.google.com/books?id=JU9VWycv5zUC&lpg=PR9&ots=nP1UJw7u7v&dq=unjust
%20enrichment%20elements&lr&pg=PA20#v=onepage&q=unjust%20enrichment
%20elements&f=false
 538. Neyers, Jason W. McInnes, M., Pitel, Stephen G. A.; (2004)
Understanding unjust enrichment.
http://books.google.com/books?id=0_A8BzUQo7YC&lpg=PA341&dq=unjust%20enrichment
%20elements&pg=PA341#v=onepage&q=unjust%20enrichment%20elements&f=false
 539. Smith, L. D. (1997)The law of tracing

The Law of Tracing

LIONEL D. SMITH

CLARENDON PRESS · OXFORD

1997

http://www.questia.com/read/55471201/55471485
 540. Oliver Wendell Holmes (1920) Rock Island v US

“Men must turn square corners when they deal with the Government.”

-Oliver Wendell Holmes, Jr.

Rock Island, A. & L. R. v. United States, 254 U.S. 141, 143 (1920
 541. Rule of Lenity 

In construing an ambiguous criminal statute, the court should resolve the ambiguity in favor of the
defendant. See McNally v. United States, 483 U.S. 350 (1987); See, e.g., Muscarello v. U.S., 524 U.S. 125
(1998) (declining to apply the rule of lenity); Evans v. U.S., 504 U.S. 255 (1992) (Thomas, J., dissenting);
Scarborough v. U.S., 431 U.S. 563 (1977) (Stewart, J., dissenting); See United States v. Santos (2008).