Shook, Hardy & Bacon Public Policy Partners Victor Schwartz and Phil Goldberg discuss factors that have led to False Claims Act lawsuit abuse and cover a recent example in a December 17 Law360 article, titled, “How False Claims Act Abuse Can Lead to Highway Robbery.” Schwartz is also Chair of the firm’s Public Policy Practice.
Using the high-profile lawsuit against Trinity Highway Products over its ET Plus guardrail end terminal system as an example, Schwartz and Goldberg explain the nuanced differences between product liability litigation and False Claims Act cases.
Schwartz and Goldberg remind readers that “FCA cases are supposed to be about fraud, such as intentionally overcharging the government or selling a product to the government, but never delivering it,” with harsh financial penalties in place to discourage companies from committing fraud, and financial incentives for those who expose fraud.
In addition to the fact that the majority of current FCA claims do not involved fraud, including the ongoing Trinity litigation, Schwartz and Goldberg point out that the government “has joined only 20 percent of [FCA claims]. The other 80 percent are believed to be of questionable merit, yet the private plaintiffs pursue them in hopes of hitting it big.”
Specific to the Trinity matter, the authors ask, “How can our legal system allow a private individual to generate a massive $663 million award for defrauding the government when the federal agency at issue has repeatedly said that it got what it paid for?” If the FCA judgment against Trinity stands, it would be the largest one where the government did not join the suit.
Schwartz and Goldberg also warn of the compounding effect from undeserving FCA awards, as states, personal injury attorneys and others file additional lawsuits based on the same questionable accusations: "Lawyers file pleadings that copy each other word for word; it would appear that this is done without in-depth investigation.”