Washington, D.C. June 22, 2016 – Today, the U.S. Department of Justice filed a Notice of Supplemental Authority in a pending False Claims Act case, U.S. ex rel. Westrick v. Second Chance Body Armor, et al., No. 04-0280 (D.D.C.), setting forth the DOJ’s official position on the impact of the Supreme Court’s unanimous decision announced last week in Universal Health Services, Inc. v. United States ex rel. Escobar, 579 U.S. ___, slip op. No. 15-7 (June 16, 2016). In its filing today, the DOJ argues that the Supreme Court’s unanimous decision in Escobar discussion that a contractor’s “misleading half-truths” to the government “unequivocally supports the United States’ argument” in the Westrick case that Toyobo Co. Lt. and Toyobo America, Inc. (collectively Toyobo) “had a legal duty to disclose” its knowledge that the degradation of Zylon bullet-proof vests that it sold to the government “contradicted Toyobo’s misrepresentations about the superiority” of those vests.
Stephen M. Kohn and David K Colapinto who together with Michael D. Kohn filed an amicus brief in Escobar on behalf of the National Whistleblower Center, also represent Dr. Aaron Westrick, the whistleblower in the Westrick case.
The Supreme Court’s unanimous decision in Escobar in favor of a whistleblower was widely reported last week and has been the subject of many blog posts on both sides of the issue. We reported that that this 8-0 decision was a “big win for whistleblowers.” See Nataleigh Kohn, “Big Win for Whistleblowers at Supreme Court” (June 16, 2016).
In its unanimous Escobar decision the Supreme Court rejected arguments raised by the healthcare industry, the U.S. Chamber of Commerce and numerous business groups, that the False Claims Act only prohibited fraud that was “expressly designated” as a “condition of payment.” They had argued that the government should pay bills submitted by unlicensed and unqualified “doctors” even though their misconduct resulted in the death of a child.
The DOJ’s notice of supplemental authority filed in the Westrick case is the first public statement by DOJ on the applicability of the Escobar ruling in a pending False Claims Act case.
DOJ’s position is also consistent with the public statement issued by Senator Chuck Grassley (the principal author of the modern False Claims Act) late last week in reaction to the Supreme Court’s Escobar decision, in which he stated, “It goes without saying that a lie of omission is still a lie.” Senator Grassley also echoed what DOJ is stating today, by commenting that the Escobar ruling “makes clear that entities that knowingly mislead the government through half-truths and lies of omission when conducting business run afoul of the False Claims Act.” Senator Grassley also filed an amicus brief in the Escobar case.
This is the first in a series of blog posts that will examine the impact of the Supreme Court’s 8-0 decision in favor of the whistleblower in Escobar.