The Fourth Circuit, in United States ex rel. Sheldon v. Allergan Sales, LLC, No. 20-2330, 2022 WL 211172 (4th Cir. Jan. 25, 2022) recently upheld the dismissal of False Claims Act (“FCA”) lawsuit brought by a quit tam relator (“Relator”) against his employer, Forest Laboratories, LLC (“Forest”) alleging that Forest engaged in a fraudulent price reporting scheme under the Medicaid Drug Rebate Statute (“Rebate Statute”).[1]

Notably, the Fourth Circuit adopted the US Supreme Court’s decision in Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47 (2007) in holding that the scienter element of the FCA is subject to an “objective reasonableness” standard, where a defendant can defeat FCA liability by establishing that its interpretation of the applicable statute or regulation was objectively reasonable and that no authoritative guidance from a court or agency could have “warned defendant away” from that interpretation. Just last year, the Seventh Circuit adopted this standard in U.S. ex rel. Schutte v. SuperValu Inc., joining the Third, Eighth, Ninth, and DC Circuits in holding the same.

At issue in Sheldon was the reasonableness of Forest’s interpretation of the Rebate Statute in determining how it calculated certain discounts given to separate customers for purpose of reporting its “best price” to the government. The District Court dismissed the complaint on the basis that Forest’s reading of the Rebate Statute was “objectively reasonable,” there was no authoritative guidance to the contrary, and thus Forest did not act “knowingly” under the FCA. The Fourth Circuit affirmed.[2]
Continue Reading Fourth Circuit Adopts Objective Reasonableness Standard in Determining Scienter Element of the False Claims Act

Seyfarth partner Teddie Arnold is moderating the “Enhancing Small Business Ethics and Compliance Efforts” panel for the Defense Industry Initiative’s (DII) first quarter webinar on Thursday, March 24 at 1:00 p.m. Eastern. The program will include a discussion of ethics and compliance risks and opportunities for small and mid-sized businesses, with perspectives from industry, experts,

In a recent decision, the Court of Appeals for the Federal Circuit held that FAR 52.212-4(l), the Termination for Convenience clause used in commercial items contracts, had no effect in a services contract—even though the services contract explicitly incorporated the clause. The case could have significant implications not just for services contracts that borrow commercial-items clauses, but also for contractors evaluating whether new clauses added into their contract (like clauses requiring COVID-19 vaccines) are operative.
Continue Reading Federal Circuit Holds Termination for Convenience Clause Inoperative in Services Contract

Executive Order 14005

Not even one week into the Biden Administration’s tenure, Buy American rules are yet again taking center stage as a fundamental policy objective. On January 25, 2021, President Biden issued Executive Order 14005 entitled “Ensuring the Future is Made in All of America by All of America’s Workers,” which sets forth the new Administration’s policy of utilizing the federal procurement process to maximize the use of goods, products, and materials that are US-origin. Executive Order 14005 takes aim at overhauling “Made in America Laws,” which it defines broadly as inclusive of all statutes, regulations, rules, and Executive Orders relating to federal financial assistance awards or federal procurement—known interchangeably as Buy America or Buy American rules—which provide a preference for purchase of domestic goods and materials that are US-origin. But unlike Executive Order 13788 issued by the Trump Administration making changes to Buy America rules, President Biden’s Executive Order 14005 does not make any immediate changes to those rules. Rather, it calls for a review of existing laws and implementing rules. That review, however, and what proposed changes in existing laws comes out of that review, could be significant.
Continue Reading Biden Administration Issues Executive Order 14005 Aimed at Strengthening Made in America Laws

Seyfarth Government Contracts partners Adam Lasky and Donald Featherstun are presenting programs at Navigating Federal Government Contracts Northwest 2020 on October 21 and 22. The conference—which is hosted by Associated General Contractors of Washington, Washington State Procurement Technical Assistance Center, Pacific Northwest Defense Coalition, and Oles Morrison Rinker & Baker LLP—is two days of informative

The 2020 edition of The Legal 500 United States recommends Seyfarth Shaw’s Construction group as one of the best in the country. Nationally, our Construction practice earned Top Tier, and our Government Contracts practice earned Tier 3.

Based on feedback from corporate counsel, Seyfarth partner Bennett Greenberg was ranked in the editorial’s “Hall of Fame,”

Sign up for Seyfarth’s Coronavirus roundup email.
Visit Seyfarth’s Coronavirus resource page.

The impact of COVID-19, the ensuing delays and changes in the work, protecting the contractor’s cash flow, and avoiding a default termination are now top of mind for every construction contractor. This article reviews delay principles, changes in the work, default and convenience terminations, illness of key personnel, stop work orders, and other considerations related to claims and defenses arising from COVID-19. Contractors must be alert to the practical aspects of entitlement and recovery under the clauses that come into play.
Continue Reading COVID-19’s Impact on the Government Construction Contractor’s Performance: Recognizing and Implementing the Appropriate Claims and Defenses

With the exponential spread of COVID-19, owners, contractors, and design professionals are recognizing the substantial impact this pandemic will have on the construction industry. Several states issued shelter-in-place orders, resulting in the suspension of some construction work.[1] In some states, this has resulted in work stoppages on some of our nation’s largest infrastructure projects. The financial impact of these work stoppages will be significant. As a result, parties to construction agreements have looked to their force majeure clauses for guidance on how these issues should be addressed.
Continue Reading Coronavirus Pandemic: My Construction Agreement Has a Force Majeure Clause, So Now What?

On March 13, 2020, President Trump declared a national emergency in response to the coronavirus (COVID-19) outbreak. Such a declaration has significant implications on the contracting community navigating the federal procurement process. While contractors are undoubtedly trying to manage existing contracts in light of labor and supply chain disruptions, many will be looking at the procurement landscape for business opportunities. Federal procurement law contains a number of provisions that authorize streamlined procurement procedures for major disasters or national emergencies. This article addresses the procedures that federal agencies may employ during a national emergency such as COVID-19. Because these procedures do not often look like typical procurement procedures, contractors should be mindful of the rules to better position themselves as they seek out opportunities.
Continue Reading Federal Procurement Procedures During a National Emergency

Federal contractors already subject to a myriad of reporting requirements should be prepared for yet another. Effective December 23, 2019, a new Federal Acquisition Regulation (“FAR”) provision entitled “Reporting of Nonconforming Items to the Government Industry Data Exchange Program” requires federal contractors and subcontractors to report to the Government-Industry Data Exchange Program (“GIDEP”) certain counterfeit or suspect counterfeit parts and certain major or critical nonconformances. The new FAR provision (48 C.F.R. § 46.317) and clause (FAR 52.246-26) applies to both civilian and defense contracts over the simplified acquisition threshold, currently $150,000.

Where did this rule come from?

Continue Reading New Federal Contract Reporting Requirements Aimed at Protecting Supply Chains Through Detection of Counterfeit Parts