taproot – digging out the fact of Branch qui tam UPDATED

Taproots develop from the radicle of the seed, which forms the primary root. It produces branches called the secondary roots, and they in turn produce branches to form tertiary roots…very difficult to uproot – the plant itself gives way, but the root stays in the ground and may sprout again.

Who better than Judge Sarah Vance to do the digging and get to the fact of the Branch Consultants qui tam claim? None that I can think of considering the depth of research evident in the Order that Sop reported in Judge Sarah Vance Educates Insurers about Federal Court Jurisdiction in False Claims Act Cases – A Branch Qui Tam Update.

However, shortly after Judge Vance’s well-reasoned 69-page Order was issued, the Defendants filed for certification of an Interlocutory Appeal to the Fifth Circuit:

Relying on pre-Rockwell out-of-circuit decisions, this Court has reached a different conclusion, finding that Branch’s investigation of a publicly disclosed fraud provides direct and independent knowledge such that Branch is an “original source” whose allegations provide this Court subject matter jurisdiction. It is this question Defendants seek to have certified for interlocutory appeal: whether a “sleuth” like Branch, without first-hand involvement in an alleged fraud, can qualify as an “original source” by providing additional examples of a publicly disclosed, alleged fraudulent scheme.

Naturally, the Branch Consultants responded in Opposition:

…whether a particular case was decided pre-Rockwell or post-Rockwell misses the point. Instead, the relevant question is whether Rockwell overruled any of the legal points on which the Court based its decision. It did not, and Defendants do not argue otherwise. Rockwell held that the statutory language stating that “the relator must demonstrate that he or she has ‘direct and independent knowledge of the information on which the allegations are based” refers to the allegations “in the relator’s complaint, not the allegations that were subject to public disclosure.”

Contrary to Defendants’ repeated suggestions, Rockwell did not completely re-write original-source jurisprudence-it simply announced that a relator must be the original source of the information underlying the allegations in the complaint rather than the information underlying the allegations in the public disclosure. Rockwell therefore did not alter existing jurisprudence on whether a relator’s own investigation can provide the information on which the allegations are based. Stated differently, Rockwell did not speak to the source of the relator’s knowledge; instead, it addressed what the knowledge had to support-the allegations in the complaint…

Defendants filed for Oral Argument on the Motion and Judge Vance issued a related Order

The Court is in receipt of a request by defendants (R. Doc 238) for oral argument on their Motion for Certification of Court’s October 19, 2009 Order for Interlocutory Appeal. The Court has reviewed the pleadings and is familiar with the issues raised in the motion. Accordingly, The request is DENIED as unnecessary.

The taproot on this case is already deep in the ground.  Defendants asked for an extension to answer the amended complaint;  Judge Vance granted the motion; and answers were due November 23 (yesterday).

Defendant Fidelity National jumped the gun with an Answer and Third Party Demand raising questions that will be the theme of the scheme for the defense in each defendant’s Answer:

For what purpose was Branch “retained by numerous insureds”? Were the particular persons whose claims appear in the FAC customers of Branch? What did Branch say to these people to gain entry into their homes? What paperwork was provided to Branch by these persons? What did Branch learn from these people? Did Branch inform these persons of its conclusion that its customers were, at least as to Fidelity, unlawfully in possession of fraudulently disbursed United States Treasury funds? Did Branch inform its customers that if indeed their flood claim had been overpaid, that those monies had to be returned to the Federal Treasury?

Answering further, if it is the truth that “on nearly all of the hundreds of properties inspected by Branch in various areas in and about southern Louisiana” that the facts support Branch’s theory, why are only 57 of those “hundreds” of claims referenced in the FAC?

Branch responded with a Memorandum of Support for Motion to Strike the third party claims; i.e. Fidelity’s attempt to file offsetting claims against the named policyholders to recover the alleged overpayment of flood claims:

…Fidelity has no standing to assert these claims against these insureds, qui tam defendants such as Fidelity do not have the right to bring claims that will have the effect of offsetting False Claims Act liability and Fidelity’s claims cannot be added under Rule 14.

Plaintiff-Relator Branch Consultants, LLC (“Branch”) brings this memorandum support motion to strike the “Third-Party Complaint” recently filed by Defendants Fidelity National Property & Casualty Insurance Company and Fidelity National Insurance Company (collectively, “Fidelity”) against the NFIP-insured owners of seven of the properties identified in the First Amended Complaint.

Fidelity, purporting to act in its “fiduciary capacity as the fiscal agent of the United States,” asserts claims against these seven insureds “in the alternative” for “breach of contract,” “unjust enrichment,” and “the common law doctrine of payment by mistake.” Id. at 26-28. Fidelity has no standing to assert these claims on behalf of the United States and its attempt to drag these seven insureds as parties into this qui tam lawsuit should be struck.

Fidelity has no authority to act “as its general agent”! and no standing to assert any claims on behalf of the United States in False Claims Act cases. Indeed, public reports indicate that, directly contrary to Fidelity’s purported claim on behalf of the United States, FEMA already has made a policy decision not to seek reimbursement from insureds. The decision to pursue claims against NFIP insureds rests solely with the United States, not the Defendants in this qui tam action.

The footnote documenting the public report that FEMA will not seek reimbursement from insureds reads:

See Rebecca Mowbray, “Whistleblower Suit Accuses Insurance Of Overbilling Federal Government,” May 30,
2007, available at http://blog.nola.com/times-picayune/2007/05/whistleblower _suit_accuses ins.html, (quoting
FEMA official as stating that, where insureds were underpaid on their wind policies, “FEMA would go after the
companies for not adjusting claims properly, not the individual homeowner”).

A few points here before closing:

  • If FEMA does not intend to recover funds from the insureds who were underpaid on their wind policies, why is the Mississippi court? The effect is making policyholders pay for the wrong doing of their insurance company.
  • Secondly, raising the issue of how many claims are cited in a qui tam complaint is not relevant.  Those who have alleged Branch is superior to the Rigsby claim because of the larger number of examples of alleged fraud in the Complaint are as guilty of posing an irrelevant argument as Fidelity.
  • Judge Senter, too, is offbase when making McIntosh the focus of Rigsby and not the scheme to defraud the federal government.  A qui tam complaint is inclusive of all information provided the federal government and every claim the Rigsby sisters turned over to the government is as much a part of the Complaint as McIntosh.
  • Last, but certainly not least, the insurer defendants cite various named examples in their Answers and make related claims that could significantly impact the credibility of the Branch action if verified in discovery.  However, the Defendants would have to prove the integrity of their data had not been compromised – and at that point they will run headlong into Judge Sarah Vance who demonstrated an impressive command of the technology used by the insurance industry in her Order and Reasons on the preservation of documents.

In that regard, it is important to note the Branch legal team not only includes Susman Godfrey’s expertise in intellectual property litigation but a home grown expert on the technology used by the insurance industry in the claims handling process, Soren Gisleson of Herman, Herman, Katz & Coltar – a familiar name to those who have read the schemeChapter 4: the Blame Game.  Thus far, the Branch defendants are playing it by the book!

Answer American National

Answer American Reliable

Answer Colonial Claims

Answer Liberty Mutual

Answer Standard Fire

Defendant Simsol filed an unrelated document as its Answer.  When the correction is made, this post will be updated.

Answer Simsol

2 thoughts on “taproot – digging out the fact of Branch qui tam UPDATED”

  1. Wow, what creative use of Metaphor to describe an otherwise overgrown scene of (drum roll) Whorticulture. Ka’Banga! Pyyyyyyowww! Who’z da’Punisha! 😉
    But this is why we have artists,
    because making tombstones is such a dying medium.
    Stop me, please… first you need the carver, then you gotta find an epitaph… but you got nothing without da’slab.

  2. So Kanner had the brains to bring in Soren Gisleson? There are only a few litigators in the NOLA area that reside in his professional zip code. This baby is heating up.


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