So much for my thinking the next item listed on the Rigsby qui tam docket would be one of the two remaining motions argued at the recent Status Hearing. State Farm filed its first Notice of Intervening Authority before the ink was dry on Judge Vance’s order dismissing the Branch qui tam case; and, when Judge Vance filed an Amended Judgment, State Farm filed a second Notice. (Notices in scribd format follow)
The Rigsbys legal team obviously differed with State Farm’s take on case and Friday they, too, filed a Notice of Intervening Authority citing the Branch decision (Notice in scribd format follows):
[T]he Rigsbys believe that the latest Branch decision again supports their motion to reconsider the scope of the current litigation. The Branch court’s ruling recognized that “a relator need not be an original source of the actual false claims made by the defendants to the government,” as long as the relator is “an original source of a certain core of information, such as the basic modus operandi of the fraud.” Thus, this most recent opinion reinforces the Branch court’s prior ruling, which held that original-source knowledge would have “entitle[d] [the Branch relator] to discovery on all the alleged instances of fraud in the loss-shifting scheme, even those outside the examples in the First Amended Complaint.”
State Farm incorrectly contends that the Branch decision suggests that the “threshold issue in this litigation” is the McIntosh claim rather than State Farm’s scheme to defraud the government. But in contrast to the Rigsbys, the Branch relator had no direct or independent knowledge of any fraudulent scheme; instead, its claims rested entirely upon allegations that individual exemplar properties had been improperly adjusted. In initially holding that the Branch relator qualified as an original source, the court found that the number of exemplar properties in the complaint “was sufficient to raise an inference of potential fraud.”4 The court denied the defendants’ motions to dismiss by explaining that “the presence of a large number of fraudulent adjustments suggests that there are many more examples of the same conduct – a ‘scheme’ even.”
Here, the Rigsbys have explained from the beginning that State Farm was engaged in a scheme to defraud the government, and they provided specific details and direct evidence on the nature of that scheme, the people involved, and the manner in which it was carried out. The Rigsbys did not ask this Court to infer that State Farm schemed to defraud the government based only on a sample of false claims; they told the Court how that scheme had happened. Indeed, the Court has previously recognized that “[t]he Allegations of the Amended Complaint go well beyond the two specific instances of misconduct specifically identified. The Relators charge State Farm. . . entered into a conspiracy to inflate or overstate the amount of flood damage that actually occurred.”
Thus, as the Branch decision again makes clear, the Rigsbys’ direct and independent knowledge of State Farm’s scheme establishes the Court’s subject-matter jurisdiction over all of the false claims submitted as a result of that scheme. Accordingly, even if a jury were to determine that the McIntosh home sustained $250,000 of flood damage, the larger question of whether State Farm’s scheme resulted in other false claims would remain as a necessary issue for trial. For that reason, the most recent Branch ruling supports the Rigsbys’ motion to reconsider and expand the scope of this litigation.
Note that the Rigsbys’ Notice uses the plural, Rigsbys, while State Farm’s continues the Company’s quest for Summary Judgment on Cori’s claims, asking the Court to dismiss her as a relator based on her admitted lack of “direct, independent knowledge” of the McIntosh claim. However, Judge Senter considered her status when ordering the case to trial and he also indicated his intent to eventually expand the scope of the case. IMO, Cori’s status can only be determined by an expanded discovery – when, not if, that is ordered.
SLABBED reports, you decide:
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