Category: Branch Consultants qui tam case

chain, chain, chain of fools – Liberty Mutual’s and Standard Fire’s motions to break chain and sever from Branch defendants

Aretha I’m not but a chain of fools I can spot –  and, despite their claims to the contrary, there’s no weak link between either Liberty Mutual or Standard Fire and the other Branch defendants.  I will concede, however, both companies rattle the chain more than most.  In fact, they make so much noise that I would have missed the motions to sever each filed in January had the two defendants not recently filed motions for leave to Reply to the Branch Response in Opposition to their motions..

Apparently, I’m not the only one who ignored the rattling and moved on.  While both argue against being joined with other defendants, the two companies are obviously joined in a defense strategy to sever.  Each requested a hearing on its motion on the same day, the 3nd of February, a date that passed without a response from the Court.  Perhaps, I’m not the only one these two links in the “chain” didn’t fool.

The WYO Accounting Procedures Manual, Exhibit 1 to the Branch Opposition brief, documents the link. Liberty Mutual makes a foolish attempt to fool the Count by claiming Branch “espouses a new theory of liability” by arguing “the defendants’ unauthorized/fraudulent use of the DHHS PMS” as sufficient to “satisfy Federal Rule of Civil Procedure 20(a)(2)’s requirement that the right to relief against joined defendants must arise out of the same series of transactions or occurrences”.

Surely, neither defendant expects the Court to believe its company does not have to use the established NFIP procedures and system to file flood claims!  The word games these two companies are playing is based on the same flawed analysis of policyholder claims data used to justify streamlined or steamrolled procedures.

Granted, each claim represents a different property and all that claim handling entails. However, the Feldman procedures erred because the number one insurer’s claims are to the total number of claims is a reliable indicator of nothing other than the calculated percentage.  Likewise, the number of exemplary claims Branch cited for a single defendant insurer is not a statistically reliable indicator of the extent of the alleged fraud.  The Branch opposition brief picks up from there: Continue reading “chain, chain, chain of fools – Liberty Mutual’s and Standard Fire’s motions to break chain and sever from Branch defendants”

Scruggs, Minor, and some legal odds and ends (pun intended) – Nielsen, Wilson, Robie and Tort Reform

The “drafts file” is overflowing (again) and time is short (again) – nothing to do but pull a handful of things I think worth a mention and go for what Sop has called a “round-up” post.

First up is an update on Young v Scruggs – brief because the case is stuck on proper service of the summons issued to Dick Scruggs, a discussion I passed on recenty when reporting Defendant’s Rebuttal.  What’s happened since the, however, is more interesting.  First, the defendants fied a Motion to Strike Purported Summons that basically restated the argument Scruggs was not lawfully served and there was a pending motion to dismiss on that basis.  Next, plaintiffs pop up and file Notice the summons has been reissued – and on that same day, according to the docket,  defendants filed anAmended Motion to Strike that cites and attaches a recent Mississippi Supreme Court ruling on the subject that’s worth a look.

The latest news on USA v Minor (Whitfield and Teel) makes for interesting reading – so did the recently filed Motion for Rehearing that was sitting in drafts when most media had the story up.  Here’s the Motion and here’s the latest:

Pursuant to Federal Rule of Appellate Procedure 28(j), Paul Minor notifies the Court of the Supreme Court’s recent decision in Citizens United v. FEC, No. 08-205 (Jan. 21, 2010). That decision clarifies that the jury instructions in this case, which allowed the jury to convict the defendants of honest services fraud for campaign contributions made with only an intent to influence and without any quid pro quo, violate the First Amendment. h/t Legal Schnauzer (entire letter posted there)

Now, news on the “odds” – the first “odd” appears to be Gerald Nielsen or, more accurately, Mr. Nielsen appears to be odd – long on ego but short on memory.  Continue reading “Scruggs, Minor, and some legal odds and ends (pun intended) – Nielsen, Wilson, Robie and Tort Reform”

Judge Vance denies Defendants Motion for Interlocutory Appeal and Branch qui tam rings in the new with Motion to amend complaint adding Allstate and Pilot Catastrophe Service

Defendants contend that a specific question of law controls this matter: “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.”

…The Court need not resolve this question because district courts do not certify “questions” for the court of appeals upon the grant of a § 1292(b) motion.

The eleven-page Order and Reasons s is classic Vance – another pick ’em up, put ’em down tutorial on qui tam law!

Defendants’ primary argument is this: the Supreme Court, in Rockwell International Corp. v. United States, 549 U.S. 457, 470- 71 (2007), abrogated the Fifth Circuit’s “original source”decision in United States ex rel. Laird v. Lockheed Martin Eng’g & Sci. Servs. Co., 336 F.3d 346, 356 (5th Cir. 2003)…Defendants contend that the Court’s Order “diverges from Fried based on pre-Rockwell, out-of-circuit decisions,” R. Doc. 237 at 1, and that there is substantial ground for difference of opinion as to whether a relator who initiates an investigation after an alleged fraud can be considered an original source…

Initially, although defendants make repeated use of the term “pre-Rockwell,” they point to nothing in Rockwell itself that makes it a watershed decision as to the specific issue they identify. Continue reading “Judge Vance denies Defendants Motion for Interlocutory Appeal and Branch qui tam rings in the new with Motion to amend complaint adding Allstate and Pilot Catastrophe Service”

USA files Statement of Interest – supports Branch qui tam relators’ Motion to Strike defendant’s third party claims

Although the United States has declined to intervene and is therefore not a party to this action, the United States remains the real party in interest, entitled to share in any recovery that may be obtained in the qui tam action…The United States therefore has a substantial interest in ensuring that the FCA is interpreted correctly…The United States herein takes no position on the overall merits of any of the claims or third-party claims raised in this case or Fidelity’s opposition brief.  The United States submits that Relator’s motion to strike the third-party claims for overpayment asserted by defendant Fidelity against its individual flood-insurance policyholders named in Relator’s complaint should be granted, in keeping with well-established law prohibiting third-party practice in FCA cases.

In a June,  SLABBED reported the first Statement of Interest filed by the USA in the Branch qui tam case  Support for Rigsby qui tam found hanging on the Branch qui tam docket. Background on the issue prompting the USA to file a second  Statement of Interest –  defendant Fidelity’s assertion of third party claims – can be found in the recent SLABBED post, taproot – digging out the fact of Branch qui tam.

While a striking departure from the conduct of the USA in the Rigsby qui tam, these statements of interest reflect nothing than the need for the President to fill the vacant US Attorney positions in Mississippi – preferably with individuals who understand  the prosecutor’s special duty is not to convict, but to secure justice.

As was the case with the first, the US Attorney’s office in Baton Rouge has demonstrated  the competence and commitment necessary to fulfill a “prosecutor’s special duty” in this second Statement of Interest: Continue reading “USA files Statement of Interest – supports Branch qui tam relators’ Motion to Strike defendant’s third party claims”

Judge Vance’s decision consistent with ABA analysis of Supreme Court’s Rockwell decision – a Branch qui tam update

A post on Insurance Law Hawaii (h/t CLS) sent me racing to the Branch qui tam docket thinking I’d missed an Order more recent than those I linked in taproot – digging out the fact on Branch qui tam.

As it turned out, I had not.  Sop posted Judge Vance’s 69-page Order of October 19 in Judge Sarah Vance Educates Insurers about Federal Court Jurisdiction in False Claims Act Cases that I linked in taproot.

However, while SLABBED focused on the big picture of Judge Vance’s ruling; i.e., Branch was moving forward,  Tred Eyerly, the attorney who writes Insurance Law Hawaii, pointed to the ruling of Branch Consultants qualified as an “original source” – a ruling the Defendant are challenging in their Motion for Certification of an Interlocutory Appeal.

State Farm tried to run the “original source” rabbit in the Rigsby qui tam; but, the dog didn’t hunt.  Let’s take a look at why and see if we pick up the scent of the “good neighbor”. Continue reading “Judge Vance’s decision consistent with ABA analysis of Supreme Court’s Rockwell decision – a Branch qui tam update”

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. Continue reading “taproot – digging out the fact of Branch qui tam UPDATED”

Just a twig about Branch qui tam

Ordinarily, a Motion to appear Pro Hac Vice does not merit a mention, much less a post.  However, there is nothing ordinary about the appearance of a Susman Godfrey attorney for the plaintiffs in the Branch Consultants qui tam case.

Founded in 1980, Susman Godfrey focuses its nationally recognized practice on just one thing: big – stakes commercial litigation. We are one of the nation’s leading litigation boutique law firms with locations in Houston, Dallas, Los Angeles, Seattle, and New York. Each of the firm’s 79 trial attorneys devotes all of his or her time and talent to achieving excellent outcomes within the complex commercial litigation environment…

Susman Godfrey’s very first case, the Corrugated Container antitrust trial, led to one of the highest antitrust jury verdicts ever obtained.

Like that antitrust experience a lot; but, what I really find intriguing is… Continue reading “Just a twig about Branch qui tam”

Let’s talk – the Branch qui tam, Rigsby, and Judge Sarah Vance

SLABBED has been talking about the Maustaud directive on expedited claim handling process. Like most good conversations, one thing led to another – and the most recent “another” was a discussion of the relative merits of the qui tam claims filed by the Rigsby sisters and the Branch consultants.

The last SLABBED update on Branch – Support for Rigsby qui tam found hanging on the Branch qui tam docket – reported Judge Vance had requested the parties submit an order for preservation of documents.

The content of that post as well as that of a more recent post on an order issued by Judge Vance – Federal District Court Judge offers tutorial – proof of loss and segregation of damages – is relevant to the ongoing conversation about the Maustaud directive.

For example, the June update on Branch reported a Statement of Interest in Opposition to Defendant State Farm’s Motion to Dismiss filed by the United States among the entries made before the Order dismissing Branch was issued:

The fact that FIA and the WYO carriers enter into an agreement, and the agreement relates to the WYO carriers’ alleged violation of the FCA, does not mean that the FCA claim is founded on that agreement. Rather, the FCA claim is founded on the defendants’ alleged violation of a federal statute which prohibits a person, like the defendants, from acting with appropriate scienter to submit false or fraudulent claims to the government or make false statements in order to avoid an obligation to the government. Further, the FCA provides for relief – treble damages and penalties – that is not available under the Arrangement but that arises instead by statute.

The Fifth Circuit reinstated Branch, in part, last February.  The current conversation, like an off-blog mention of the case last June, reminded me to check the docket where this time I found the most recent entry was this past July, the Order and Reasons of Judge Vance’s decision on the preservation of documents : Continue reading “Let’s talk – the Branch qui tam, Rigsby, and Judge Sarah Vance”

Behind door #1 – Xactware come on down!

A number of complaints have been filed with the Justice Department regarding what appears to be an effort to fix prices in the property insurance claims repair business. It involves a company called Xactware, which is a wholly-owned subsidiary of the Insurance Services Organization.

The writer,  an independent business owner, was concerned because the practices in question impact my business, my employees and my family – raising the question:  What practices?

As a practice, insurers, through their adjusting procedures, attempt to impose compliance with these “pricelists” by contractors as a broad group. Because of Xactimate’s position in the industry, at the very least I believe they should be enjoined from presenting their data as a “pricelist”.”

Again, a question is raised: What is Xactware’s data in Xactimate if it isn’t a “pricelist”?

They produce a pricing database, which they market as a “pricelist”, which is actually a database of information of previously submitted settlement numbers for typical processes heavily dependent on “feedback” from insurance companies and from captive contractors who have agreements with those insurers to use the database as a “pricelist”. This methodology results in a self-fulfilling prophecy as insurers and their contracted companies feed back information to establish a “pricelist”…

There is also no doubt that these so-called price lists can be manipulated BOTH downwards and upwards if the client requesting the “price” has a vested interest in doing so.

But, wait, “these client” are insurers –  insurers that own a controlling interest in ISO and ISO owns Xactware. Continue reading “Behind door #1 – Xactware come on down!”

Support for Rigsby qui tam found hanging on the Branch qui tam docket

Since claims brought under the FCA are not contract-based claims or dependent upon the degree of negligence involved, the claims are unimpaired by contractual limitations on liability.

We missed it or did until today when I went to the Branch docket for an update and found a Statement of Interest in Opposition to Defendant State Farm’s Motion to Dismiss filed by the United States among the entries made before the Order dismissing Branch was issued.

There was no blog SLABBED until after Branch was dismissed.  However, once we were up and running in March 2008, we posted the Branch Consultants’ qui tam case here; wrote about the Appeal here and here ; and reported on 5th Circuit’s decision here and here.

Nonetheless, until today, we missed the Government unequivocally stating that statutory authority over a WYO carrier can not be contracted away.

The fact that FIA and the WYO carriers enter into an agreement, and the agreement relates to the WYO carriers’ alleged violation of the FCA, does not mean that the FCA claim is founded on that agreement. Rather, the FCA claim is founded on the defendants’ alleged violation of a federal statute which prohibits a person, like the defendants, from acting with appropriate scienter to submit false or fraudulent claims to the government or make false statements in order to avoid an obligation to the government. Further, the FCA provides for relief – treble damages and penalties – that is not available under the Arrangement but that arises instead by statute.

With FCA claims not contract – based claims or dependent upon the degree of negligence involved, there is no “reasonable overpayment” – no “little bit pregnant” fraud permissible under the Expedited Claim Handling Processes authorized following Hurricane Katrina. Continue reading “Support for Rigsby qui tam found hanging on the Branch qui tam docket”