Companies Finding Creative Ways to Use the FCA for Competitive Advantage

The False Claims Act (”FCA”) was designed to provide government agencies with the power to pursue corporate corruption and fraud, but some companies are using its whistleblower protection power in a creative way to gain an advantage over their competitors.

The number of cases where companies bring FCA claims against competitors has been increasing over the past decade, with businesses using the FCA in non-traditional ways to accomplish other goals, including terminating unfavorable contracts, increasing market share and preventing hostile takeovers.

For example, a generic drug manufacturer accused its name brand competitor in a qui tam action of overcharging the government by raising the price of its drug based on an invalidated patent. The generic pharmaceutical company asserted that the government was being forced to pay a higher price for the name brand drug since the generic brand was barred from entering the marketplace. Litigation in this matter is still ongoing.

Several years ago, a manufacturer was forced to pay a $45 million settlement when a competitor alerted authorities that it was misrepresenting the country of origin in customs documents for certain products.

In light of these developments, companies should consider how competitors could use the FCA against them and if there is any economic gain to be made from using the FCA themselves as a strategic competitive advantage.

The Cogdell Law Firm is a full service criminal litigation and appellate law firm. We provide client-focused representation at all stages of the process, whether our clients are seeking to avoid charges, have been charged, or are seeking reversal of a conviction on appeal. When results matter most, contact Dan Cogdell at (713) 426-2244 or info@cogdell-law.com.

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