Click Fraud Protection Appellate Win Allows “Rent-A-Vet” False Claims Act Qui Tam Case Against Cardinal Health to Proceed - Tycko & Zavareei LLP
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HomeSuccessesAppellate Win Allows “Rent-A-Vet” False Claims Act Qui Tam Case Against Cardinal Health to Proceed

Appellate Win Allows “Rent-A-Vet” False Claims Act Qui Tam Case Against Cardinal Health to Proceed

UPPI LLC, qui tam as Relator, and United States of America v. Cardinal Health, Inc.; Cardinal Health 414 LLC, DBA Cardinal Health Nuclear Pharmacy Services; Cardinal Health 200 LLC; D’s Ventures LLC DBA Logmet Solutions LLC; Caring Hands Health Equipment & Supplies LLC; Obie B. Bacon; Demaurice Scott; Other Unnamed Small Business Front Companies; Unnamed Individuals (No.: 21-35905, D.C. No. 2:17-cv-00378-RMP)

The Ninth Circuit of the United States Court of Appeals has ruled in favor of a relator, giving new life to their False Claims Act lawsuit and overturning the prior decision of the United States District Court for the Eastern District of Washington to dismiss the case. The relator, UPPI LLC, an association of highly specialized small business nuclear pharmacies, has accused healthcare company Cardinal Health and several “small business front companies” of engaging in a deceptive “rent-a-vet” scheme. This scheme involves exploiting government preferences for Service-Disabled Veteran-Owned Small Businesses (SDVOSBs) in contracting.

According to the relator’s allegations, Cardinal Health used SDVOSBs Caring Hands and Logmet as front companies to secure contracts for the supply and distribution of radiopharmaceutical products to Veterans Affairs (VA) hospitals. However, the relator claims that Cardinal Health performed the majority of the work and kept most of the revenue, with the SDVOSBs taking only a small cut for nominal invoicing. The relator accuses the defendants of misleading the government into awarding contracts based on false representations.

The District Court initially dismissed the case for failure to plead falsity and materiality. However, the Ninth Circuit found that the relator’s First Amended Complaint (FAC) presented viable theories of liability, including “promissory fraud” where defendants make false promises to perform as SDVOSB subcontractors without any intention of fulfilling the contract.

As a result, the case will now go back to the trial court for further litigation on the relator’s claims. This development marks an important step forward in the pursuit of justice and accountability in government contracting.

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