Professional Documents
Culture Documents
I. Introduction
area.
flood prone areas.” Gowland v. Aetna, 143 F.3d 951, 953 (5th
these insurance policies are made with federal money. Id. The
FEMA drafts the policies and the insurers cannot alter them
2
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also Dwyer v. Fidelity Nat. Prop. & Cas. Co., 565 F.3d 284, 285
(5th Cir. 2009). The private companies under WYO act as “fiscal
F.3d at 285.
Cas. Co., 559 F.3d 390, 394-95 (5th Cir. 2009); Eckstein v.
Fidelity Nat. Prop. & Cas. Ins. Co., 07-4567, 2009 WL 1870558, at
behalf of the United States government under the False Claims Act
3
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4
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government.
filed its Second Amended Complaint over three years after filing
under this theory was not to avoid paying wind losses, but rather
flooding.
1
R. Docs. 280, 617.
5
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Because the Mississippi case was filed first, the Court ruled
that this suit was barred under the FCA’s “first-to-file” rule.3
2
R. Doc. 191.
3
31 U.S.C. § 3730(b)(5). Certain provisions of the
False Claims Act were amended in March of 2010 by the Patient
Protection and Affordable Care Act, Pub. L. No. 111-148, § 10104,
124 Stat. 119, 901-02 (2010). The Supreme Court has intimated
that the changes do not apply retroactively. See Graham County
Soil & Water Conservation Dist. v. United States ex rel. Wilson,
130 S.Ct. 1396, 1400 n.1 (2010). In addition, the subsections of
§ 3729 of the FCA were reorganized by statute in 2009 as part of
the Fraud Enforcement and Recovery Act of 2009. See Pub. L. No.
111-21, § 4, 123 Stat. 1617, 1621-22 (2009). Here, unless
otherwise specified, all citations to the provisions of the FCA
are to the pre-2009 version of the statute.
4
United States ex rel. Branch Consultants v. Allstate
Ins. Co., 560 F.3d 371, 381 (5th Cir. 2009).
6
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the same day.8 Before the Court granted Branch leave to file the
5
United States ex rel. Branch Consultants, L.L.C. v.
Allstate Ins. Co., 668 F.Supp.2d 780 (E.D.La. Oct 19, 2009) (R.
Doc. 228).
6
R. Doc. 280.
7
R. Doc. 615.
8
R. Doc. 617.
7
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The Court will resolve this case under the FCA’s first-to-
Rule 12(b)(1) motion to dismiss, the court may rely on (1) the
241 F.3d 420, 424 (5th Cir. 2001); see also Barrera-Montenegro v.
United States, 74 F.3d 657, 659 (5th Cir. 1996). The plaintiff
another forum. See Hitt v. City of Pasadena, 561 F.2d 606, 608
8
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384 F.3d 168 (5th Cir. 2004) (quoting United States ex rel. Laird
Catrett, 477 U.S. 317, 322-23 (1986); Little v. Liquid Air Corp.,
Pine Land Co. v. Nationwide Agribusiness Ins. Co., 530 F.3d 395,
754 F.2d 1212, 1216 (5th Cir. 1985); Little, 37 F.3d at 1075.
will bear the burden of proof at trial, the moving party “must
9
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(5th Cir. 1991). The nonmoving party can then defeat the motion
will bear the burden of proof at trial, the moving party may
nonmovant may not rest upon the pleadings, but must identify
Behalf of Isquith v. Middle South Utils., Inc., 847 F.2d 186, 198
III. DISCUSSION
10
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may siphon off a portion of the recovery from the government and
Sys., 384 F.3d 168, 174 (5th Cir. 2004) (quoting United States ex
rel. Laird v. Lockheed Martin Eng’g & Sci. Servs. Co., 336 F.3d
act has created a situation in which qui tam actions are commonly
11
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addition, other cases have been filed that are vying for
Rigsby v. State Farm Ins. Co., No. 06-433 (S.D. Miss.); United
La.); United States ex rel Sonnier v. Allstate Ins. Co., No. 09-
B. Jurisdictional Tests
12
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rel Rigsby v. State Farm Ins. Co., No. 06-433 (S.D. Miss. 2006),
states:
Independent School Dist., 527 F.3d 439, 442 (5th Cir. 2008);
13
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72 F.3d 447, 451 (5th Cir. 1995). Thus, the Court has
defined as:
(2007)). The Court has ruled that Branch adequately pleaded that
also argue that Branch did not disclose that information to the
Regional Healthcare System, 384 F.3d 168, 177 (5th Cir. 2004).
Both the public disclosure bar and the first-to-file bar are
9
United States ex rel. Branch Consultants, L.L.C. v.
Allstate Ins. Co., 668 F.Supp.2d 780 (E.D.La. Oct 19, 2009) (R.
Doc. 228).
14
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Branch Consultants v. Allstate Ins. Co., 560 F.3d 371, 376 (5th
Cir. 2009). See also Grynberg v. Koch Gateway Pipeline Co., 390
Hughes Aircraft Co., 243 F.3d 1181, 1186 (9th Cir. 2001)
15
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(D.D.C. 2003) (every court that has been faced with the question
16
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i. Statutory Text
17
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Healthcare Group Inc., 606 F.3d 361, 362 (7th Cir. 2010).
must be met at the time a qui tam action is filed. The use of
the action was filed, as opposed to facts that existed when the
rel. Merena v. SmithKline Beecham Corp., 205 F.3d 97, 101-02 (3d
18
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the time the original complaint was filed, the Court must dismiss
Atlas Global Group, L.P., 541 U.S. 567, 574-75 (2004) (post-
Fed.Appx. 928, 931 (5th Cir. 2009) (in the federal question
19
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Victus Ltd., 212 F.3d 885, 888 (5th Cir. 2000) (an amendment may
Co., 700 F.2d 889, 893 (2d Cir. 1983) (amendment to add new
be created by amendment.”).
Sessions v. Rusk State Hosp., 648 F.2d 1066, 1070 (5th Cir.
complaint. See also ConnectU LLC v. Zuckerberg, 522 F.3d 82, 92-
20
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review of the case law under the FCA, starting with the Supreme
filing rule.
iii. Rockwell
plant. The Supreme Court held that the relator was not an
in the amended complaint. Id. at 473. But the Court did not
21
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the contrary, the Court stated that its holding was consistent
U.S. 694 (1891) and Morris v. Gilmer, 129 U.S. 315 (1889). In
his own executorship, and the other executor amended to name only
diversity cases, but the Supreme Court did not hesitate to apply
22
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Inc., 759 F.2d 504, 508 (1985) (court lacked jurisdiction when
23
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473.10
had some direct and independent knowledge and later amend the
10
When this case reached the Fifth Circuit, the court
noted in the background section of its opinion that its “focus is
on the allegations in Branch’s first amended complaint” and cited
Rockwell for the proposition that “when a plaintiff files a
complaint in federal court and then voluntarily amends the
complaint, courts look to the amended complaint to determine
jurisdiction.” United States ex rel. Branch Consultants v.
Allstate Ins. Co., 560 F.3d 371, 375 n.5 (5th Cir. 2009) (citing
Rockwell, 549 U.S. at 473-74). The court did not, however,
interpret Rockwell to hold that a court could acquire
jurisdiction by amendment if it lacked jurisdiction at the time
the relator originally brought the action. The court simply was
not faced with that issue.
24
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court must have jurisdiction over the original qui tam complaint
States, 72 F.3d 447, 453 (5th Cir. 1995), for example, the Fifth
Circuit held that a relator who was not an original source could
not amend the complaint to add a new relator. The court reached
this conclusion by applying the general rule that a party may not
(quoting Aetna Cas. & Sur. Co. v. Hillman, 796 F.2d 770, 776 (5th
claim under the False Claims Act and . . . the district court
11
In addition, the relator in Rockwell argued that even
if he was not the original source of claims added by amendment,
the government had intervened by the time of the amendment,
providing an independent basis for jurisdiction. The Court
responded by stating: “Even assuming that [the relator] was an
original source of allegations in his initial complaint, we
reject [his] ‘intervention’ argument.” Id. at 477. The Court
did not have to reach the question of whether the relator was the
original source of his initial complaint, because his
“intervention” argument was flawed in any event. Nonetheless,
Rockwell makes clear that a court must have jurisdiction over the
allegations in the original qui tam complaint in order to have
jurisdiction going forward.
25
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Lockheed Missiles & Space Co., Inc., 190 F.3d 963 (9th Cir.
whether the relator had stated claims over which it had subject
Equalization, 858 F.2d 1376 (9th Cir. 1988), which states: “In
complaint. 190 F.3d at 969-970. The court also ruled that the
Grynberg v. Koch Gateway Pipeline Co., 390 F.3d 1276 (10th Cir.
26
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the Court depends upon the state of things at the time of the
rule, found that a related action was pending at the time the
original complaint was filed, and dismissed the case. 390 F.3d
at 1279-80.
United States Steel Corp., 639 F.2d 1278 (5th Cir. Unit A Mar.
27
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dismissed relators who fail to meet it. See, e.g., United States
Inc., 570 F.3d 907 (7th Cir. 2009). The Court will follow the
28
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Fifth Circuit has held that even skeletal allegations can bar
Allstate Ins. Co., 560 F.3d 371, 379 (5th Cir. 2009). It would
29
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amendments.
United States ex rel Rigsby v. State Farm Ins. Co., No. 06-433
rel Sonnier v. Allstate Ins. Co., No. 09-1038 (M.D. La.). The
Ins. Co., 560 F.3d 371 (5th Cir. 2009) (applying first-to-file
30
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D. First-to-File Bar
i. Allstate
Allstate Ins. Co., No. 06-4091, 2007 WL 3118310 (E.D.La. Oct. 17,
2007), aff’d in part and rev’d in part, 560 F.3d 371 (5th Cir.
No. 06-433 (S.D. Miss. 2006), which was filed before Branch’s
jurisdiction.
12
Rigsby, R. Doc. 2 (filed April 26, 2006).
31
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Allstate and State Farm and that there was no jurisdiction over
13
Rigsby, R. Doc. 2.
14
Rigsby, R. Doc. 58.
15
Rigsby, R. Doc. 192.
32
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For this same reason [as the ruling regarding State Farm],
we affirm the dismissal of Allstate, named in the Rigsby
complaint. We recognize that only skeletal allegations are
raised against Allstate in that case. We express no opinion
on the as-yet-unpresented question of whether a dismissal
for lack of any factual basis or on Rule 9(b) grounds in the
Rigsby case would then permit a suit by Branch or any other
person with knowledge of facts from suing Allstate without
facing the first-to-file bar. In other words, if the
“first-filed” case is essentially a sham, does it continue
to be “first” after the court in that case dismisses it?
The answer to that question should await a case in which it
is squarely presented.
16
Rigsby, R. Doc. 2, ¶41-53.
33
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Wright & Miller, Fed. Prac. & Proc. Juris. § 4436 (2d ed.); see
17
Original Brief of Plaintiff-Appellant at 36, Branch
Consultants, L.L.C. ex rel. United States v. Allstate Insurance
Company, et al., 560 F.3d 371 (2009) (No. 07-31191), 2008 WL
6082655; Transcript of Oral Argument at 3, Branch Consultants,
L.L.C. ex rel. United States v. Allstate Insurance Company, et
al., 560 F.3d 371 (2009) (No. 07-31191).
34
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669 F.2d 269, 272 (5th Cir. 1982) (quoting Segal v. American
Telephone & Telegraph Co., 606 F.2d 842, 845 (9th Cir. 1979))
“The test for res judicata has four elements: (1) the
merits; and (4) the same claim or cause of action was involved in
Rigsby action.
18
R. Doc. 192.
35
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the issue was actually litigated in the prior action; and (3) the
States, 961 F.2d 245, 256 (D.C. Cir. 1992). Although the Fifth
only of its own jurisdiction, but also that of the lower courts
534, 541 (1986) (quoting Mitchell v. Maurer, 293 U.S. 237, 244
36
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have to look to facts that were not available at the time the
the basis of evidence that existed, but was not before the
Co., 243 F.3d 1181, 1188 (9th Cir. 2001), a first-filed complaint
that was pending at the time the relator brought suit barred the
v. Apria Healthcare Group Inc., 606 F.3d 361 (7th Cir. 2010), the
relator brought her action at a time when two other related qui
37
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pending at the time she brought her action. Id. at 362. The
barred by § 3730(b)(5).
against Allstate and that the Fifth Circuit has left open the
38
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the Fifth Circuit’s dictum about what it was not deciding does
simply said that it was not deciding an issue that had not
court in the first-filed action decides that the qui tam action
ii. Pilot
Pilot, however, was not named in Rigsby, and Branch argues that
39
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original source as
the allegations are based and (2) the relator must demonstrate
Healthcare System, 384 F.3d 168, 177 (5th Cir. 2004). A relator
who does not meet the second part of this test is not considered
Inc., 264 F.3d 1271, 1280-81 (10th Cir. 2001); United States v.
40
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Inc., 570 F.3d 907 (7th Cir. 2009). As this Court has noted, it
Allstate Ins. Co., 668 F.Supp.2d 780, 802 (E.D.La. 2009); see
06313, 2001 WL 40807 (N.D.Ill. Jan. 16, 2001) (same). The pre-
§ 3730(b)(2) that the relator serve the government with “[a] copy
19
R. Doc. 686-3, Ex. A.
41
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because it was made the same day the complaint was filed, but the
Court does not need to reach that issue. Rather, the Court will
sufficient.
while holding back the information about which it has direct and
20
R. Doc. 793-1.
42
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filing the original complaint but before filing the First Amended
43
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Products, L.P., 579 F.3d 13, 28 (1st Cir. 2009) (relator was
complaint was still under seal, and filed the First Amended
106, 113 (1993), the Court dismissed the case when the plaintiff
21
R. Docs. 692-2, 692-3.
44
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not raise this issue, the Court must consider its subject matter
22
R. Doc. 686-3, Ex. A.
23
R. Doc. 693.
45
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Co., 668 F. Supp. 2d 780, 797-98 (E.D. La. 2009). The Court
24
Specifically, the title of the document names St. Paul
Travelers Cos., a company related to Standard Fire.
25
Even if Branch’s original complaint, which was
communicated along with the written disclosure statement, could
be considered a disclosure under § 3730(e)(4)(B), that complaint
also fails to list exemplar properties for Standard Fire, Liberty
Mutual, and Pilot. R. Doc. 1.
46
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defendants.
47
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26
R. Doc. 793-1.
27
Id. at ¶5.
28
Id. at ¶5(c).
48
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the title of the document but does not specify any exemplar
29
R. Doc. 49.
30
R. Docs. 686-3, 692-2.
31
R. Doc. 692-3.
49
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or adjust both wind and flood policies for any of the exemplar
and ANPAC.
i. Fidelity
32
See also United States ex rel. Ackley v. International
Business Machines Corp., 76 F.Supp.2d 654, 659 (D.Md. 1999) (in
qui tam action with ongoing discovery, initial complaint is the
most reliable evidence of whether the relator is an original
source).
50
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Branch now admits, however, that Fidelity did not issue wind
33
R. Doc. 1. The Court’s analysis of the loss-shifting
scheme would be unchanged if it were to look to the First Amended
Complaint or the Second Amended Complaint rather than the
original complaint.
34
R. Doc. 631, Ex. 2, No. 1.
35
R. Doc. 615 at 9.
36
R. Doc. 631, Ex. 2, No. 3.
51
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including Fidelity, wrote both wind and flood policies for the
exemplar properties.
Branch now admits, however, that Fidelity did not issue both
37
R. Doc. 1, §17.
38
Id. at §20.
39
R. Doc. 631, Ex. 2, No. 6.
52
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Livingston, 600 F.3d 552, 561 (5th Cir. 2010) (quoting C.B.
Fidelity did not issue both wind and flood policies for any of
40
R. Doc. 615 at 38.
53
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54
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off, the plant discovered that many of the blocks were only
Vuyyuru v. Jadhav, 555 F.3d 337 (4th Cir. 2009), also supports
55
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provided any evidence that Fidelity issued both the wind and
56
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within its own control and should not require discovery. See
57
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41
While the Court has already dismissed Standard Fire,
Liberty Mutual, SIMSOL, and Colonial due to the inadequacy of
Branch’s pre-filing disclosure to the government, it is worth
noting that Branch has also admitted that Standard Fire did not
issue both the wind and flood policies for any of its exemplars
(R. Doc. 631, Ex. 1, No. 3), and that Liberty Mutual did not
issue the wind policy for one of its two exemplars (R. Doc. 631,
Ex. 4, No. 1). Further, Branch does not dispute that SIMSOL
adjusted only the flood policy, not the wind policy, for the
relevant exemplar property. (R. Doc. 570, Ex. A; R. Doc. 631,
Ex. 5, Nos. 3 and 7.). Additionally, Branch alleges that
Fidelity wrote the policies for the Colonial exemplar properties,
but as discussed, Fidelity did not write both the wind and flood
policies for any of those properties.
42
R. Doc. 541, Ex. 14.
43
R. Doc. 541, Ex. 13.
44
R. Doc. 541 at 8.
58
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Life Ins. Co., 895 F.2d 1073, 1078 (5th Cir. 1990) (claim not
iii. ANPAC
Branch admits that ANPAC did not issue wind policies for any
45
R. Doc. 589 at 13.
46
R. Doc. 631, ¶37.
59
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Louisiana[.]”47
for the [exemplar] properties”49 and that “ANPAC did not receive
contract between itself and NFS which states the parties are
47
R. Doc. 631, Ex. 6, No. 36.
48
R. Doc. 580, Ex. A, ¶7.
49
Id. at ¶14.
50
Id. at ¶16.
60
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adjusting claims,53 but the letter does not prove or even imply
Branch also argues that ANPAC had a duty under the WYO
51
R. Doc. 580, Ex. B., Art. VIII, Sec. H.
52
Id. at Art. VI, Sec. C.
53
R. Doc. 631, Ex. 17.
61
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supervise NFS, Branch does not explain how that demonstrates that
York Medical College, 252 F.3d 118 (2d Cir. 2001), the Second
Technologies Corp., 985 F.2d 1148, 1159 (2d Cir. 1993)). The
relator in New York Medical College did not meet this standard
62
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allegations.
Emergency Care, Inc., 190 F.3d 1156 (10th Cir. 1999), the Tenth
Circuit held that the relator was not an original source of the
Id. The court also noted that the relator alleged not only that
the defendants made false claims to the government, but also that
Royalties, 562 F.3d 1032, 1046 (10th Cir. 2009) (relator’s direct
63
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Ry. Co. v. Quinn, 14 F.3d 645, 656-57 (D.C. Cir. 1994), the court
64
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speculation.
the flood claims. Branch’s theories about how ANPAC may have
the summary judgment evidence now shows that NFS, not ANPAC, was
54
R. Doc. 315 at 4.
65
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ANPAC, ANPAC Louisiana, and NFS. There would have had to have
Otherwise, the right hand would not have known what the left hand
was doing. But as noted, Branch does not even mention ANPAC
theory, and it does not even purport to raise such a theory. Nor
could ANPAC be liable under the FCA for merely knowing of fraud
714 (10th Cir. 2006) (citing United States v. Hibbs, 568 F.2d
347, 349 (3d Cir. 1977)) (setting out proximate cause standard
under the FCA). Further, Branch does not dispute that no money
changed hands between ANPAC and NFS based on the amount of the
flood claims.
66
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ANPAC’s seventh defense is that NFS adjusted the flood claims and
fatally flawed.
55
R. Doc. 254 at 16-17.
56
R. Doc. 280.
57
R. Doc. 615 at 16-21.
67
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III. Conclusion
SARAH S. VANCE
UNITED STATES DISTRICT JUDGE
68