Katz, Marshall & Banks partner Alexis Ronickher authored an Expert Analysis article for Law360, “Cisco FCA Deal Shows Viability of Cybersecurity Qui Tams.”
The False Claims Act and its state analogues allow whistleblowers to bring lawsuits against companies that defraud the federal government. These “qui tam suits” are brought when contractors make false and fraudulent claims for payment to the United States. Generally, qui tam suits involve defense contractors, health care providers, drug manufacturers, and others.
In July, Cisco Systems settled with the federal and several state governments for $8.6 million in a blockbuster cybersecurity FCA case. The original lawsuit, brought in 2011 by whistleblower James Glenn, alleged that Cisco’s video surveillance manager package sold to government customers had such significant security issues that they were unusable. Instead of recalling the systems, or disclosing the vulnerabilities, Cisco continued to sell to government customers for another two years after the original qui tam suit was filed.
Glenn argued that Cisco’s claims were false both because their systems failed to enhance the security of government agencies (and actually harmed them), and the company failed to disclose the flaws to the government, which violated its contractual duty to replace faulty equipment.
This is an important case as it proves the viability of cybersecurity FCA cases, and should serve as a warning to government contractors that cybersecurity whistleblowers must be treated seriously in the future.
Read the full article here.