The False Claims Act (31 U.S.C. §§ 3729 – 3733) allows private citizens to file lawsuits on behalf of the government (called “qui tam” cases) against those who have defrauded the government. Private citizens who successfully “blow the whistle” with respect to fraud on the government may receive a portion of the government’s recovery.
When a qui tam case is first filed, it is confidential and filed under seal so that the government can investigate and evaluate the allegations made by the whistleblower. At the conclusion of the investigation, the government makes an intervention decision. It can choose to either intervene in the case and effectively take it over as lead counsel or it can decline to intervene and allow the whistleblower and his or her counsel to proceed to litigate the case on the government’s behalf. The intervention decision is a critical juncture in the trajectory of any qui tam case. Indeed, several circuit courts have held that by declining to intervene, the government no longer becomes a “party to litigation” and “disclaim[s] any participation” in the qui tam action.[1]
However, the government can change its intervention decision as the case proceeds. If the government declines to intervene, it can later intervene “upon a showing of good cause.” The False Claims Act lists other actions that the government can take – it can limit discovery or the whistleblower’s participation in the litigation, it can settle the matter over the whistleblower’s objection provided that the Court finds that the settlement is fair and reasonable, and it can dismiss the action over the whistleblower’s objections. In fact, the Supreme Court recently decided in U.S. ex rel. Polansky v. Executive Health Resources, Inc. that the government can seek dismissal of a qui tam case so long as the government intervened in the case at some point.
What the statute does not contemplate is the government jumping in-and-out of a declined qui tam case when and where it sees fit. For example, in one case pending in federal court in Florida, the government declined to intervene but nevertheless filed a memorandum of law in opposition to the Defendant’s motion to dismiss. The government did not seek to intervene nor did it provide good cause to do so. Rather, the Government submitted a brief under the guise of a “Statement of Interest” to oppose the Defendant’s motion to dismiss.
This is a very unusual move and not one expressly permitted by the False Claims Act statute. However, the government’s position is that, even in the declined qui tam case, the Plaintiff is still the government and it is the government’s case. What the government is doing when it files legal arguments in opposition to a motion to dismiss is trying to prevent the creation of “bad law” in a particular district. Frier Levitt called out the government for jumping back in the case to help counsel for the whistleblower and argued that the government’s brief had no bearing on the dismissal of the qui tam complaint because it was deficient for a host of reasons and defenses.
How Frier Levitt Can Help
Frier Levitt is a national boutique healthcare law firm that has handled qui tam matters in all shapes and sizes. If you have been served with a civil investigative demand or government subpoena, you may be the subject of a qui tam lawsuit. Please contact us for assistance in defending you from the investigation and allegations presented to the government. We look forward to working with you.
[1] See US ex rel. Eisenstein v. City of N.Y., 540 F.3d 94, 97 (2d Cir. 2008); US ex rel. Petrofsky v. Van Cott, Bagley, Cornwall, McCarthy, 588 F.2d 1327, 1329 (10th Cir. 1978).
