When Congress amended the False Claims Act (FCA) in 1986, its goal was to increase private individual’s use of the qui tam provision of the FCA. Previous amendments had made the FCA ineffective by eliminating any real incentives to whistleblowers to come forward, and failing to protect them when they did. Along with several other changes, Congress’ 1986 amendments increased the percentage of the recovery that whistleblowers were eligible to recover upon completion of a successful qui tam lawsuit.
Section 3730(d)(1) of the False Claims Act enables a relator to recover anywhere from 15% to 25% of the award in a case where the Government intervenes. When the Government chooses not to intervene in a case, Section 3730(d)(2) allows for a recovery between 25% and 30%. The 15% share in an intervened case is viewed as the level in which the relator’s share cannot fall below. It has been referred to as a “finder’s fee” and the relator is required to do nothing more than file the complaint in order to receive their share of the proceeds. U.S. v. Stern, 818 F. Supp. 1521, 1522 (M.D. Fla. 1993).
The actual realtor’s share is most often determined by an agreement between the relator and the government. But, if they cannot reach an agreement, the amount can be determined by the court, based upon the unique facts of each individual case. The Senate, in their deliberations over proposed amendments to the FCA, identified the following factors that should be considered in determining the relator’s share: the significance of the information provided by the relator, the relator’s contribution to the final outcome, and whether the Government previously knew such information. S.Rep. No. 99-345, at 28 (1986).
Since that time, the Department of Justice established guidelines to elaborate upon what factors would be considered in raising or lowering a relator’s share. The factors which would tend to increase a relator’s share are:
- The relator reported the fraud promptly.
- When he/she learned of the fraud, the relator tried to stop the fraud or reported it to a supervisor or the Government.
- The qui tam filing, or the ensuing investigation, caused the offender to halt the fraudulent practices.
- The complaint warned the Government of a significant safety issue.
- The complaint exposed a nationwide practice.
- The relator provided extensive, first-hand details of the fraud to the Government.
- The Government had no knowledge of the fraud.
- The relator provided substantial assistance during the investigation and/or pretrial phases of the case.
- At his/her deposition and/or trial, the relator was an excellent, credible witness.
- The relator’s counsel provided substantial assistance to the Government.
- The relator and his/her counsel supported and cooperated with the Government during the entire proceeding.
- The case went to trial.
- The FCA recovery was relatively small.
- The filing of the complaint had a substantial adverse impact on the relator.
The Department of Justice’s guidelines also identify the following factors that could lead to a justifiable decrease in the relator’s share of the recovery:
- The relator participated in the fraud.
- The relator substantially delayed in reporting the fraud or filing the complaint.
- The relator, or relator’s counsel, violated FCA procedure:
- Complaint was served on the defendant or not filed under seal.
- The relator publicized the case while it was under seal.
- Statement of material facts and evidence was not provided.
- The relator had little knowledge of the fraud or only had suspicions.
- The relator’s knowledge was based primarily on public information.
- The relator learned of the fraud in the course of his Government employment.
- The Government already knew of the fraud.
- The relator, or relator’s counsel, did not provide any help after filing the complaint, hampered the Government’s efforts in developing the case, or unreasonably opposed the Government’s position in litigation.
- The case required a substantial effort by the Government to develop the facts to win the lawsuit.
- The case settled shortly after the complaint was filed or with little need for discovery.
- The FCA recovery was relatively large.
While the DoJ and Senate guidelines for determining the relator’s share of the recovery are not binding law, courts have shown a willingness to adhere closely to the recommendations. In U.S. ex rel. Shea v. Verizon Communications, Inc., 844 F.Supp.2d 78 (D.D.C. 2012), the district court employed a piecemeal analysis based on the DoJ and Senate recommendations to determine that a relator’s share should be increased from 15% to 20% of the total recovery. The court still has a wide degree of discretion on the percentage of the relator’s share, and these Guidelines are not absolutes. But, by reviewing the factors laid out by the Senate and the Department of Justice, a relator can better understand where he or she may fall if a case is successful and a relator’s share is being determined.
If you believe you have information regarding fraud against the government and are considering bringing a False Claims Act case, please contact James Hoyer for an evaluation of your claims. Click here for more information about the firm and to submit your information electronically, or you may contact our office at 813-397-2300.
Written by Jesse Hoyer and Brant McKown