Posts Tagged ‘relator’

Do I Really Need a False Claims Act Attorney? Pro Se Relators and the Pitfalls of Trying to Do it Alone

You’ve suspected fraud at your workplace. You’ve gathered evidence that confirm your suspicions. You’ve researched the False Claims Act (“FCA”). You think you qualify to be a whistleblower and now you’re ready to file a qui tam complaint.

In fact, you’re so prepared that you’re thinking maybe you don’t even need an attorney. After all, you can file an FCA case by yourself just like any other lawsuit, right?

Wrong.

To protect the Government, courts have adopted a straightforward rule that an FCA relator may not bring a case pro seStoner v. Santa Clara County Office of Educ., 502 F.3d 1116, 1126-28 (9th Cir.2007); Timson v. Sampson, 518 F.3d 870, 873-874 (11th Cir.2008); U.S. ex rel. Lu v. Ou, 368 F.3d 773, 775-76 (7th Cir.2004).  Every court to address the issue has ruled the same, thus representing one of the few issues surrounding the FCA where there is no split among the circuits.

Although it is certainly advisable to consult with an attorney to bring complex cases, it is every person’s right to represent his or her own interests in most legal proceedings. Indeed, acting pro se is a right entitled to individuals by United States statutes. 28 U.S.C. § 1654 (“In all courts of the United States, the parties may plead and conduct their own cases personally or by counsel….”) ..

The key to this right, however, is that a person must be representing “his or her own interests,” not the interest of any others.  Stoner, 502 F.3d at 1126.  The relator in an FCA case does not bring a case based on his or her own interests, but on behalf of the United States of America.  From the time a case is filed until the time it is resolved, whether or not the Government intervenes, the case belongs to the United States as the real party in interest.  U.S. ex rel. Milam v. University of Texas M.C. Anderson Cancer Center, 961 F.2d 46, 50 (4th Cir.1992).

Because the interests of the United States are at issue, the stakes are incomparably high and therefore the rules are different.  An inexperienced or untrained relator, even with the best intentions, may make a misstep which compromises the Government’s ability to obtain a recovery.  Stoner, 502 F.3d at 1126 (“[T]he United States ‘is bound by the relator’s action’ for purposes of res judicata and collateral estoppel.”)  Because of the incredibly complex rules of the False Claims Act, one simple procedural mistake or pleading deficiency can doom a case.  As such, the law requires relators to engage experienced FCA attorneys to avoid such pitfalls.

So, as a practical matter, if you’ve gotten this far in your investigation of a suspected fraud and you’re prepared to take the courageous step of becoming a whistleblower, then do it right.  Find a law firm with a proven record of success under the False Claims Act to help you bring your case on behalf of the United States.

To contact James Hoyer about a suspected FCA violation, please contact us here or call us toll-free at 1-800-651-2502.

 

A Race to the Courthouse: Why Being First Matters in Qui Tam Cases

A major point of emphasis in nearly every discussion of bringing a qui tam case is filing the case as early as possible.  Though there are several reasons for this, the most important is due to a part of the False Claims Act known as the “first-to-file bar.”  In sum, the first-to-file bar creates a literal “race to the courthouse” where the runner-up can be completely excluded from the proceeds of a successful qui tam lawsuit just by being in “second (or third, or fourth…) place.”  This means that, even if an investigation leads to a successful recovery, the so-called “later-filed relator” may walk away empty-handed while the first-filed relator reaps a significant financial award.

Section 3730(b)(5) of the Federal False Claims Act says,

          When a person brings an action under this subsection, no person other than the Government may intervene or bring a related action based on the facts underlying the pending action.

In other words, when a person files a qui tam complaint, no one else can file a complaint against the same defendant for the same fraud while the first case is pending.  Though the language of the statute is relatively short, there are several key parts which are equally important when determining whether a case is impacted by the first-to-file bar.

Is the First Case Pending?

The first-to-file bar does not create a permanent ban for all time against a defendant who has faced a qui tam allegations.[1]  However, the bar is in effect for the life of the first case – from the time is it is filed under seal until the time it is dismissed, settled or tried to a verdict.  In re Natural Gas Royalties Qui Tam Litigation (CO2 Appeals), 556 F.3d 956, 964 (10th Cir. 2009)(“The ‘pending’ requirement much more effectively vindicates the goal of encouraging relators to file; it protects the potential award of a relator while his claim remains viable, but, when he drops his action another relator who qualifies as an original source may pursue his own.”)

It can be very difficult to know whether there is a pending qui tam case which would impact a later-filed case.  Of course, if a case has been unsealed, it will appear on the publicly-accessible federal court docket, and there may well be media articles covering the case.  A major difficulty is presented by sealed cases, which by nature are not readily discoverable by the public.  On occasion, a whistleblower may hear water-cooler conversation about another employee filing a qui tam case, or experienced qui tam counsel may be able to read the tea leaves to interpret common corporate practices by a company involved in a False Claims Act investigation.  But, while these may be strong clues, it is impossible to know with certainty whether another qui tam case has been filed and remains under seal.

It is important to remember that for purposes of the first-to-file bar, it does not matter whether the later-filed relator had actual knowledge of the first-filed complaint.  It is strictly a matter of being first-in-time.

What is a “Related Action” for Purposes of the First-to-File Bar?

Later-filed cases are only precluded by the first-to-file bar if it is a “related action based on the facts underlying the pending action.”  While that standard is broad, it is not all-encompassing, meaning that a defendant is not automatically protected from all other qui tam cases just by virtue of one case existing.  There has been extensive case law developed around the issue of what constitutes “a related action based on the facts underlying the pending action” and ultimately a first-filed and later-filed complaint will require a head-to-head comparison to see whether the first-to-file bar is invoked.  U.S. ex rel. LaCorte v. SmithKline Beecham Clinical Laboratories, Inc., 149 F.3d 227, 234 (11th Cir. 1994)

Two complaints do not need to be identical for the first-filed complaint to preclude the later-filed complaint.  U.S. ex rel. Batiste v. SLM Corp., 659 F.3d 1204, 1208 (D.C. Cir. 2011).  If the first-filed complaint provided the information necessary to set the government on the trail of fraud, then it will bar any later-filed complaints that would be traveling on the same trail.  LaCorte, 149 F.3d at 232-34.  The bar is exception-free.  U.S. ex rel. Lujan v. Hughes Aircraft Co., 243 F.3d 1181, 1187 (9th Cir. 2001).

However, there are situations where the first-to-file bar does not prohibit a second complaint.  For example, if a complaint alleges a similar fraudulent scheme but identifies different defendant companies than an earlier-filed complaint, then the later-filed complaint may still survive.  In re Natural Gas Royalties Qui Tam Litigation (CO2 Appeals), 556 F.3d at 962.  Similarly, if the later-filed complaint identifies the same defendants but an entirely unique fraudulent scheme, then the later-filed complaint will likely not be subject to the first-to-file bar.  U.S. ex rel. Heineman-Guta v. Guidant Corp., 874 F.Supp.2d 35, 38 (D.Mass. July 5, 2012).

If a whistleblower learns of a first-filed, pending complaint, experienced qui tam counsel will conduct an exacting comparison of the two complaints to determine if there are unique aspects or whether the cases overlap entirely.  The relators and their counsel may reach an agreement on how to proceed, or the government or the judge can assist in the process.  There may even be situations where a second-filed complaint would be precluded by the first-to-file bar, but the two relators resolve to work together to present a stronger case against the defendants.  Experienced qui tam counsel will present a relator with all viable options before determining how to proceed.

Conclusion

Beyond just the first-to-file bar, there are additional reasons why a relator should come forward as early as possible to report fraudulent conduct.  From a purely ethical standpoint, the sooner the fraud is reported, the sooner it can be stopped.  Additionally, the timeliness of a relator’s complaint is considered in the factors that determine the relator’s share at the end of a successful case.  Simply put, a relator is given additional consideration if he came forward with evidence of the fraud as soon as the scheme was apparent, rather than waiting months or years while the government continued to be victimized.

The most important thing a relator can do to avoid the first-to-file bar is to seek out qui tam counsel as soon as he is aware of fraud against the government.  A relator who comes to the first meeting with well-organized and documented allegations will be valuable in moving the case forward quickly and efficiently.  Because the potential consequences of being the second-filed relator are so severe, the relator should expect a sense of urgency to get a case investigated and filed as soon as possible.  Being available and helpful during this period may make the ultimate difference in whether a case can proceed or whether it is precluded by the first-to-file bar.

If you believe you have information regarding fraud against the government and are considering bring 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 Jillian Estes



[1] Once a case is resolved and unsealed, there may be other issues such as the Public Disclosure Bar or claim preclusion that effectively preclude a relator from moving forward with a qui tam case.  These are unique from the first-to-file bar and should be given careful consideration by a whistleblower and his attorneys before filing.

 

The Role of a Relator and Relator’s Counsel in a Whistleblower Case

The James Hoyer Qui Tam Team

The James Hoyer Qui Tam Team

Whether from personal experience, reading the news or just watching television, most people have some understanding of the basic legal case: a plaintiff sues a defendant, both sides have lawyers that file pleadings and exchange evidence, eventually the case settles or goes to trial where a judge or jury reaches a verdict.  The process repeats time and again in courtrooms throughout the country in a relatively predictable pattern.

Whistleblower, or qui tam, cases are entirely different.  The roles of a relator and his or her counsel are unique from any other civil case, and being prepared for the unusual role can make a case much more manageable for a relator.  There are several common steps in almost every qui tam case where the relator and relator’s counsel will have specific roles to fulfill:

1.      Preparing and Initiating the Complaint

There is typically a flurry of activity right after a potential relator first contacts his or her attorney because time is of the essence in getting a qui tam case on file.  A relator can greatly assist the process by having all the documents and evidence organized, and by being prepared to do an in-depth factual review of the allegations at one of the first meetings with counsel.

Relator’s counsel will prepare all of the documents, file the complaint, and serve it on the government.  It is very important for the relator to remember that the case initially will not be served on the defendant and that the case will be under seal from the moment it is filed, so the relator’s obligations of confidentiality begin immediately.

2.      Relator’s Meeting

Shortly after filing a complaint – typically within several weeks – the government will contact the relator’s counsel to set up an initial meeting with the relator.  The meeting may be attended by only one government attorney or several attorneys or investigators from different parts of the government, depending on the strength and type of allegations that are raised.  The Relator’s Meeting is arguably the most important moment for the relator – it is his or her opportunity to present the allegations to the government and convey the severity of the fraud.

The Relator’s Meeting is also the relator’s first impression on the government as a potential witness if the case were to go to trial, so the relator and his or her counsel will prepare extensively for this meeting.  The government attorneys are typically very thorough, so the meeting may be long and comprehensive.  A relator should prepare to be very candid in this meeting, so if he or she has any concerns about information that may be disclosed, it is essential to discuss how to handle that with his or her counsel before the meeting.

3.      Government’s Investigation

After the relator’s meeting, the government may have immediate follow up requests from the relator, or it may begin its own investigation.  This step is where experienced relator’s counsel is the most important, as the relator’s counsel will maintain a relationship with the government throughout this phase.  The government’s investigation can take several months or several years.

During this time, the relator may be called on to assist in the investigation in various ways, particularly if the relator is still working for the defendant company.  The government may seek assistance identifying witnesses, reviewing documents or even recording important meetings and conversations.  The relator should remain patient and fully cooperative with the government throughout this phase, in accordance with his or her counsel’s advice.

4.      After a Government Intervention or Declination

If the government chooses to intervene in the case and pursue a recovery, the role of the relator and relator’s counsel will depend entirely on the facts of the case.  It may be frustrating to know that the case is progressing and the relator has little involvement, but that is a reality of qui tam cases and the relator should be prepared for that possibility.

If the government declines, the relator and his or her counsel will decide how to proceed based on the facts of the case and the case’s unique circumstances.  If the case moves forward, the procedure will resemble a typical civil case as the defendants will be served with the complaint and both sides will begin to work towards a final resolution.

If you believe you have information regarding fraud against the government and are considering bring 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 Jillian Estes

 

Filing a False Claims Act Complaint: Does Motivation Matter?

ascudieri

Al Scudieri – James Hoyer Chief Investigator

For the past 35 years, I have been working with False Claims Act whistleblowers (also known as “relators”) first as an FBI agent and later as the Chief Investigator for the James Hoyer law firm.  I have found that relators can be just about anyone:  doctors, public servants, mechanics, accountants, investigators, members of the military, clerical personnel, CEOs, reporters, nurses, engineers – in short, anyone who has knowledge that the government is being cheated.

When complainants contact me, they often ask the same questions, one of which is: “Will my motivation matter to the government?”  Here are a few insights I have shared in response:

Why are you coming forward?

Generally speaking, relators are responding to one or more of four essential motivations: profit, moral outrage, self-protection, and revenge.  Although some motivations may be regarded as more palatable than others, if the relator’s facts and proof are solid, then the motivation for coming forward is often of little consequence to the government.  Nevertheless, when relators are deciding if they should file a False Claims Act (“FCA”) complaint, it is of value for them to come to terms with their motives.

Profit

Since successful relators stand to receive a reward of anywhere between 15% and 30% of government FCA recoveries, there is an assumption most relators are “in it for the money.”  Empirical research has shown this is not necessarily true. [1]   In fact, this research indicates although profit can be a significant motivating factor, the majority of successful FCA relators are principally motivated by a sense of moral outrage.

Moral outrage

Many relators possess a heightened sense of integrity and are truly disturbed by their discovery of unethical behavior.  They come forward with no other motivation than that of concerned taxpayers.  I find that relators in the health-care arena are generally more concerned with the impact of fraudulent behavior on patient safety than any potential monetary reward.  Relators in the defense arena who detect fraud are often more concerned with the safety of our armed forces and the fraud’s impact on national security than they are with getting rich.

Self-protection    

Occasionally, relators are willing to give the benefit of the doubt to the perpetrators of fraud and choose to assume the improper conduct they discovered may be inadvertent.  They believe corrective action will certainly be taken based upon complaints filed through proper internal channels.  Before contacting me, many relators have pursued this course of action – often to no avail.  To their surprise and disappointment, management may even have retaliated against them for merely raising legitimate concerns.

In other cases, employees are worried that sometime in the future, a finger may be pointed at them as being responsible for the improper conduct.  They feel it would be better to go on record with a preemptive complaint setting the record straight than to one day receive a knock on the door from investigators accusing them of wrongdoing.

Revenge 

In some cases, relators come to our law firm after already having lost their jobs when they raised concerns about improper conduct.  These individuals quite rightly resent that they and their families are being punished for having done the right thing.

I have also seen a number of cases wherein business owners contracting with government agencies want to report wrongdoing by competitors who gained an unfair advantage by engaging in fraud.  These relators are not only morally outraged, but also resent the negative impact of this conduct on their businesses.

Conclusion

No prospective relator should ever feel their motivation is insufficiently worthy to justify the filing of an FCA complaint.  However, such concerns should be discussed with the relator’s counsel during the initial consultation period.  The simple fact is, we are all motivated by something – and the government (which plays a major role in the success or failure of any FCA case) is well-aware of that fact.  During the initial meeting with the relator, government attorneys will almost always explore the issue of motivation as it helps place the relator’s complaint in the proper context.  Since the filing of an FCA complaint can be the beginning of a lengthy partnership between the government and the relator, it is incumbent upon relators to reach an honest determination as to their motivation and be prepared to share that information with their attorneys and the government.

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 Al Scudieri


[1] Kesselhim, “Whistle-Blowers’ Experiences in Fraud Litigation Against Pharmaceutical Companies 362:19 NeJM 1832-34, 2010.

 

Supreme Court Denies Cert in Allison Engine Retroactivity Case

Supreme CourtAmid a series of high-profile and highly anticipated decisions this week, the Supreme Court made a relatively minor decision with potentially far-reaching consequences for the False Claims Act on June 24, 2013.  The highest court in the United States denied a petition for certiorari in a case called Allison Engine Company v. United States ex rel. Sanders.  The decision, commonly called “denying cert,” means that the Supreme Court decided not to hear an appeal of a Sixth Circuit opinion in the case.  The question before the Court was whether Section 3729(a)(1)(B) of the False Claims Act applies retroactively to cases pending on or after June 7, 2008, where allegedly no false claims for payment were pending on or after that date. Read More…