Procedures for Filing a Qui Tam Suit by a Whistleblower
The disclosure statement (“disclosure”) is perhaps the most essential document a qui tam whistleblower prepares when initiating an FCA suit. Section 3730(b)(2) of the False Claims Act states that the qui tam whistleblower must provide the government with a “written disclosure of substantially all material evidence and information” possessed. The primary purpose of the disclosure is to allow the government an opportunity to investigate the allegations and decide whether to intervene in the action. The disclosure also allows the government to determine whether the qui tam whistleblower is an original source of the information.
However, the case law provides scant guidance on the level of specificity required in the disclosure. While some courts require a mere factual recitation, others note that it should also include legal theories, analysis, and opinions. There are risks to filing merely a “factual” disclosure rather than one that also contains legal opinion and analysis. A disclosure devoid of legal analysis and opinions may be discoverable because the work product privilege generally does not apply to mere factual recitations, whereas, a disclosure containing legal opinion and analysis may be protected under the work product doctrine.
FILING SUIT UNDER SEAL
The seal requirements were added to the FCA during the 1986 amendments. While the overall intent of Congress was to encourage more private FCA suits, the government was specifically concerned that FCA suits might forewarn defendants of potential criminal investigations. Because of this concern, Congress included a sixty-day seal period for the action. The seal period allows the government an opportunity to make an intervention decision, move to dismiss the case, or attempt to settle the case with the defendant prior to a formal investigation. The government may request additional extensions of the seal period only for a good cause because Congress determined that sixty days is more than enough time for the government to make these decisions. Congress intended for the courts to be cautious in granting extensions, however, courts have generally ignored congressional intent and routinely grant numerous extensions to the government.
Failure to comply with the seal requirements can result in irreversible damage to the parties. However, courts draw a distinction between curable and non-curable seal violations. Dismissal is proper only if the error is incurable; however, dismissal is not automatic. When considering dismissal, the court may dismiss the cause under its statutory authority. If the court is considering statutory authority for dismissal, it must balance three factors: (1) the extent of harm to the government because of the violation; (2) the nature of the violation; and (3) whether or not the violation involved bad faith or willfulness.
CONSEQUENCES OF GOVERNMENTAL INTERVENTION
If the Government decides to intervene in the FCA case, the qui tam whistleblower remains a party to the litigation, but the Government assumes primary responsibility for pursuing the case. In addition to litigating the matter, the Government may settle the suit, over the qui tam whistleblower’s objections, if the court determines that the proposed settlement is fair, adequate and reasonable under all the circumstances. The False Claims Act provides that the court may limit the qui tam whistleblower’s participation in the suit if it determines “that unrestricted participation during the course of the litigation by the person initiating the action would interfere with or unduly delay the Government’s prosecution of the case, or would be repetitious, irrelevant, or for purposes of harassment . . . .” Once the Government has intervened, it may also dismiss the suit over the qui tam whistleblower’s objections, so long as the qui tam whistleblower is provided a hearing.
Once the Government intervenes, the qui tam whistleblower is entitled to a standard recovery of between fifteen and twenty-five percent, depending on the level of the qui tam whistleblower’s participation. Generally, the more involved the qui tam whistleblower is in pursuing the case and assisting the Department of Justice (“DOJ”), the greater his recovery. If the qui tam whistleblower does not assist the Government after filing the complaint, hinders development of the case, or unreasonably opposes the Government, his share of the recovery could be reduced.
CONSEQUENCES OF NONINTERVENTION
In the event the government declines to intervene, the qui tam whistleblower may proceed with the case and is entitled to a standard recovery of 25-30 percent. The government may still maintain some involvement in the action by requesting to be served with copies of pleadings at its own expense. The government also maintains the right to intervene at a later time for good cause, or seek alternate remedies. Further, the government must give written consent before the qui tam whistleblower can dismiss the suit. Although the government maintains these rights even if it declines to intervene, it is no longer subject to discovery requests.
For more information and case citations, please see Androphy “Federal False Claims Act and Qui Tam Litigation,” published by Law Journal Press (2010).
This website is designed to provide general information only. This information is not and should not be construed to be legal advice. The transmission of the information found on this website also does not result in the formation of a lawyer-client relationship.
You should be aware that qui tam claims are subject to a Statute of Limitations. The area of limitations periods is complex. There are also first to file rules, public disclosure bars, original source issues, and varying limitations in pursuing retaliation claims. If you wish to pursue your claims, you should promptly seek the opinion of an attorney regarding the merits of your qui tam claim and the applicable statute of limitations.