Qui Tam Whistleblower Recovery and Attorney Fees
IMPACT OF SETTLEMENT BEFORE TRIAL
Courts differ on the precise impact that settling a qui tam case should have on the qui tam whistleblower’s share. For example, one court, noting that Section 3730(d) makes no distinction for whether the case is settled or tried, awarded the qui tam whistleblower the maximum thirty percent share. In contrast, another court stated that the full share should rarely be awarded if the case settles before trial. Generally, the greater the amount of contribution, effort, and personal sacrifice, the greater the share of the proceeds the qui tam whistleblower should receive, regardless of whether the case settled or went to trial.
IMPACT OF GOVERNMENT INTERVENTION
If the government intervenes, the qui tam whistleblower is entitled to receive fifteen to twenty-five percent of the proceeds in a qui tam case, subject to the qui tam whistleblower’s noninvolvement in the alleged wrongdoing and lack of public disclosure issues. The amount the qui tam whistleblower receives depends upon the extent to which the person substantially contributed to the prosecution of the action. The Senate factors provided by the legislative history of Section 3730 and the Department of Justice (“DOJ”) Guidelines both provide factors, which courts may take into account when determining the qui tam whistleblower’s share.
Congress set out three guidelines, known as “Senate Factors,” as a guide for the judiciary to use when determining qui tam whistleblower recovery. The “Senate Factors” are: 1) the significance of the information; 2) the contribution of the person bringing the action to the result obtained; and 3) whether the information was previously known to the government.
DEPARTMENT OF JUSTICE GUIDELINES
The DOJ Guidelines suggest factors to consider both in favor of increasing and decreasing the qui tam whistleblower’s share. The following factors are recommended to increase the qui tam whistleblower’s share: 1) qui tam whistleblower reported the fraud promptly; 2) upon learning of the fraud, the qui tam whistleblower attempted to stop it, or reported it to a supervisor or the Government; 3) the qui tam filing or investigation caused the defendant to stop the fraudulent practices; 4) the complaint warned the Government of a safety issue; 5) the complaint exposed a nationwide practice; 6) qui tam whistleblower provided extensive, first-hand details of the fraud to the Government; 7) the Government had no previous knowledge of the fraud; 8) qui tam whistleblower provided substantial assistance during the investigation and pretrial phases of the case; 9) excellent quality of qui tam whistleblower’s witness testimony; 10) qui tam whistleblower’s counsel provided substantial assistance to the Government; 11) qui tam whistleblower and counsel supported and cooperated with the Government during the entire proceeding; 12) the case went to trial; 13) the FCA recovery was relatively small; and 14) there was a substantial, adverse impact on qui tam whistleblower as a result of filing the complaint.
The DOJ also suggests the following factors in favor of decreasing the qui tam whistleblower’s award: 1) qui tam whistleblower participated in fraud; 2) qui tam whistleblower substantially delayed reporting the fraud or filing the complaint; 3) qui tam whistleblower or counsel violated FCA procedures; 4) qui tam whistleblower had only suspicions or little knowledge of the fraud; 5) qui tam whistleblower’s knowledge was based primarily on public information; 6) qui tam whistleblower learned of the fraud in the course of governmental employment; 7) the Government already knew about the fraud; 8) qui tam whistleblower or counsel for qui tam whistleblower did not provide help, hampered Government efforts, or unreasonably opposed the Government’s position in the litigation; 9) the Government was required to put forth a substantial effort to develop the facts; 10) case settled shortly after complaint was filed or with little need of discovery; and 11) FCA recovery was relatively large. It is important to note that the DOJ guidelines are internal standards, not federal regulations, and therefore are not mandatory factors for courts to consider. Instead, determination of the qui tam whistleblower’s share depends on the court’s informed discretion.
IMPACT OF PUBLIC DISCLOSURE
The FCA limits the qui tam whistleblower’s share to no more than ten percent if the court finds that the qui tam action is based primarily on publicly available information.
EFFECT OF GOVERNMENT NON-INTERVENTION
In a case where the Government does not intervene, Section 3730(d)(2) provides the qui tam whistleblower with twenty-five to thirty percent of the proceeds; the actual amount within this range is left to the court’s discretion. When determining the final amount of the qui tam whistleblower’s share, courts consider the same type of factors as those considered when the Government does intervene.
EFFECT OF QUI TAM WHISTLEBLOWER INVOLVEMENT IN THE WRONGDOING
If the court finds the qui tam action was brought by a person who planned and initiated the alleged violation, the court may reduce the amount of the qui tam whistleblower’s share to the extent it considers appropriate. This reduction applies whether or not the government intervened in the action. In determining the appropriate reduction, the FCA requires the court to take into account the role of the qui tam whistleblower in bringing the case to litigation, and any relevant circumstances that pertain to the violation.
QUI TAM WHISTLEBLOWER’S SHARE IF THE GOVERNMENT PURSUES ALTERNATIVE REMEDIES
The Government may pursue an alternate remedy even if it declines to intervene in the qui tam whistleblower’s action. The FCA provides that if the Government chooses to seek an alternate remedy for its losses instead of proceeding under the FCA. The qui tam whistleblower who originally brought the action is entitled to the same rights as if the Government had proceeded with the action under the FCA. Therefore, if the Government chooses to pursue an alternate remedy, the qui tam whistleblower is entitled to recover a share of the proceeds to the same degree that he or she would have been entitled to a share of the proceeds of the FCA action.
ATTORNEY FEES, COSTS, AND EXPENSES
In addition to a share of the recovery, the FCA provides that a qui tam whistleblower may recover attorney fees, costs, and expenses. The qui tam whistleblower, not the qui tam whistleblower’s counsel, has standing to request attorneys’ fees under the FCA. Furthermore, the general rule is that these fees are paid to the qui tam whistleblower not the qui tam whistleblower’s attorney. A qui tam whistleblower may not request fees unless there is an attorney-client relationship, even if the qui tam whistleblower is an attorney.
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.