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UMKC Law ReviewFall, 1996
*30 BADGES? WE DON'T NEED NO STINKING BADGES! CITIZEN ATTORNEY GENERALS ANDTHE FALSE CLAIMS ACT
Anthony L. DeWitt [FNa1]
Copyright © 1996 by the Curators of the University of Missouri; Anthony L.
DeWitt
Table of Contents
I. INTRODUCTION ............................................... 31
A. History of the FCA ...................................... 31
B. Purpose of the FCA ...................................... 32
C. Purpose of This Article ................................. 33
II. LIABILITY UNDER THE FCA .................................... 33
A. Section 1 of the FCA--False Claims ...................... 33
1. What Constitutes a Claim? ........................... 34
2. Falsity of the Claim and Knowledge Thereof .......... 35
B. Section 2 of the FCA--False Records ..................... 35
C. Section 3 of the FCA--Conspiracy ........................ 36
D. Section 7 of the FCA--Reverse False Claims .............. 37
E. Damage Provisions Under the FCA ......................... 38
F. Civil Penalty Provisions Under the FCA .................. 39
G. Unique Procedural Problems in FCA Cases ................. 40
1. Filing Requirements ................................. 40
2. Evidentiary Disclosure .............................. 40 3. Intervention and Maintaining the Seal ............... 41
H. Bars to Qui Tam Plaintiffs .............................. 41
III. PROSECUTING MEDICARE FRAUD UNDER THE FCA ................... 42
A. Spotting the Qui Tam Case ............................... 43
B. Investigation ........................................... 43
C. The Petition and Evidentiary Disclosure ................. 44
D. The Department of Justice Investigation ................. 45
E. Department of Justice Declination--The Kiss of Death? ... 45
F. Settlement .............................................. 46
G. The Relator's Share ..................................... 47
IV. CONCLUSION ................................................. 48
*31 I. INTRODUCTION
A. History of the FCA
The year was 1863. The most bitter war in the history of the United States raged on, and as President Lincoln discovered, there is someone in every war whose goal is to make money from the carnage. [FN1] At that time, the Army Quartermaster had the authority to requisition equipment and supplies from private bidders. Unlike today's modern army, with its myriad of publications and forms, the army of the 1860s had no forms or regulations governing acquisitions of supplies, and military leaders often issued their personal assurances of payment to civilians in order to secure horses, wagons, or food. [FN2]
All too often, however, unscrupulous vendors cheated the army, giving them rancid beef or faulty weapons. [FN3] As the battles wore on, Lincoln found that the treasury was being bled dry, and much of the money being paid was for false claims or fraudulently-billed items. Lincoln sought help from Congress in the form of the False Claims Act (the "FCA" or the "Act"). [FN4] The Act authorized an individual citizen to act as a private attorney general for the purpose of instituting legal action to recover money paid by the government on a false or fraudulent claim. [FN5] The Act further provided for double damages and for a civil penalty for each false claim submitted. [FN6] As an incentive, a portion of the recovery was allocated to the person bringing the action, also known as a qui tam [FN7] plaintiff, or relator. [FN8]
After becoming law in 1863, the Act was used rather sporadically. [FN9] There are few reported FCA cases from the 1800s and early 1900s. However, in the late 1970s, environmentalists and public interest attorneys began to focus on the spiraling costs of defense contractors, and these litigants filed numerous actions in federal courts. [FN10]
In 1986, Congress amended the False Claims Act to make it easier for a qui tam plaintiff to bring an action. [FN11] The result has been a record number of new cases filed in the last few years. [FN12] Under the Act, as currently codified, a relator can share between *32 fifteen and twenty-five percent of the government's recovery. [FN13] The recovery is for three times the amount of the damages sustained by reason of the fraud, and includes a civil penalty between $5,000 and $10,000 for each false claim. [FN14]
B. Purpose of the FCA
The legislative history of the FCA shows it was meant to ferret out fraudulent and false billings submitted to the government. [FN15] Congress's objective in establishing the FCA was "to protect the funds and property of the Government from fraudulent claims, regardless of the particular form, or function, of the government instrumentality upon which such claims were made." [FN16] The purpose of treble damages provided for by the FCA was "to make sure that [the] government [was] made completely whole." [FN17] By building into the Act a damage-trebling provision, and by including a civil penalty for each and every false claim submitted, Congress intended to give private citizens an *33 opportunity to right wrongs that only they might know about. [FN18] Moreover, by making it possible for a relator to share in the award (in an amount between fifteen and thirty percent of the total judgment), Congress intended to provide a suitable incentive to motivate those with knowledge of fraud to come forward. [FN19] At the same time, by including a provision limiting the reward where public disclosure of the fraud had taken place, Congress intended to prevent latecomers with "nothing to add" from claiming a part of the proceeds. [FN20]
While the Act provides that a private relator may bring an action, the government is the real party in interest, and the government may initiate the prosecution of a false claims action on its own. [FN21] Thus, where the government initiates a criminal investigation that exposes evidence of false or fraudulent claims, the government may, on its own, bring an action under the FCA. [FN22]
If the purpose of the Act, as has been suggested, is to increase recoveries into the treasury, it has been fabulously successful. Since Congress reinforced the False Claims Act in 1986, relators have recovered more than one billion dollars for the federal government, amounting to more than one-third of all fraud recoveries. [FN23] The news media has generally ignored these recoveries. [FN24] The number of qui tam cases filed increases every year, and more frequently, physicians, laboratories, and other health care providers are being targeted with FCA violations. [FN25]
C. Purpose of This Article
This article provides an overview of the False Claims Act and details the areas of changing and developing law. It sets forth a framework for evaluating cases under the False Claims Act with an emphasis on liability for Medicare fraud.
II. LIABILITY UNDER THE FCA
A. Section 1 of the FCA--False Claims
Section 1 of the FCA provides that an individual or corporation submitting a false or fraudulent claim to the United States for payment may be liable for three times the amount of the overcharge or false billing. Specifically, this section states: *34 (a) Liability for certain acts. Any person who (1) knowingly presents, or causes to be presented, to an officer or employee of the United States Government or a member of the Armed Forces of the United States a false or fraudulent claim for payment or approval; ... is liable to the United States Government for a civil penalty of not less than $5,000 and not more than $10,000, plus 3 times the amount of damages which the Government sustains because of the act of that person.... [FN26]
Therefore, based upon the plain language of the statute, an individual who files a qui tam action must prove the following: (1) a defendant presented a claim for payment, or caused someone to present such a claim; (2) the claim was false or fraudulent; and (3) the claim was submitted knowingly. [FN27]
Additionally, in order to obtain treble damages under the statute, the qui tam relator must prove that the United States treasury sustained some damage as a result of the false claim. [FN28] There is no requirement, however, to prove damage to the treasury as a condition of bringing a false claims action. [FN29]
1. What Constitutes a Claim?
Under the FCA, a "claim" is defined as follows: For purposes of this section, "claim" includes any request or demand, whether under a contract or otherwise, for money or property which is made to a contractor, grantee, or other recipient if the United States Government provides any portion of the money or property which is requested or demanded, or if the Government will reimburse such contractor, grantee, or other recipient for any portion of the money or property which is requested or demanded. [FN30]
Nearly any demand for payment of money or property made on an officer, employee or agent of the United States government will trigger liability if the claim is false or fraudulent. In United States v. Neifert-White Co., [FN31] the Supreme Court held that a claim is made under the FCA whenever any "demand for money" is "made with the purpose and effect of inducing the Government to immediately part with money." [FN32] However, a delay between the date a claim is made and the actual payment of the claim by the government does not have any impact on FCA liability. [FN33] Thus, Medicare claims presented through third party intermediaries have been held to be claims. [FN34]
*35 Additionally, false progress reports are false claims. [FN35] Where a contractor obtains a government contract through fraudulent representations, all claims submitted under the contract are fraudulent. [FN36] Similarly, where a government contractor falsely states that he has complied with environmental requirements under federal clean air and water laws as a condition to receiving payment for the contract, the "claim" requirement under the False Claims Act is satisfied. [FN37]
2. Falsity of the Claim and Knowledge Thereof
Under the 1986 amendments to the False Claims Act, falsity is established by showing that an individual or corporation: (1) had actual knowledge that the claim submitted was false; (2) acted in deliberate ignorance of the truth or falsity; or (3) acted in reckless disregard of the truth or falsity of the information. [FN38] No specific intent to defraud is required. [FN39]
This is a very liberal standard. Prior to the 1986 amendments to the False Claims Act, the defendant had to be shown to have acted with actual knowledge of the falsity of the representation, or with reason to know that the representation was false, as well as the specific intent to defraud. [FN40] Congress removed the requirement of a specific "intent to defraud" because the Department of Justice requested its removal. [FN41] This eliminated a major obstacle to false claim recoveries, resulting in more successful plaintiffs. [FN42]
B. Section 2 of the FCA--False Records
In addition to liability for submitting a false claim, a qui tam defendant can also be liable where they create records to support the false or fraudulent claim. The Act states that any person who: [K]nowingly makes, uses, or causes to be made or used, a false record or statement to get a false or fraudulent claim paid or approved by the Government ... is liable to the United States Government for a civil penalty of not less than $5,000 and not more than $10,000, plus 3 times the amount of damages which the Government sustains because of the act of that person.... [FN43]
The elements of a cause of action under this section of the Act include all of the elements from subsection (a)(1), as well as the additional requirement that a false record be made in support of the false claim. [FN44]
*36 Frequently, this section of the Act serves as a catch-all which permits the government to impose liability even when all the elements of a false claim are not easily proved. In United States ex rel. Pickens v. Kanawha River Towing, [FN45] the qui tam relator alleged that the defendants had committed false claims by certifying that they complied with environmental laws in their work on a federal project. [FN46] The court found that because the bills were not passed along from a subcontractor to a general contractor, and were never presented for payment to the government, there was no direct liability under 31 U.S.C. § 3729(a)(1). [FN47] However, the principal acts the defendants were accused of were failing to properly record bilge water discharges under the Clean Water Act, and failing to record these discharges in their log in order to escape liability for fines. The failure to record something required to be recorded in the ship's log made the log a false record under the Act. [FN48]
In false claims submitted under Medicare, the most likely source of false records are the medical records themselves. Recording information that makes a patient appear more ill and in need of additional therapy is a violation of the Act, just as is certifying that a patient needs an expensive piece of home care equipment when no such need exists. Thus, under the False Claims Act, false statements in medical records which are either known to be false, or are made with reckless disregard of the truth, subject a provider to liability under the FCA.
C. Section 3 of the FCA--Conspiracy
Section 3 of the Act states in applicable part: Any person who ... conspires to defraud the Government by getting a false or fraudulent claim allowed or paid ... is liable to the United States Government for a civil penalty of not less than $5,000 and not more than $10,000, plus 3 times the amount of damages which the Government sustains because of the act of that person.... [FN49]
The elements of a claim under 31 U.S.C. § 3729(a)(3) include the following: (1)[a] defendant must have conspired with one or more persons to have a false or fraudulent claim paid by the government; (2) [o]ne or more of the conspirators must have performed an overt act in furtherance of the conspiracy; and (3) [t]here must have been damage to the government. [FN50]
These three requirements are found in the case law, but do not take into account the additional burden of proving a conspiracy exists in the first place. [FN51] More importantly, *37 the cases do not reflect that this section of the False Claims Act has a specific intent requirement not found in other sections of the Act. [FN52] Few cases interpret the conspiracy portion of the statute under the post-1986 amendments to the FCA, but those that exist have steadfastly applied the common law of conspiracy to require a showing of agreement between the conspiring parties [FN53] and an act in furtherance of that agreement. [FN54]
D. Section 7 of the FCA--Reverse False Claims
A section of the False Claims Act that has for years been under used is the "Reverse False Claims" section of 31 U.S.C. § 3729(a)(7). That portion of the statute reads: Any person who ... knowingly makes, uses, or causes to be made or used, a false record or statement to conceal, avoid, or decrease an obligation to pay or transmit money or property to the Government, is liable to the United States Government for a civil penalty of not less than $5,000 and not more than $10,000, plus 3 times the amount of damages which the Government sustains because of the act of that person .... [FN55]
This is considered a "reverse" false claim because the cause of action arises not from the submission of a claim to be paid, but from the concealment of an obligation owed to the government. Like the "false record" provision, [FN56] this part of the statute requires that the individual engaging in the fraud make a false record to conceal the obligation to pay money or property to the government. [FN57] It does not require, however, that a claim for any payment be submitted. [FN58] As a result, whenever an individual conceals conduct which, if discovered, would result in the payment of money to the government, the False Claims Act opens an entirely new door of recovery to the government. Courts are prone to a liberal construction of this portion of the statute.
In United States ex rel. Pickens v. Kanawha River Towing, [FN59] section 7 of the False Claims Act came under scrutiny in the context of a qui tam action brought for *38 environmental damage. The defendants operated a boat on the Ohio River, and were discharging bilge into the river in connection with their operations in support of a government project. [FN60] As a requirement of their government contract, the defendants were required to comply with all applicable environmental laws. [FN61] They routinely discharged bilge, however, and then falsified the ship's log to cover up these discharges. [FN62] The relator claimed that defendants were liable under both 31 U.S.C. § 3729(a)(1), an affirmative false claim, and 31 U.S.C. § 3729(a)(7), a reverse false claim. [FN63] The defendant moved to dismiss, claiming that the Clean Water Act expressly preempted the False Claims Act, and that there were no affirmative false statements (only omissions) in the ship's log. [FN64] The court rejected both positions out of hand. [FN65]
In refusing to dismiss the reverse false claim, the court noted that if the discharges were reported under the Clean Water Act, penalties would have been required of the operator of the boat. [FN66] The court then examined the defendant's contention that the omission of material from the logbook was not the "creation of a false record" [FN67] sufficient to impose liability under the FCA. The court stated that the vessel's log was clearly a record, and noted that "[i]f the log excludes a major event that it should ordinarily contain, the record is a false one." [FN68] The court went on to state: "[I]f the government relies upon or otherwise reviews such [ship's] logs as a part of its regulatory role, then the defendants would have submitted a false report in order to avoid an obligation to the government." [FN69]
E. Damage Provisions Under the FCA
The Act is clear in stating that the government can collect three times the damages sustained. [FN70] What is not always clear is how those damages are measured.
Most litigation involving damages in qui tam actions has focused on the provision of services under a contract, and on collusive bid rigging and other schemes which increase government costs. In a Medicare false claims case, the most likely theory of damages is that the entire value of the claim is the proper measure of damages.
In United States v. Lorenzo, [FN71] the government brought an action alleging charges for services were covered as "routine exams", not "limited consultations" by Medicare. [FN72] There, the dentist found liable by the court charged between six dollars and eight dollars per visit to Medicare as a "limited consultation" for the purpose of *39 detecting cancer. [FN73] (Medicare only pays for such examinations when they are specifically requested by the patient's treating physician.). Here, the company owned by the dentist submitted more than 3,600 such claims, running up over $130,000 in false claims damages. [FN74] Worse, however, the court imposed a civil penalty of between $5,000 and $10,000 per each false claim, resulting in liability in excess of $18,000,000. [FN75] Because the dentist had set up the corporation involved and placed his wife as the nominal president of the company, the court further allowed the government to pierce the corporate veil and attach the dentist's personal assets. [FN76]
Another type of fraud common in Medicare claims is "upcoding" or "miscoding". Under the prospective payment system in use by the federal Medicare program, patients' hospital bills are paid in relation to their diagnoses. Certain software companies and the hospitals using that software have recently been sued for just such "upcoding". [FN77] The measure of damages in those cases would be the difference between the amount the government would have paid under the correct diagnosis and the amount actually charged. [FN78]
F. Civil Penalty Provisions Under the FCA
The civil penalty provision contained in 31 U.S.C. § 3729(a) provides the following: "any person who ... [violates the provisions of the FCA] ... is liable to the United States Government for a civil penalty of not less than $5,000 and not more than $10,000, plus 3 times the amount of damages which the Government sustains because of the act of that person." [FN79]
Prior to the 1986 amendments, the district courts had discretion to reduce the civil penalty imposed on a FCA violator if circumstances warranted such a reduction. [FN80] It now appears that the district courts are without discretion regarding the imposition of a civil penalty in False Claims Act cases. However, the United States Supreme Court has suggested that the imposition of a civil penalty, compounded with the imposition of prior criminal liability for the same acts, may violate the Double Jeopardy Clause of the Constitution. [FN81] Moreover, the Court hinted in a later case that the use of the False Claims Act to extract civil penalties disproportionate to the wrongdoing might run afoul of the Eighth Amendment's Excessive Fines Clause. [FN82]
*40 G. Unique Procedural Problems in FCA Cases
There are three unique procedural aspects to False Claims Act cases. The Act provides for nearly nationwide venue and jurisdiction, [FN83] and the statute also requires that the Justice Department and United States Attorney receive copies of all evidence in the plaintiff's hands. [FN84] Finally, the Act provides for a mechanism by which the Department of Justice, which handles the majority of FCA prosecutions, can either intervene or decline to intervene. [FN85]
1. Filing Requirements
Under the express terms of the statute, cases under 31 U.S.C. § 3729 are supposed to be filed en camera and under seal; however, in practice, this rarely happens. In most courts, to prevent judge-shopping, the complaint is filed in the district clerk's office, either in a sealed envelope or placed into a safe, and the case is then assigned to a judge based on the random assignments process. Some district courts may also require that the judge receive a courtesy copy of the complaint.
2. Evidentiary Disclosure
The Act requires a qui tam relator to serve upon the United States Attorney and the Department of Justice a complete copy of all evidence in the possession of the relator involving the fraud in the complaint. Therefore, all relevant documents must be turned over, as well as a summary of all the relator's relevant information about which he might testify in trial.
The disclosure, however, carries with it some risks. In some cases, the federal courts, broadly construing Rule 26 of the Federal Rules of Civil Procedure, have held that the entirety of the disclosure made to the government must be turned over to the defendant. [FN86] This has obvious implications if the material in the disclosure contains privileged or otherwise legally confidential material. Thus, disclosure statements should convey only that information which is specific to the case and which might be the subject of proper discovery requests in a civil case. Gratuitously supplied information about the relator, the relator's work history, or other privileged or confidential information, should be omitted. This information can be disclosed privately to the Department of Justice if relevant and important to the case.
While some authors suggest that the evidentiary disclosure statement required by the statute must be filed en camera and under seal, the Justice Department frowns on this procedure because it impairs their ability to keep documents like the disclosure statement under seal once the case is unsealed and allowed to move forward. [FN87] Nothing in the Act requires a qui tam relator to make supplemental disclosures to the government. However, Rule 26 does require supplemental disclosures, and, even *41 in those cases where the Department of Justice has not intervened, it is probably wise to continue to supply the Department of Justice with supplemental information which might impact its decision regarding intervention.
3. Intervention and Maintaining the Seal
Under the Act, the Department of Justice has only sixty days in which to consider intervention, but, in practice, the federal courts are almost always inclined to permit them to take as much time as they require in sorting out the allegations and facts in the relator's position. [FN88] Some members of the Department of Justice routinely request a nine month extension in order to permit them time to evaluate the claim and conduct a thorough investigation.
The Department of Justice can do one of three things. It can elect to intervene and take over the prosecution of the case, it can elect not to intervene and allow the relator's attorney to carry the case forward, or it can move to dismiss the complaint if such action is warranted. If the Department of Justice declines intervention, the statute still requires that they be kept in the loop. [FN89] The Department of Justice still has a right to object to any settlement reached in the case, and can, for good cause shown, intervene in a case in the waning hours of the prosecution. [FN90]
It is important for the qui tam relator to maintain the sanctity of the seal during the period of time when the Department of Justice is looking at the case. If a relator publicly discloses the existence of the case before the Department of Justice completes their investigation and moves to unseal the case, there are numerous sanctions which the court can apply under Federal Rule of Civil Procedure 11 and the False Claims Act. For example, in United States ex rel. Lujan v. Hughes Aircraft Co., [FN91] the appellate court reversed a dismissal by a district court in a False Claims case where the relator disclosed the existence of the case to the news media prior to the unsealing. [FN92]
The district court had dismissed the action as a sanction for failure to maintain the seal, and the appellate court found this an abuse of discretion in view of the fact that no lesser sanction was considered. [FN93] Nevertheless, the most important lesson from this case is to maintain the seal.
H. Bars to Qui Tam Plaintiffs
The idea behind the statute is for individuals with knowledge of government fraud to profit from their assistance to the government. Clearly, the statute is not designed to make individuals who learned of fraud through public disclosures wealthy at the expense of the government. As a result, the most heavily litigated aspect of the FCA is the public disclosure bar. Where an individual files a qui tam case after the fraud has been publicly disclosed, the only way that individual can profit is if they were an "original source" under the statute. That means that an individual with direct *42 knowledge of the information underlying the suit can bring an action, [FN94] as can an individual who merely "played some part" in the public disclosure of the fraud. [FN95]
The problem is, however, that what constitutes a public disclosure is not always clear under the statute. The statute provides the following: No court shall have jurisdiction over an action under this section based upon the public disclosure of allegations or transactions in a criminal, civil, or administrative hearing, in a congressional, administrative, or Government [General] Accounting Office report, hearing, audit, or investigation, or from the news media, unless the action is brought by the Attorney General or the person bringing the action is an original source of the information. [FN96]
Courts examining this issue have often reached conflicting holdings. For example, in United States ex rel. Pentagen Technologies International Limited v. CACI International, Inc., [FN97] the disclosure of information through the Freedom of Information Act was held to be a "public disclosure" within the meaning of the FCA. The opposite result occurred in United States ex rel. Schumer v. Hughes Aircraft Co. [FN98] There, the court found that documents that were merely available through the Freedom of Information Act, but which were not publicly disclosed prior to the filing of the lawsuit, did not subject the relator to the jurisdictional bar of public disclosure. Documents disclosed through a court process, such as a deposition or trial testimony, are considered publicly disclosed, [FN99] as are documents which are "equally available to strangers to the fraud transaction...." [FN100]
While the policy behind the jurisdictional bar in qui tam cases is to prevent parasitic cases, [FN101] defendants have used the jurisdictional bar as a means to dismiss actions brought by individuals with direct knowledge of the fraud. Although a complete discussion of the original source exception and the jurisdictional bar is beyond the scope of this article, practitioners should be wary of the many traps that await unknowing litigants in this area.
III. PROSECUTING MEDICARE FRAUD UNDER THE FCA
By some accounts, Medicare fraud amounts to as much as ten percent of the federal government's Medicare budget. [FN102] There are hundreds of practitioners, nursing homes, hospitals, and other health care providers who are using Medicare as their own *43 private piggy bank, according to some. [FN103] Since 1983, when Medicare regulations for hospitals and health care changed dramatically, the health care industry has gone through a significant change. Thousands of workers who relied on the hospital for their paychecks have been forced out into the open job market, and many have found jobs in the home health care, durable medical equipment, and nursing home industry. [FN104] Unfortunately, the savings that were supposed to result from the change in the payment system under Medicare have largely gone into the hands of providers who branched out into these markets.
A. Spotting the Qui Tam Case
Lawyers routinely get telephone calls from employees, or former employees, who are interested in "getting even" with an employer for a perceived insult. It is not uncommon for employees to believe, even in employment-at-will states, that the mere discharge of an employee always gives rise to a cause of action. Employees are often angered to find out that their employer can fire them for no reason, or for any reason, but simply not for an unlawful reason. Lawyers, however, do a disservice to their clients if they do not ask them whether their employer does business with the government. It is not uncommon for employers to routinely conduct business in such a way as to flagrantly violate the False Claims Act. These violations are rarely reported unless, and until, someone is fired or laid off. When that occurs, the employee may take action, not so much to vindicate his employment rights or the rights of the government, but to "get even".
This raises an important ethical issue. The seal requirements of the statute prevent the relator's attorney from disclosing the existence of the lawsuit. [FN105] It is thus difficult for the relator's attorney to conduct a full investigation the way the attorney would, for example, in a medical negligence case. Records cannot be requested and ex parte interviews cannot be conducted because, to do so, would disclose to the defendant the existence of the action. Therefore, where an attorney suspects that the former employee may be acting in bad faith, the only mechanism through which the attorney can protect himself is to require the relator to verify his complaint under oath. [FN106]
Surprisingly, another type of case that should always be evaluated for potential FCA liability is the medical negligence case. It is not uncommon for patients to discover that they were billed for numerous services and products that they did not receive as a part of their hospital or nursing home stay. When these bills are submitted to Medicare, a false claim arises which can be a source of FCA liability.
B. Investigation
As noted, investigation is limited; however, there are numerous sources of public domain information that can be accessed in a qui tam case. Medicare cost reports, as well as most other documents filed by a FCA defendant, are available through the *44 Freedom of Information Act. [FN107] Further, where the relator is still employed at the time they bring the action, "smoking gun" documents may be copied and provided within ethical limits. [FN108] The recent rush by businesses to publish information about their companies on the Internet is yet another source of valuable information on the potential defendant. [FN109]
Often, it will not be possible to get hard evidence of the actual claim submitted for government payment. For example, where the conspiracy or false record sections of the False Claims Act are at issue, the relator may not have physical possession of the documents used to obtain payments. Rather, these documents may be in the hands of the government, or in the case of Medicare fraud, in the hands of the fiscal intermediaries. However, where the evidence and testimony by the relator is strong and credible, the Department of Justice can ultimately obtain from the appropriate agency or intermediary the necessary documentation to support the fraud.
C. The Petition and Evidentiary Disclosure
The complaint and evidentiary disclosure mandated by the Act are the two most important documents in the case. The complaint must be well-pled to include all elements of each cause of action. In addition, the requirements of Federal Rule of Civil Procedure 9(b) apply where the complaint makes allegations of fraud as opposed to mere falsity. That is, where the complaint alleges that an act was done fraudulently, the requirement to plead fraud with particularity applies. [FN110] Conversely, where the allegation is that a claim is merely false, there is no requirement to plead falsity with any particularity. [FN111]
The evidentiary disclosure is important for yet another reason. Although the filing of the document is jurisdictional and the Act requires that one be filed, it is important to remember that the purpose of the filing is to make the government aware of what evidence the relator has, and what other evidence might be available should it decide to intervene in the case. [FN112]
The disclosure should provide the government with the background information about the relator necessary to allow it to evaluate his credibility as a witness. In addition, it should provide whatever additional background is necessary to permit the government attorneys, who may be unfamiliar with the unique fact situations presented in Medicare cases, to fully comprehend the nature of the false claims. This means that, at least as it applies to the specific false claims in the lawsuit, the attorney must teach *45 an introductory course to the Justice Department about what it claims the defendant did, and why that was false or fraudulent.
The disclosure should next identify all the pertinent documents, sources of documents, and all pertinent records that may be relevant to the investigation. This is important because one of the tools the government can use, in addition to the normal discovery tools under the federal rules, is the Civil Investigative Demand (CID). [FN113] The CID operates much the same way as a subpoena, and allows the government to seize documents and obtain testimony from the defendant in order to assist it in determining whether to intervene. Once the decision is made to intervene, the government must resort to discovery through the Federal Rules of Civil Procedure. [FN114]
Because the Office of the Inspector General for Health and Human Services, as well as the Federal Bureau of Investigation, may be asked to assist the Department of Justice in its investigation, it is important to provide as much detail as possible for these agencies. Individuals with discoverable information should be identified with particularity, and if possible, their home and work telephone numbers provided to assist the field agents in their work. [FN115]
Although not specifically required by the terms of the Act, it is a good idea to provide a rough approximation of damages in the case so that the Department of Justice can get a handle on exactly how egregious the conduct of the defendant has been.
D. The Department of Justice Investigation
The statute provides only sixty days for the Department of Justice to make its decision about intervention. [FN116] As a practical matter, however, the Department of Justice usually gets as much time as it wants from the federal district courts. It is not uncommon for delays of nine months where the Department of Justice is investigating the case.
Since the case is under seal, the Department of Justice often does not serve copies of pleadings (e.g., requests for extension of time, etc.) on opposing counsel. Where local rules allow it, the relator's attorney should check on the status of the file frequently.
E. Department of Justice Declination--The Kiss of Death?
Qui tam lawsuits are defended frequently by larger firms located in Washington. These firms frequently exercise considerable efforts to shut down the Department of Justice, or to convince them to decline intervention. [FN117] The rationale is simple. While the Department of Justice can probably out-spend and out-investigate even the largest *46 of law firms, where the Department of Justice is not carrying the ball, the defense attorneys can make the qui tam action prohibitively expensive. [FN118]
However, a large number of qui tam actions are disposed of on summary judgment. Where good documentary evidence and faithful compliance with Rule 26 disclosures reveal evidence of fraud, this shortcut to a damages determination should not be overlooked by relator's counsel. [FN119]
This does not mean, however, that qui tam cases are not expensive. Document discovery alone can result in the need to store thousands of documents. Separating useful information from the piles of data may be time-consuming for attorneys and paralegals, and the administrative costs of managing a qui tam case are significant. In conspiracy cases, where a large number of depositions must be taken, or where expert witnesses are required to make a case on the grounds of medical necessity, the costs of prosecuting the action can rise dramatically beyond the reach of most small law firms. In instances where the Department of Justice declines, a motion to dismiss without prejudice is the most reasonable alternative, and representation contracts should provide for this safety valve.
F. Settlement
Few qui tam cases ever go to trial. With the specter of large civil penalties and treble damages, even the most recalcitrant defendant can be induced to settle to avoid the "distraction" of litigation. [FN120] Settlements frequently do not admit liability, and the defendant often pays less than the full amount the government could collect under the False Claims Act. [FN121] When the Department of Justice is involved in the case, and is prepared to take the case to trial, there is a strong incentive to settle.
Settlement involves a three way negotiation. The relator, entitled to a share of the proceeds, wants to see the government collect as much as possible in damages and civil penalties. The relator is awarded attorneys' fees and costs in the action, as well as expenses. [FN122] Therefore, during negotiation, the relator wants to make sure that the issue of fees is not omitted or lumped in with a general release. The government wants to limit the relator's attorneys' fees, and frequently realigns itself with the defendant at this stage of the proceeding to protect its own recovery under the Act. In fact, it is not uncommon for the Department of Justice to attempt to cut the relator out of the settlement entirely. [FN123]
*47 The final settlement amount must be approved by the district court, and both the relator and the Department of Justice have the right to object to the settlement structure. [FN124] Once the settlement is approved, the district court must decide what portion of the proceeds are to be allocated to the relator.
G. The Relator's Share
The statute provides that the relator's share in intervention cases can range between fifteen and twenty-five percent of the settlement amount, and thirty-percent in those cases where the Department of Justice does not intervene. [FN125] The mean relator's share in intervention cases is about seventeen percent of the settlement, and about twenty-eight percent in cases where the Department of Justice does not intervene. [FN126]
The criterion for awarding a qui tam plaintiff a portion of the recovery is the extent to which the relator "substantially contributed to the prosecution of the action." [FN127] Thus, the relator's contribution to the prosecution, not merely the disclosure of the fraud, is the key determinant of the relator's share.
Because the Department of Justice will want to keep the lion's share of the recovery for itself, it is important to build a good record of communication and cooperation with the Department of Justice during early stages of the litigation. Memoranda, correspondence, and the full record of any meetings between the Department of Justice and the relator, or the relator's attorneys, should be kept in a settlement file for when it becomes necessary to show the district court how helpful the relator was in obtaining the settlement. It is also important for the relator to keep accurate records of costs associated with the prosecution of the action. The statute provides not only for costs to be awarded, but also for "reasonable expenses". [FN128] Thus, travel, lodging, meals, and other *48 expenses of investigation, as well as any travel related to satisfying the requirements of the Department of Justice, may all be directly reimbursable by the defendant in a qui tam action. Since the award of these expenses and costs is not discretionary, the recovery of these costs and expenses should be included in any settlement negotiations.
IV. CONCLUSION
The False Claims Act is a unique vehicle by which an individual litigant can do well while doing good. [FN129] The Act clearly benefits the private litigant, the government, and taxpayers at large. By recovering damages and penalties for the government, wrongdoing is impeded and the burden on all taxpayers is lightened somewhat.
There are potential problems for attorneys bringing these actions. Attorneys must be careful to insure that the relators on whose behalf they bring the action are both proper relators (to avoid losing a share of the recovery) as well as individuals acting in good faith.
Attorneys prosecuting qui tam actions must be wary of certain pitfalls in the statute and case law, especially those pertaining to the jurisdictional bars of prior public disclosure and the original source exception. Yet, if the relator has information about government fraud, and that information has not been publicly disclosed, then the relator's attorney should endeavor to get the case on file as soon as possible because qui tam actions are allowed only by the first person to report the fraud to the government. [FN130]
Every emphasis should be placed on making the case attractive to the Department of Justice, and encouraging the Department of Justice to take over the case. If this happens, the relator need not play an active role in the case in order to obtain a portion of the recovery, and the relator can keep costs to a minimum and still make a hefty recovery.
FNa1. Third year associate, RRT, CRTT, Bartimus, Frickleton, Robertson & Obetz, is a plaintiff's firm that specializes in False Claims Act cases as well as personal injury and medical negligence actions. Mr. DeWitt is a cum laude graduate of St. Louis University School of Law, and served a one year clerkship with the Honorable Justice Edward D. Robertson, Jr., of the Missouri Supreme Court.
FN1. Martin Dyckman, Tallahassee Turf Fight Series, ST. PETERSBURG TIMES, Aug. 24, 1993, at 9A.
FN2. For an interesting review of the history of the False Claims Act, see Phillips & Cohen (visited July 1996) <http://www.whistleblowers.com>. At that web site is a partial transcript of General Ulysses S. Grant's 1861 testimony in front of Congress regarding defective arms in use by the Union Army.
FN3. Dyckman, supra note 1.
FN4. See United States ex rel. Stinson v. Prudential Life & Accident Ins. Co., 944 F.2d 1149, 1153 (3rd Cir. 1991); see also S. REP. NO. 99-345, at 8-10 (1986), reprinted in 1986 U.S.C.C.A.N. 5226, 5273-75.
FN5. Stinson, 944 F.2d at 1152.
FN6. Id. at 1153.
FN7. The phrase qui tam is from the Latin "qui tam pro dominrege quam pro se ipso in hac parte sequitur," meaning "who brings the action for the king as well as for himself." See Stinson, 944 F.2d at 1152 n.2 (citing Erickson v. American Inst. of Biological Sciences, 716 F. Supp. 908, 909 n.1 (E.D. Va. 1989) (quoting W. Blackstone, COMMENTARIES ON THE LAW OF ENGLAND 160 (1768)).
FN8. Stinson, 944 F.2d at 1153.
FN9. Id. at 1154.
FN10. Id.
FN11. See United States ex rel. Hagood v. Sonoma County Water Agency, 929 F.2d 1416, 1420 (9th Cir. 1991).
FN12. As of September 1995, qui tam recoveries have exceeded one billion dollars since the False Claims Act was amended in 1986. According to the Department of Justice, more than 1,000 qui tam cases have been brought during this period, with a record 245 cases reported to have been filed in fiscal year ("FY") 1995. See SPOTLIGHT, FALSE CLAIMS ACT & QUI TAM Q. REV., Oct. 1995, at 29; FALSE CLAIMS ACT & QUI TAM Q. REV., Jan. 1996, at 63; see also Tax Payers Against Fraud (visited July 1996) <http://www.taf.org/taf/docs/qtstats>. The number of reported qui tam cases beginning with FY 1987 are as follows:
FY 1987: 33 cases FY 1992: 119 cases
FY 1988: 60 cases FY 1993: 131 cases
FY 1989: 95 cases FY 1994: 220 cases
FY 1990: 82 cases FY 1995: 245 cases
FY 1991: 90 cases
Id. Total qui tam recoveries by fiscal year are approximated as follows:
FY 1987: N/A FY 1992: $123.88 million
FY 1988: $2.34 million FY 1993: $193.45 million
FY 1989: $17.89 million FY 1994: $379.56 million
FY 1990: $40.56 million FY 1995: $243.00 million
FY 1991: $70.45 million
Id. The Department of Justice reported in August, 1995, that it has intervened in 169 cases and obtained judgments or settlements in 115 matters. In cases where the relator's share has been finally determined, relators have received about $153 million or an average of 18% of the total recovery. Id. Based on the Department of Justice's statistics, the average recovery for all resolved qui tam cases (including unsuccessful cases) is approximately $1.76 million. The number of filings in 1995 set an all time record at 274 cases. Id.
FN13. 31 U.S.C. § 3730 (1994).
FN14. 31 U.S.C. § 3729 (1994). The impact of the civil penalty on false claims recoveries is impressive. If a health care provider were, for example, to over bill only one dollar for one thousand laboratory tests, the civil penalty could exceed ten million dollars.
FN15. United States ex rel. Stinson v. Prudential Life & Accident Ins. Co., 944 F.2d 1149, 1153 (3d Cir. 1991).
FN16. Rainwater v. United States, 356 U.S. 590, 592 (1958).
FN17. United States ex rel. Marcus v. Hess, 317 U.S. 537, 551-52 (1943); see also United States v. Beatrice Foods Co., 330 F. Supp. 577, 582 (D.C. Utah 1971).
FN18. Stinson, 944 F.2d at 1153.
FN19. United States ex rel. Hagood v. Sonoma County Water Agency, 929 F.2d 1416, 1420 (9th Cir. 1991).
FN20. United States ex rel. Rabushka v. Crane Co., 40 F.3d 1509, 1511 (8th Cir. 1994).
FN21. 31 U.S.C. § 3730 (1994).
FN22. See, e.g., United States v. Crescent City, E.M.S., Inc., 151 F.R.D. 288 (E.D. La. 1993); United States v. Fesman, 781 F. Supp. 511 (S.D. Ohio 1991). An even better situation for the qui tam relator is where his allegations of fraud result in a criminal prosecution. Where this occurs, and the defendant pleads guilty to the criminal actions, the only thing left for the government in the qui tam action is to collect the appropriate damages. See United States v. Boutte, 907 F. Supp. 239 (E.D. Tex. 1995).
FN23. See Spotlight, FALSE CLAIMS ACT AND QUI TAM Q. REV., Oct. 1995, at 29.
FN24. For a notable exception based on an interview with Taxpayers Against Fraud, see Whistleblowers Live Lifestyles Of The Rich If They See Someone Cheating The Government, The Rewards Can Run Into The Millions, ORLANDO SENTINEL, Feb. 20, 1994, at A18.
FN25. For a discussion of the impact of qui tam litigation in health law, see Arent Fox (visited July 1996) <http://www.arentfox.com/features/quitam>.
FN26. 31 U.S.C. § 3729(a)(1) (1994).
FN27. See id.
FN28. Even where the government sustains no damage, an individual can be liable for a civil penalty of up to $10,000 for each false claim submitted.
FN29. See United States ex rel. Hagood v. Sonoma County Water Agency, 929 F.2d 1416, 1421 (9th Cir. 1991); United States ex rel. Marcus v. Hess, 371 U.S. 537, 544-45 (1943); see also Charles Tiefer and Michael Blumenfeld, Qui Tam Recovery Without "Actual Damages", FALSE CLAIMS ACT & QUI TAM Q. REV., June 1996, at 23.
FN30. 31 U.S.C. § 3729(c) (1994).
FN31. 390 U.S. 228 (1968).
FN32. Id. at 232.
FN33. United States v. Rivera, 55 F.3d 703 (1st Cir. 1995).
FN34. Covington v. Sisters of St. Dominic, 61 F.3d 909 (E.D. Cal. 1995).
FN35. United States ex rel. Schwedt v. Planning Research Corp., 59 F.3d 196 (D.C. Cir. 1995).
FN36. United States ex rel. Alexander v. Dyncorp, Inc., 924 F. Supp. 292 (D.C. 1996).
FN37. Id.
FN38. 31 U.S.C. § 3729(b) (1994); see United States ex rel. Hindo v. University of Health Sciences/The Chicago Med. Sch., 65 F.3d 608, 613 (7th Cir. 1995).
FN39. See Hindo, 65 F.3d at 613.
FN40. United States v. Mead, 426 F.2d 118, 121 (9th Cir. 1970).
FN41. John T. Boese, CIVIL FALSE CLAIMS AND QUI TAM ACTIONS, §§ 2-60 (1994 Supp.).
FN42. Mead, 426 F.2d at 121.
FN43. 31 U.S.C. § 3729(a)(2) (1994).
FN44. Boese, supra note 41, at §§ 2-12.
FN45. 916 F. Supp. 702 (S.D. Ohio 1996).
FN46. Id. at 704.
FN47. Id. at 707.
FN48. Id.; see also discussion infra part II.D.
FN49. 31 U.S.C. § 3729(a)(3).
FN50. United States ex rel. Bouchey, 860 F. Supp. 890, 893 (D.C. 1994); see also United States ex rel. Stinson v. Provident Life & Accident Ins. Co., 721 F. Supp. 1247 (S.D. Fla. 1989).
FN51. For a thorough discussion of the elements of civil conspiracy, see United States v. Murphy, 937 F.2d 1032, 1039 (6th Cir. 1991). The Sixth Circuit in Murphy held the following: A civil conspiracy is an agreement between two or more persons to injure another through unlawful action. Express agreement between the conspirators is not necessary to find the existence of a civil conspiracy.... All that must be shown is that there was a single plan, that the alleged coconspirators shared in the general conspiratorial objective, and that an overt act was committed in furtherance of the conspiracy.... Id. (citing Hooks v. Hooks, 771 F.2d 935, 943-44 (6th Cir. 1985)).
FN52. The Act speaks in terms of "conspiring to defraud", pulling within the statutory language the requirement of an agreement by the conspirators and an act in furtherance of the agreement. The courts are universal in requiring these elements. Bouchey, 860 F. Supp. at 893. Additionally, the statute's use of the term "conspires to defraud" would seem to require an intent to defraud, not merely a finding that the defendants acted knowingly to submit a false claim. See 31 U.S.C. § 3729(a)(3) (1994).
FN53. Stinson, 721 F. Supp. at 1259 (citing Blusal Meats, Inc. v. United States, 638 F. Supp. 824, 828 (S.D.N.Y. 1986)).
FN54. Bouchey, 860 F. Supp. at 894.
FN55. 31 U.S.C. § 3729(a)(7) (1994).
FN56. 31 U.S.C. § 3729(a)(2) (1994).
FN57. United States ex rel. Pickens v. Kanawha River Towing, 916 F. Supp. 702, 707-08 (S.D. Ohio 1996).
FN58. Id.
FN59. 916 F. Supp. 702 (S.D. Ohio 1996).
FN60. Id. at 704.
FN61. Id. at 705.
FN62. Id. at 708.
FN63. Id. at 707-08.
FN64. United States ex rel. Pickens v. Kanawha River Towing, 916 F. Supp. 702, 704-05 (S.D. Ohio 1996).
FN65. Id. at 709.
FN66. Id. at 705.
FN67. Id. at 708.
FN68. Id.
FN69. United States ex rel. Pickens v. Kanawha River Towing, 916 F. Supp. 702, 708 (S.D. Ohio 1996).
FN70. 31 U.S.C. § 3729(a) (1994).
FN71. 768 F. Supp. 1127 (E.D. Pa. 1991).
FN72. Id. at 1131.
FN73. Id.
FN74. Id. at 1129.
FN75. Id. at 1133.
FN76. Id.
FN77. See Boese, supra note 41, at §§ 3-20.
FN78. Id.
FN79. 31 U.S.C. § 3729 (1994).
FN80. United States v. Lorenzo, 768 F. Supp. 1127, 1133 (E.D. Pa. 1991) (citing Peterson v. Blue Cross, Blue Shield of Texas, 508 F.2d 55 (5th Cir. 1975)).
FN81. United States v. Halper, 490 U.S. 435, 448-49 (1989).
FN82. See Browning-Ferris Indus. of Vermont, Inc., v. Kelco Disposal, Inc., 492 U.S. 257, 276 (1989). For an excellent discussion of damages issues in FCA cases, see Boese, supra note 41, at Chapter 3.
FN83. 31 U.S.C. §§ 3731-3733 (1994).
FN84. Id.
FN85. Id.
FN86. See, e.g., United States ex rel. Burns v. A.D. Roe Co, Inc., 904 F. Supp. 592 (W.D. Ky. 1995).
FN87. See, e.g., United States ex rel. Pentagen Tech. Int'l v. CACI Int'l, Inc., 885 F. Supp. 80 (S.D.N.Y. 1995) (sealed documents submitted by the government during the initial sealing period not subject to continuing seal once Department of Justice declined intervention).
FN88. 31 U.S.C. § 3730(b)(2) (1994).
FN89. 31 U.S.C. § 3730(c)(3) (1994).
FN90. 31 U.S.C. § 3730(c)(2) (1994).
FN91. 67 F.3d 242 (9th Cir. 1995).
FN92. Id. at 244.
FN93. Id. at 248.
FN94. United States ex rel. Koch & Presley v. Koch Indus., Inc., No. 91-CV- 763-B, 1995 WL 812134 (N.D. Okla. Oct. 6, 1995).
FN95. United States ex rel. Barajas v. Northrop Corp., 897 F. Supp. 1274 (C.D. Cal. 1995).
FN96. 31 U.S.C. § 3730(e)(4)(A) (1994).
FN97. No. 94 CIV. 2925, 1995 WL 693236 (S.D.N.Y. Nov. 22, 1995).
FN98. 63 F.3d 1512 (9th Cir. 1995).
FN99. United States ex rel. Stinson v. Prudential Life & Accident Ins. Co., 944 F.2d 1149 (3d Cir. 1991).
FN100. Id. at 1155.
FN101. See United States ex rel. Hagood v. Sonoma County Water Agency, 929 F.2d 1416, 1420 (9th Cir. 1991).
FN102. Stephen Green, Panel Told of Massive Fraud in Medicare, SAN DIEGO UNION- TRIBUNE (Feb. 15, 1995), at A1.
FN103. Id.
FN104. See Francie Scott, Eldercare: Mapping a New Frontier in Respiratory Therapy, 9 ADVANCE RESP. CARE. PRACT. 8, 15 (1996).
FN105. 31 U.S.C. § 3730(b)(2) (1994).
FN106. At our firm, all qui tam complaints are filed with a verification statement signed by the relator in front of a notary.
FN107. 5 U.S.C. §§ 551-559 (1994).
FN108. This presents another interesting ethical question: Can a qui tam relator, who remains employed, ask his attorney for advice about what documents to take with him? This would seem to violate the ethical rules and the spirit of the discovery rules in federal court. However, where the case is not on file, and the attorney is merely investigating, there is nothing to prevent the attorney from examining documents obtained by the relator where the attorney has not directed the relator to obtain the documents, but merely looks at what the relator has already obtained.
FN109. In a recent action filed by our firm, which remains under seal at the time of this writing, the defendant's home page provided numerous press releases and other information, ultimately convincing our firm to take the case.
FN110. See FED. R. CIV. P. 9(b).
FN111. See Boese, supra note 41, at §§ 5-34.
FN112. 31 U.S.C. § 3730(b) (1994).
FN113. 31 U.S.C. § 3733 (1994).
FN114. See Boese, supra note 41, at §§ 5-48.
FN115. Telephone Interview with Lauri Oberembt, U.S. Department of Justice (July 22, 1996).
FN116. 31 U.S.C. § 3730(b)(4) (1994).
FN117. Arent Fox, the Washington firm that handles many of these cases, suggests this boldly on the World Wide Web page. See Arent Fox (visited July 1996) <http://www.arentfox.com/features/quitam/health>.
FN118. Arent Fox calls a Department of Justice declination the kiss of death for a qui tam action, telegraphing its defense strategy by suggesting that absent the Department of Justice, "these suits die from lack of relator resources." See Arent Fox (visited July 1996)<http:// www.arentfox.com/features/quitam/>.
FN119. See, e.g., United States v. York, 909 F. Supp. 32 (D.C. 1995); Mikes v. Strauss, 889 F. Supp. 746 (S.D.N.Y. 1995); Godwin v. Visiting Nurse Ass'n, Home Health Serv's. 831 F. Supp. 449 (E.D. Pa. 1993); United States v. Lorenzo, 768 F. Supp. 1127 (E.D. Pa. 1991); United States v. Diamond, 657 F. Supp. 1204 (S.D.N.Y. 1987); United States v. Jacobson, 467 F. Supp. 507 (S.D.N.Y. 1979).
FN120. Heart valve maker Shiley, Inc., in a statement released after settling a qui tam case for 10.75 million dollars, stated: "[l]itigation is tremendously distracting and time-consuming, and it keeps us from the real issues at hand." Anne Michaud, Shiley Inc. Settles False-Claims Suit, LOS ANGELES TIMES, July 1, 1994, at D1.
FN121. Id.
FN122. See 31 U.S.C. § 3730(d) (1994).
FN123. See, e.g., United States ex rel. Neher v. N.E.C. Corp., 11 F.3d 136 (11th Cir. 1994). In Neher, the relator filed a qui tam action and was dismissed as an improper relator. Id. at 137. He filed an appeal with the Eleventh Circuit and, during the pendency of the appeal, the case was publicly disclosed and NEC entered into an agreement with the Department of Justice to settle the case. Id. Importantly, the government settled the matter without approval of the district court and without notice to the relator. The Eleventh Circuit reversed the district court and denied the relator's motion to enjoin the settlement. Id. at 139. Relator then filed a motion in the district court to obtain his portion of the settlement proceeds. The government opposed the motion, and further opposed an attempt by the relator to preserve his testimony (relator was dying from cancer). Id. at 137. When the relator died, the government moved to dismiss the relator's claim as moot, which the district court granted, resulting in a second appeal. United States ex rel. Neher v. N.E.C. Corp., 11 F.3d 136, 137 (11th Cir. 1994). The extreme lengths that the government went to in order to avoid paying a share of the proceeds offended the Eleventh Circuit, which found that the Department of Justice had "brazenly ignored" the relator's rights.
FN124. 31 U.S.C. § 3730(c) (1994). In those cases where the Department of Justice has declined to intervene, but where the defendant wishes to settle, the Department of Justice still has to be included in the settlement negotiations. 31 U.S.C. § 3730(c)(2) (1994). Moreover, the Department of Justice can object and derail the settlement without necessarily intervening. 31 U.S.C. § 3730(c)(2)(B) (1994). The Department of Justice can also limit the relator's participation in the action, which, theoretically, could include limiting the relator's participation in settlement negotiations. 31 U.S.C. § 3730(c)(5) (1994). The statute also gives the relator a voice in settlement negotiations and the relator can object to any deal struck by the defendant and the Department of Justice. 31 U.S.C. § 3730(c)(2)(B) (1994).
FN125. 31 U.S.C. § 3730(d)(2) (1994).
FN126. See Qui Tam Statistics, FALSE CLAIMS ACT AND QUI TAM Q. REV., Jan. 1996, at 63.
FN127. 31 U.S.C. § 3730(d)(1) (1994).
FN128. Id.
FN129. Whistleblowers Live Lifestyles Of The Rich If They See Someone Cheating The Government, The Rewards Can Run In The Millions, ORLANDO SENTINEL, February 20, 1994, at A18.
FN130. See generally 31 U.S.C. § 3730 (1994).
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