As discussed in my prior articles on the False Claims Act (FCA), the government relies heavily on individual whistleblowers to report fraudulent government contractors. This article will discuss the procedure for reporting and prosecuting an FCA violation. The FCA procedure is legally unique, and this process must be filed to the letter. Courts have frequently reduced whistleblower awards, or even dismissed lawsuits, because of failure to follow FCA procedure to the letter. It is therefore critical that any potential whistleblower first contact an attorney who is experienced and knowledgeable about the FCA before taking any further steps.
Filing the Action
If you have information regarding a potential fraud against the government, you should begin by contacting an attorney. Be prepared to provide details regarding the company, the contracts at issue, and the alleged fraud: What type of fraud is it? How long has it been ongoing? What are the dollar amounts at issue? How did you discover it? If you have any relevant documents or emails, you should bring copies along with you.
Contacting an attorney can be a daunting step, but the FCA has strict provisions forbidding a company from retaliating against whistleblowers. A whistleblower is also allowed to remain anonymous, at least at the beginning of the case, as explained below.
Filing the Lawsuit Under Seal
Assuming the attorney believes that there is a strong evidence of an FCA violation, the next step is filing a lawsuit in federal court. An FCA lawsuit must initially be filed under seal. This means that the identities of both the company and the whistleblower are kept secret. The company will not know who has reported it — in fact, at first it will not even know that it has been sued.
This sealed and anonymous complaint process is unique to the FCA. Almost all lawsuits are public records, which means that anyone can go to the courthouse (or the Internet) to find the court records and pleadings. Because FCA complaints are sealed, these records and pleadings are not available to the public until the court gives an order unsealing the case. Sometimes, the case will not be unsealed until after the government has fully investigated and settled the matter with the defendant.
In the meantime, it is imperative that a whistleblower not break this seal by informing the defendant (or anyone else) of the ongoing lawsuit, as this can lead to significant sanctions including dismissal of the case. Failure to file under seal, or failure to respect the seal, can be a fatal misstep in the minefield of FCA procedure.
Contacting the Government
After the lawsuit is filed, it must be presented to the local U.S. Attorney to determine whether the government wishes to investigate or intervene. This is why FCA lawsuits are sealed, as it allows the government to investigate the strength of the case without alerting the company. The whistleblower, along with his attorney, will work with the local U.S. Attorney’s office to determine whether the government is interested in pursuing the case. This will generally involve at least one interview, if not several, and the government will ask for any documents that evidence the fraud. It is always in the whistleblower’s best interests to cooperate with the government fully. At the end of the investigation, the government will decide whether to intervene as a party in the lawsuit.
As a general rule, it is a very good sign if the government chooses to intervene. Some whistleblowers are concerned that the government will “take over” their case. To some extent, this is true, but the government will have far more resources than one single whistleblower and his attorney could ever hope to muster. The government attorneys will likely have handled several similar cases, so they are skilled and experienced in FCA procedure. The government’s decision to intervene is also a sign that the claims have merit, and companies tend to be more willing to settle when they are litigating against the government rather than a private citizen.
If the government does intervene, the whistleblower will be asked to provide testimony and information, will no longer be calling the shots. As a reward, a successful whistleblower is entitled to receive between 15 and 25% of all amounts ultimately recovered in the lawsuit.
Proceeding Without Government Intervention
If the government chooses not to intervene, the whistleblower and his attorney can prosecute the case on the government’s behalf. Essentially, the whistleblower stands in the shoes of the government in order to vindicate the government’s rights. This is known as a qui tam action, from an ancient Latin phrase meaning “he who sues for the king.”
Once the government chooses not to participate in the case, the seal will be lifted and the case will proceed as in a regular lawsuit (although the government will still be entitled to review all the pleadings and to have a say in any proposed settlement). It is not at all uncommon for a whistleblower to successfully litigate and settle FCA cases without government assistance.
If the government does not intervene, the whistleblower has significantly more control over the process. However, this also requires more legwork because the whistleblower cannot rely on the government to press the case forward on his behalf. At the same time, the financial rewards can be much greater. Successful whistleblowers who prosecute their actions without government intervention may recover between 25 and 30 percent of the total award – significantly more than is available if the government does intervene.
Conclusion
FCA procedure is complicated and unique, and the consequences for misfiling an FCA claim can be significant. If you would like to discuss a potential fraud against the government, call me at (504) 267-0777 or email me here. The initial consultation is always free, and our call is completely confidential and privileged.