There is a common misperception that only current or former employees of a company engaged in fraud can serve as whistleblowers under the False Claims Act. To the contrary, virtually anyone with non-public information regarding a company or individual that is ripping off the government can bring a case as a whistleblower under the False Claims Act.
Under the False Claims Act, the whistleblower bringing the case is referred to as the “qui tam plaintiff,” or “relator” (relator, not realtor; if you speak to an attorney who claims to know about this area, and they say “realtor,” you should consult another attorney).
While certainly current and former employees are the most common type of relator, many False Claims Act cases are brought by competitors of a company that is breaking the law, private investigators, and in some cases, government employees themselves. (There are restrictions on certain types of government employees from serving as relators, and attorneys for a companies engaged in fraud are usually precluded from being relators due to the attorney-client privilege.)
What exactly does being a relator entail? Here is a basic overview of the major steps:
- Working with an attorney (not a requirement, but a very good idea), draft a legal document (the “complaint”) that initiates the case. The complaint must describe the fraud in a fair amount of detail, and ideally contains specific examples of the fraud.
- The complaint is then filed “under seal.” This means that, unlike normal lawsuits, which are publically available once filed, qui tam lawsuits are filed in a separate area of the courthouse, and neither the public, nor the defendants, are notified of the lawsuit or allowed to obtain a copy of it. Only the government attorneys are provided copies of the lawsuit.
- On the same day the complaint is filed, the relator must provide the appropriate government attorneys a copy of the complaint, along with all pertinent information, documents, and other evidence that the relator has.
- The government attorneys then are allowed to investigate the claims. This investigation can take a very, very long time.
- Within two or three months of initiating the case, the government team will typically interview the whistleblower (the “relator interview”). The relator interview usually lasts a half or full day, and may involve multiple government attorneys, agency investigators, and law enforcement (FBI agents, for example). From the government’s perspective, the purposes of the relator interview are primarily to measure the credibility of the relator, hear about the fraud in the relator’s own words, and gather additional facts that may not have already been provided. From the perspective of the relator and the relator’s attorney, the goals of the relator interview should be to establish the credibility of the relator, demonstrate that the relator and relator’s counsel will be a helpful partner to the government in its investigation or litigation of the case, and generally continue to persuade the government that the case has merit, involves significant fraud (measured either by dollar amount or principle), and will be easy to prove.
- After the relator interview, the government will continue its investigation. This may involve requesting documents from the company through a subpoena or “civil investigative demand.” The government may also interview former employees of the company who have knowledge of the fraud (including people identified by the relator). The government may then reach out to the company’s lawyers, present the government’s concerns, and ask for the defendant’s reaction.
- During this investigative process, which can last years, the case remains under seal, and the relator’s identity protected (though once under investigation, companies often guess that there is a qui tam lawsuit involved). The government may or may not seek significant input from the relator and relator’s attorneys during the investigation. In some cases, relator’s counsel is involved heavily, for example, in reviewing documents produced by the company to the government (which can number in the hundreds of thousands). Generally speaking, however, the role of relators during the investigative period is limited, and because the investigations can drag out, this period requires a tremendous amount of patience.
- Once the government has completed its investigation—or the judge cuts the government investigation off—typically one of three things happens:
- The government decides not to get involved in the case. This is known as a “declination.” The reasons for declination can vary, but typically it is because the case is too small for the government, or there is some aspect of the case that the government thinks will be difficult to prove. Remember, the government has limited resources to pursue these cases, so a declination does not mean that a case does not have merit. If the government declines, the relator can continue to pursue the case on behalf of the government. The case is unsealed, and litigation proceeds.
- The government decides to pursue the case. This is known as “intervention.” When the government intervenes, the case is then unsealed, and the government takes the lead role in prosecuting the case. The relator remains a party to the lawsuit, and can participate in the litigation, but the government attorneys call the shots. A good relator’s attorney will have developed relationships with the government attorneys. Good relationships allow the relator and relator’s counsel to better influence the course of the litigation, and ensure the best outcome possible.
- The government enters settlement discussions with the defendant. Often, settlement agreements are entered into while the case remains unsealed. Many companies do not want the negative publicity associated with a false claims act case, and therefore are motivated to pay money to settle the case before it comes out from under seal. When such settlements are reached, the case is only unsealed after the settlement is announced. All settlements with the government under the FCA—and the identity of the whistleblower(s)—eventually become public.
In Part 5, we will go over the financial rewards available to successful whistleblowers under some of the most common qui tam laws.
These areas of law are, of course, highly complicated, and this series is not designed to provide legal advice of any kind. If you have questions about your rights, obligations, or potential legal claims, you should contact an attorney, and do so as promptly as possible, as there may be statutes of limitation or other deadlines that could impact your ability to bring a claim.
Justin T. Berger is a Partner at Cotchett, Pitre & McCarthy, LLP, where he handles high-profile cases of corporate fraud, including representing whistleblowers in qui tam actions under the federal and California False Claims Acts ...