Can a Government Employee Bring a False Claims Act Case?

In our recent case, U.S. ex rel. Black & Montiel v. Novo Nordisk, which the Department of Justice settled for $25 million, one of the relators was a former Army officer who got some of the information that formed the basis for the lawsuit while he was in the Army. The question that the government and relators’ counsel struggle with in these cases is whether a government employee can be a relator. The Department of Justice generally takes a very strong stance on that issue, and will often tell government employee relators at the beginning of a case that they are not considered proper relators. During recent efforts to amend the False Claims Act, the DOJ supported an amendment that did not make it into any of the final bills that explicitly barred government employees from becoming relators.

For all intents and purposes, the viability of a False Claims Act suit brought by a government employee depends on whether any of the information underlying the complaint has been publicly disclosed. Under the FCA, if there has been a public disclosure, the relator has to qualify as an “original source,” which in turn requires the relator to have “voluntarily” disclosed the information about the fraud to the government. The government has argued that a government employee who is charged with disclosing fraud as part of his job cannot “voluntarily” disclose the information. The government is concerned, in these situations, that government employees who are charged with ferreting out fraud will file qui tam cases instead of doing their job. Several courts, considering these public policy implications, have accepted this argument. See U.S. ex rel. Fine v. Chevron, 72 F.3d 740 (9th Cir. 1996). But other courts have found that under certain circumstances, a government employee can be a relator. For example, if the employee has a job that does not require the reporting of fraud. Thus, while a government auditor may have trouble showing he is a relator, a postal worker, whose job it is to handle mail rather than uncover fraud, has a better chance at qualifying as an original source. See U.S. ex rel. Holmes v. Consumers Ins. Group, 318 F.3d 1199 (10th Cir. 2003). A government employee is also more likely to qualify as a relator where she reports the fraud up her chain of command,  and nothing was done about it, prior to filing suit, since under those circumstances, public policy favors consideration of the employee as an original source.

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Loren Jacobson is a partner at Waters & Kraus, LLP, in the firm’s Dallas office. Her practice focuses on qui tam (whistleblower) cases and appellate matters.