Tuesday, September 29, 2015

What is a Relator Interview and What Can One Do to Prepare for it?

October 1, 2015 — Upon retaining a qui tam attorney and filing a case under seal, the Assistant opportunity to discuss the wrongful conduct. United States Attorney assigned to investigate the case may contact the qui tam attorney on the record to schedule an in person interview with the relator (also known as a whistleblower). This occurs in a majority of cases that hold merit. The relator interview is one of the first steps undertaken during the investigation. It is the

Who attends?

Generally, the relator will be there along with the relator's attorney(s). In addition, there will be several individuals from government agencies involved in the investigation. This includes the assistant U.S. Attorney leading the investigation, and any of her colleagues, any attorneys from the state attorney general's office if the case involves state claims, any paralegals, federal agents, among others. It is not uncommon for the room to be filled.

Who does not attend?

At this stage of the investigation, the defendant is not yet aware of the case, and as such, there will not be anyone present affiliated with the company or individuals whom the relator whistleblower is alleging is responsible for the wrongful conduct.

How long is the interview?

There is no set time period within which the government must complete the interview. The span of time generally depends on the depth of the allegations. It is safe a good idea to dedicate the full day to the interview to be on the safe side.

What can a relator do to prepare for the interview?

Generally, it is wise to review the disclosure statement and exhibits along with the complaint filed in court. If there are additional documents that were not included in the disclosure statement, reviewing those documents may be helpful as well. There is also an expectation that the relator will be able to sufficiently and specifically provide details about the fraudulent scheme.

What can the relator expect?

Because this is not an adversarial setting, the relator can rest at ease to the extent that the government is on the same side as the relator. This does not mean that the government agents and attorneys are going to be friendly. It is always best to keep the dialogue and atmosphere formal.

This article was contributed by Louisa Kirakosian, a qui tam attorney at Waters & Kraus, in the firm’s Los Angeles office. She represents whistleblowers who have uncovered fraud against the government in the pharmaceutical, Medicare/Medicaid, and government contracting industries.

Friday, September 25, 2015

10 Fun Facts About the False Claims Act

  1. The False Claims Act (“Act”) is over 150 years old. The Act, originally known as the Lincoln Law, after its original proponent, President Abraham Lincoln, was implemented during the Civil War. The Act was a response to war profiteering by federal contractors who attempted to defraud the government by selling inadequate firearms and horses.
  2. The Act has a “qui tam” provision. Qui Tam is Latin for “in the name of the king.” This part of the statute allows a private person, usually referred to as a relator, to file a suit on behalf of the United States against those who have filed false or fraudulent claims or caused such claims to be filed. This part of the Act provides for incentives for the relator, so that he or she can receive part of the proceeds of a victory on behalf of the government.
  3. From 1986 to 2013, the False Claims Act has allowed the federal government to recover over $40 billion. Nearly half of all these recoveries were a result of False Claims Act lawsuits brought by whistleblowers or relators. Whistleblowers have been paid upwards of $2 billion in statutory rewards for filing False Claims Act cases.
  4. Most of the recoveries under the Act have been a result of healthcare fraud cases. Healthcare fraud cases represent the largest industry for False Claims Act cases. For example, in 2009, healthcare fraud cases accounted for about $1.6 billion in recoveries under the Act, more than two-thirds of the $2.4 billion collected under the Act that year.
  5. There have also been recoveries for areas outside of healthcare fraud, including fraud and abuse in government contracts for defense, energy, construction, housing, natural disaster recovery, Iraq War reconstruction, and other forms of government procurement.
  6. The Act is a first-in-time, first-in-right statute. As stated in previous posts, the Act bar subsequent cases that are based on the same facts underlying a pre-existing action. This first to file rule was intended to encourage the prompt reporting of fraud.
  7. False Claims Act cases cannot be based solely on publicly disclosed information. The Act is designed to encourage individuals to report fraud on the government. Therefore, the Act prohibits cases in which the relator seeks to rely only on information that is substantially the same as allegations in the public domain, unless the relator is an “original source” of the information. An “original source” is defined as someone who has information independent of and materially adds to the publicly disclosed information.
  8. False Claims Act cases are filed under seal and can remain so for many years. These cases are filed in federal court under seal and are not initially served on the defendant. The purpose of filing the case under seal is to give the government an opportunity to investigate the allegations without the defendant’s knowledge. While the initial statutory period of time for the case to be under seal is 60 days, the government is allowed to ask the court to extend this period and often does so, especially in complex False Claims Act cases.
  9. False Claims Act cases cannot be brought against states, but may be brought against local governments and municipalities. In 2000, the Supreme Court ruled that a state government or agency cannot be sued for fraud in administering federally-funded programs under the Act. However, in 2003, the Supreme Court ruled that local governments and municipalities are not so exempt under the Act.
  10. Relators who were involved in the fraud may have their reward substantially reduced or totally eliminated. Under the Act, the court is authorized to reduce the reward of a relator who planned and initiated the wrongdoing.

To learn more about the False Claims Act and filing a whistleblower case, please contact Waters & Kraus at 800.226.9880. This article was contributed by Anne Izzo, one of the firm’s whistleblower attorneys. Anne represents whistleblowers who have uncovered fraud against the government in the pharmaceutical, Medicare/Medicaid, and government contracting industries.

    Monday, September 14, 2015

    Multi-Relator Disputes

    September 17, 2015 — As summarized in a previous post, whistleblowers (also known as relators) interested in filing a qui tam case must act quickly, because by statute only the whistleblower who is “first to file” her complaint is entitled to pursue the action with or on behalf of the government. Where, however, a whistleblower is able to establish that her allegations are materially different from those in an earlier-filed complaint, or that her complaint would allow the government to obtain a separate and distinct recovery, she may avoid the first-to-file bar.

    Forgoing a First-to-File Fight

    In addition to the statutory basis for avoiding the first-to-file bar, whistleblowers may also pursue more practical solutions. In cases where there are multiple active complaints against the same defendant, and where the allegations are similar or overlap, the whistleblowers and their counsel may pursue an agreement to proceed jointly and cooperatively. In exchange for forgoing a first-to-file fight among each other, the whistleblowers agree to litigate (or assist the government in litigating) against the defendant together. As a result, the whistleblowers avoid potentially costly and protracted litigation against each other or the defendant while also combining forces, which may result in a larger recovery for the government.  

    Agreement May Not Always Be Beneficial

    Importantly, not all first-to-file conflicts are or should be resolved by agreement among the whistleblowers. Where, for example, the later-filed complaint does not add to or expand the first-filed allegations, an agreement between the whistleblowers may not be beneficial to the first-in-time whistleblower. Alternatively, where a later-filed complaint does, in fact, expand the case and allow the government or whistleblower to pursue separate or additional claims, the later-in-time whistleblower may want to take her chances in court, arguing that her case is not barred and she is entitled to pursue it.

    As with many other aspects of False Claims Act litigation, these first-to-file issues are complex, and require the expertise of experienced and specialized FCA counsel who are equipped to both avoid a first-to-file issue in the first place, or to reach a fair resolution in the event that a first-to-file issue emerges.

    Contact Waters & Kraus to learn more about the first -to-file statute or to file a False Claims Act lawsuit. This article was contributed by Caitlyn Silhan, one of the whistleblower attorneys in the firm's Dallas office.

    Wednesday, September 9, 2015

    Private Insurance Fraud and Qui Tam Cases

    September 10, 2015 — California is one of two states that has a unique statute that permits qui tam actions in the context of private insurance claims. Generally, qui tam cases involve claims paid for by the government. Any claims paid for by private insurance companies under the False Claims Act are not actionable. Within the False Claims Act context, the idea is that the federal or state government healthcare programs have paid for a service or product that is in violation of the Act. As such, generally, even though defendant’s services or products are paid for by both government healthcare programs and private insurance companies, generally the defendant is only liable for payments by the government under the False Claims Act.

    On the other hand, the California’s Insurance Frauds Prevention Act prohibits individuals or companies from engaging in conduct that will increase the private insurance claims paid for by private insurers in the State of California. It is modeled after the federal False Claims Act and the federal Anti-Kickback Statute.

    To the benefit of the whistleblower, the Act permits relators to obtain between 30-50% of the share of the recovery that the State of California obtains through settlement or judgment. Although this large percentage seems advantageous, there is a catch. The 30-50% is determined after costs and statutory attorney’s fees have been deducted from the recovery. Depending on whether the case is settled early on or litigated, the costs and statutory attorney’s fees in the case may be substantial. In which case, the portion of the recovery owed to the relator would be lessened accordingly.

    At Waters & Kraus, LLP, our attorneys are well versed in the application of the California Insurance Frauds Act. If you are aware of a company engaging in unlawful conduct to purposefully increase the private insurance claims paid for in the State of California, there is a remedy recognized by California Statute. Please contact us.

    This article was contributed by Louisa Kirakosian, an attorney at Waters & Kraus, in the firm’s Los Angeles office. She is one of the attorneys currently working on California Insurance Frauds Act cases at the firm.