Amanda S. Marshall Former U.S. Attorney (Local Counsel)
Lynette Byrd Former Assistant U.S. Attorney
Roger Bach Former Special Agent (OIG & DEA)
Joe Brown Former U.S. Attorney
Filing a Successful False Claims Act Case
A potential whistleblower (also referred to as a ‘relator’) debating whether to report fraud per the False Claims Act (FCA), should be cognizant that securing a qui tam case on file ahead of any other fellow reporters is a crucial and necessary element of acquiring any potential recovery amount. Additionally, the relator should be cognizant of the applicable statute of limitations for their given claim. The False Claims Act limits the time in which a lawsuit can be filed. Typically, lawsuits must be formally submitted within six years of the date the alleged fraudulent activity took place; under certain circumstances, this window can be extended to ten years. The statutory clauses pertaining to time limits is significantly complex, and some otherwise promising claims have been dismissed in the past due to the court’s interpretation of what time limit is applicable.
The False Claims Act states in relevant part (31 U.S.C. § 3730(b)(5)): “…no other person other than the Government may intervene or bring a related action based on the facts underlying the pending action.” This is often referred to within the legal profession as the “first-to-file” rule and operates to bar subsequent fraud allegation(s) if it is premised on the same key operative nucleus of facts of a previously filed whistleblower claim or preexisting qui tam lawsuit. Accordingly, only the whistleblower that first submits a fraud claim to the government stands to recoup a monetary incentive resulting from their claim.
Rationale Behind the “First-to-File” Rule
There are multiple justifications for the implementation of the False Claims Act’s unique first-to-file policy. Primarily, the clause operates to provide incentives to relators to timely notify the federal government to the key elements of an ongoing fraudulent scheme. By promoting would-be whistleblowers to report fraud at the earliest possible stages, the statutory language serves to protect the government’s vital interests of recouping federal funds threatened by the given fraudulent activity.
Additionally, the False Claims Act’s first-to-file characteristic has a chilling effect on excessive and repetitive litigation that could needlessly bog down the court system and encumber the government’s ability to conduct subsequent investigations and prosecute those responsible for the original fraud. Once the government has received the initial tip-off regarding a given fraud operation, enabling identical litigation would only operate to drain key governmental resources.
Put our highly experienced team on your side
Dr. Nick Oberheiden
John W. Sellers
Former Senior Trial Attorney U.S. Department of Justice
Joanne Fine DeLena
Former Assistant U.S. Attorney
Lynette S. Byrd
Former Assistant U.S. Attorney
Former U.S. Attorney
Aaron L. Wiley
Former Federal Prosecutor
Former Special Agent (OIG)
Former Supervisory Special Agent (FBI)
Former Special Agent (FBI & IRS-CI)
Kevin M. Sheridan
Former Special Agent (FBI)
Former Supervisory Special Agent (FBI)
Dennis A. Wichern
Former Special Agent-in-Charge (DEA)
Judicial Interpretation of the “First-to-File” Rule
The standing precedent across the majority of jurisdictions regarding the first-to-file rule has been to interpret the meaning of the key statutory language: “…related action based on the facts underlying the pending action” in a considerably broad sense. Thus, the key elements of the second qui tam suit don’t have to be exactly identical for the suit to be prohibited by the rule. Instead, the court will bar the latter claim if the complaint originates on either (1) comparable “types of fraud”; (2) similar “essential elements”; or (3) identical “material elements” of fraud.
There are two key questions to answer when determining whether a later-filed qui tam suit is related to an already-submitted claim: (1) Does it present allegations of a different form of wrongdoing/fraud based on alternative facts from those offered by the initial qui tam suit; and (2) Does it give rise to a potential recovery by the government that is separate and distinguishable from the initial claim? The majority of judges have weighed subsequent qui tam claims on the basis of these inquiries or a relatively similar initial case analysis.
Key Implications Resulting from the “First-to-File” Rule
The first-to-file rule impacts potential litigation in several key aspects that potential whistleblowers must understand to be successful in their claim and recover the financial reward for reporting fraudulent activity. First and foremost is that the claimant must file their qui tam suit promptly at the earliest possible stage of discovery in order to mitigate the chances of someone else reporting the same occurrence of the crime. A closely related component of qui tam litigation strategy is that, if there is another fraud occurring within the same entity, the whistleblower must attempt to distinguish their claim from any previously filed suit and draft their complaint to clearly indicate how it will ultimately result in separate recovery by the government. Doing so will prevent the secondary claim from being barred by the first-to-file clause and enable a claimant to proceed with their case.
Elements of a Successful Whistleblower/Qui Tam Claim
Whistleblower/Qui Tam litigation is a highly specialized mechanism for individuals to assist the government in preventing a multitude of fraud schemes and recover money that has been unlawfully diverted from the U.S. Treasury and its taxpayers.
The FCA incentivizes whistleblowers whose qui tam file submission enables the recovery of government funding and further provides job protection to potential whistleblowers due to the inherent professional and personal risks they undertake in filing their claim. Due to these risks, it’s vital to know whether you have a legitimate whistleblower/qui tam claim prior to taking formal legal action. If you are contemplating submitting a fraud report against the government, you need to ensure the following criteria beforehand: (1) You have personal and/or first-hand knowledge of the alleged fraud; (2) You have the requisite documentation confirming the claimed illegal activity; (3) The amount of money associated with the claim is substantial; and (4) the qui tam suit is filed within the applicable statute of limitations.
Additionally, it is key for a potential whistleblower to avoid discussing any aspect of the claim with anyone other than their attorney. Pursuant to the statutory language of the FCA, your complaint will remain under seal for a period of sixty days. This gives the government an adequate time frame to conduct a confidential investigation of your claim. The seal works both ways – meaning that, if you discuss the matter with anyone other than your attorney, the case may be dismissed and you will lose any potential recovery you might have obtained in subsequent litigation.
Following the investigatory period, the government will make a determination as to whether or not to pursue your claim. Under the FCA, the whistleblower is entitled from anywhere between a 15% to 30% share of any recovery obtained from the subsequent lawsuit.
If you believe your potential whistleblower claim qualifies under these stipulations, it is vital you hire a dedicated qui tam attorney to ensure the responsible and timely handling of your case to protect your occupational and private interests while maximizing your chances of success.
The Importance of Hiring a Competent Whistleblower/Qui Tam Attorney
At Oberheiden, P.C., our dedicated attorneys understand that confidentiality and reliable access to counsel are important elements of a healthy client/attorney arrangement. As such, we pride ourselves in being responsive to client inquiries and requests for information. Regarding confidentiality, whistleblower cases are handled on a confidential basis. This means that no one other than the court, the federal government, and your attorneys will be aware of the existence of your claim during the initial sixty-day investigatory period.
Following the submission of your qui tam claim, government officials will request to interview you and review any documents you have provided in support of your allegation. Our lawyers will accompany you during this interview to ensure your rights and interests are continually protected. During the subsequent investigation, the legal team at Oberheiden, P.C., will maintain consistent contact with the government in order to advance your case as expeditiously as possible. Commonly, the government will seek to extend the sixty day confidentiality seal to complete its research and build its case. You can rest assured that all updates will be relayed to you accurately and promptly – minimizing any undue stress and anxiety related to your claim.
Another thing to keep in mind is that qui tam lawsuits can be submitted in a number of jurisdictions across the country. However, different courts have historically interpreted key clauses of the False Claims Act in varying ways. These wide-ranging precedents could dramatically impact your claim and should therefore be taken into account when deciding where to file your lawsuit. For instance, the federal civil court that is nearest to the defendant’s corporate headquarters as opposed to the nearest facility operated by the defendant might be a crucial decision that makes the difference in winning or losing your claim. Our lawyers have years of experience and have handled hundreds of federal cases. They can assist you in deciding where to file your specific claim to maximize your chances of recovery.
Successfully navigating the complex and often confusing sphere of qui tam litigation is not something you should attempt to undertake on your own. It is imperative that you contact an experience qui tam legal team (like the one you’ll find at Oberheiden, P.C.) as soon as you detect potential fraud within an organization. Our knowledgeable attorneys can assist you in ensuring that your claim is submitted both in a timely manner and drafted accurately with all pertinent information to withstand any subsequent judicial scrutiny or challenge mounted by the defendant. Our lawyers are also well-versed in formulating customized trial strategies to differentiate your claim from any previously filed complaint to avoid your suit from being barred – thereby maximizing your potential recovery amount. If you suspect fraudulent activity and are considering filing a qui tam claim, please call Oberheiden, P.C., at 888-680-1745 or inquire online now to receive a free and confidential case analysis.
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