FCA Procedure

The qui tam provisions of the False Claims Act are a relatively unique element of the American judicial system, yet play a pivotal role in combating fraud against the government, particularly in the area of health care fraud.

The False Claims Act prescribes certain requirements for all qui tam complaints filed by a whistleblower.  All complaints must be filed under seal and served upon the government along with a disclosure of all other material facts concerning the allegations.  The complaint must also satisfy the requirements under the “first-to-file bar” and “public disclosure bar,” which are discussed more fully below.  After a period of 60 days, the government must decide whether to intervene in the case or not, though the whistleblower may still proceed with the case even when the government declines to intervene.

Although the general notion of a False Claims Act case is relatively straightforward, preparing a proper and effective case requires the assistance of a qualified and experienced False Claims Act attorney.

Filing a case

False Claims Act lawsuits must be filed in a federal district court where a violation occurred or where the defendant resides or does business.  The filing must be made under seal meaning that the lawsuit is not yet made public, indeed, during this period knowledge that the suit has been filed is even withheld from the defendant parties against whom the suit is filed.  Filing the lawsuit under seal ensures that whistleblowers are not targeted and retaliated against for bringing a False Claims Act case and enables the government to conduct a comprehensive investigation of the alleged fraud.

After filing the lawsuit under seal, the whistleblower must then submit a disclosure containing all material evidence within their possession to the Attorney General and United States Attorney Office for the appropriate district.  While the case remains under seal, the whistleblower is prohibited from discussing the lawsuit with any outside parties.

Government intervention

After the case has been filed under seal and the government has received the whistleblower’s disclosure of material evidence, the government is given 60 days to investigate the matter and decide whether to intervene or decline to intervene in the case.  Although the False Claims Act establishes this specific time frame, a provision of the statute also allows the government to request an extension of the investigatory period for a showing of “good cause.”  As a practical matter, courts often grant such requests, and cases may remain under seal awaiting a government decision for months, and in some instances, even years.

During the investigation period, the government may make use of Civil Investigative Demands (“CIDs”) to compel documents or testimony, which can be used to aid in its decision-making.  The government may also work with the whistleblower to further the investigation a in many circumstances the whistleblower continues to work at the defendant-company during the investigatory period.

Limited government resources prohibit the government from intervening in every meritorious case presented, thus even if the government chooses not to intervene, a whistleblower may still proceed with the qui tam action.  Whistleblower lawyers with a willingness to investigate and litigate instances of fraud have secured large whistleblower recoveries even in those cases where the government has decline to intervene.  Under the False Claims Act, the government may still choose to intervene in a declined case at a later date.  Regardless of whether the government chooses to intervene or not, the case is immediately served upon the defendant once a decision has been issued by the government.

First-to-file Bar

Pursuant to 31 U.S.C. 3730(b)(5), a lawsuit filed under the False Claims Act cannot be based on the same underlying facts as a previously filed False Claims Act suit.  The “first-to-file bar” does not invalidate a case merely because some facts or elements are shared, particuarly where the new action produces material facts and elements not contained in a previous filing made only on “information and belief.”

While some similar cases may be distinct enough to survive the first-to-file bar, the rule nonetheless is a strong incentive for whistleblowers to promptly report any instances of fraud to the government.

Public Disclosure Bar

Generally speaking, the False Claims Act prohibits filing of a lawsuit based on allegations or transactions which had already been publicly disclosed in a federal criminal, civil or administrative proceeding, federal report, hearing, audit or investigation or the news media.

However, the public disclosure bar contains an “original source” exception where the whistleblower has “knowledge that is independent of and materially adds to the publicly disclosed allegations,” or had disclosed the information to the government prior to the information becoming public.

Under provisions of the Affordable Care Act, the public disclosure bar has been amended to further ease the burden of bringing a suit where public information is implicated as the law now requires the consent of the government prior to a court dismissing a False Claims Act suit on the basis of the public disclosure bar.

Introduction to the False Claims Act The False Claims Act False Claims Act Procedure Achieving Successful Outcomes