Qui tam litigation relies upon a public-private partnership for its success. The whistleblower and his or her lawyers must have a strong working relationship in order to prevail. Given the unique relationship of the three parties to a qui tam lawsuit—the whistleblower, the government, and the defendant—cases filed under the False Claims Acts (FCAs) include unique procedural elements.
Whistleblowers generally must bring an action under the False Claims Acts within the time prescribed in the FCAs: generally, either within six years of the date the violation was committed; or within three years of the time the responsible government official knew, or should reasonably have known, of the violation; and in any event, not later than ten years from the date of violation. Some state and local False Claims Acts have different statutes of limitations or no statute of limitations.
A federal qui tam action may be brought in any federal district court where “any one defendant can be found, resides, transacts business” or where the violation occurred. The venue for state and local False Claims Act cases varies. Unlike most other types of complaints, a qui tam complaint, whether state or federal, is to be filed “under seal” so that neither the public, nor the defendant, is alerted to the existence of the lawsuit, and the whistleblower is not permitted to “violate the seal” by telling anyone about the suit. The whistleblower must serve the government with a written disclosure of all information in his or her possession concerning the wrongful acts, and provide the government a copy of the legal complaint filed in court. This is whistleblower’s first chance to make a good impression on the government lawyers assigned to his or her case, and to build a relationship of trust, and it is critical that the disclosure statement and complaint be thorough, well-organized, and persuasive.
The action then shifts to the government. The federal government has 60 days to investigate the whistleblower’s allegations and determine whether it wants to join in the suit; the investigative deadlines for states and local governments vary. The government can – and generally does – extend this investigatory period by requesting more time from the court, which is generally granted for one to two years, and often longer. During its investigation, the federal, state and/or local government attorneys generally interview the whistleblower and work with the whistleblower’s lawyers, and may work with several other parties, including other law enforcement agencies, the governmental agency at which the fraud is directed, and often other states’ attorneys general. The U.S., state or local government lawyers may also require the defendant and others to give testimony, answer written questions and produce documents to be reviewed as part of the investigation, all while the case remains under seal and the defendant does not know it has been sued or the basis of the investigation. When a criminal investigation is also ongoing, the government may employ search warrants and other criminal investigation devices. The whistleblower’s complaint generally remains under seal during the entire period of the government’s investigation, but sometimes the government asks the court to partially unseal the case to allow the defendant to read the complaint and provide its explanation for the whistleblower’s allegations.
If more than one whistleblower sues the same defendant based upon the same fraudulent scheme, the government may ask the court to partially unseal each of the complaints to allow the whistleblowers to learn of one another’s lawsuits, at which point the whistleblowers sometimes work out an agreement to work together if their cases are overlapping. Generally, if there is more than one case filed against a defendant based upon the same fraud, alleging substantially similar facts and elements of the fraudulent schemes, the first case to be filed bars any subsequent cases, and subsequent cases will be dismissed, so that only the first relator to file can recover. The question of whether the facts and elements of the fraudulent schemes are substantially similar is not always easy to determine. As a result, if a potential whistleblower anticipates that someone else may also sue the defendant for the same fraudulent scheme, ideally he or she should either collaborate with the other potential whistleblower and/or file a complaint as soon as possible. Whistleblowers often have to balance the need for a thorough and well-prepared disclosure statement and complaint with the need to be the first to file.
By the end of the authorized review period during which the case is under seal, the government must decide whether to intervene. If the government elects not to join in the suit, the whistleblower may still proceed under the federal and most state False Claims Acts. At that point, the case is generally unsealed and served on the defendant. Even when the government initially declines to intervene, it may still monitor progress of the suit and ultimately change its decision and petition to intervene in the case at a later time.
If the government chooses to intervene, it assumes primary responsibility for prosecuting the action. After the whistleblower’s complaint is unsealed and served on the defendant, still more years of discovery and litigation may follow before the case is resolved. Accordingly, having experienced litigation counsel is critical. As a practical matter, in cases in which the government decides to intervene, many, but not all, defendants decide to settle the claim fairly quickly. Because of the high stakes for defendants, many corporations settle strong cases to save the cost of litigation and escape an admission of fault or a jury finding of wrongdoing.