The False Claims Act A Primer on healthcare and related fraud claims by Jeffrey J. Downey, Esq. The Law Office of Jeffrey J. Downey, P.C.

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1 The False Claims Act A Primer on healthcare and related fraud claims by Jeffrey J. Downey, Esq. The Law Office of Jeffrey J. Downey, P.C I Street, N.W., Suite 600 Washington, DC Phone: jeffdowney@dmggroup.com Web: whistleblowerlegalinfo.com I. The Growing Scope and Application of a False Claims Act The last five years has seen a significant expansion in the prosecution of False Claims Act (FCA) cases, especially in the health care field. In 2012, the federal government prosecuted more cases than ever before with over $9 billion in civil fines and criminal penalties associated with False Claims Act cases. Any legal practitioner involved in healthcare would be well served to be familiar with the types of claims that can be brought under the FCA. While the intervention rate for the government prosecuting a FCA case is low (typically under 20%), when the government does intervene the vast majority of those cases are settled on terms that are favorable to the whistleblower. Careful screening of these cases is essential before a complaint is filed in federal court. Where the government declines an intervention, most cases die in the courthouse. Practitioners in this area can expect that the federal government will continue its trend in increasing its FCA prosecutions. This reality is based on several important considerations: 1. The Obama administration has been very aggressive in prosecuting False Claims Act cases was a record year for False Claims Act prosecutions and the administration has created a special task force to focus on healthcare fraud. 2. The Affordable Care Act will result in a significant increase in the number of people seeking health care and paying for such health care through government insurance programs. As the government seeks to clamp down on health care costs under the Medicare program, health care providers frequently employ creative billing methods that violate federal regulations. This, in combination with the baby boomer generation that will be seeking care at a historically high level, will result in a significant increase in health care expenditures by the government. 3. The computerization of health care records and electronic billing information allows the federal government to collect large amounts of data that can form the basis for complex damage models used under the False Claims Act. 4. Services provided by SNFs, especially those billed to Medicare, provide excellent opportunities for health care providers to defraud the Medicare system. A GAO report in 2009 identified over a billion dollars in fraudulent billing activities involving SNFs for that year alone. See, 1

2 II. How the False Claims Act Works The roots of the False Claims Act go all the way back to the Civil War, when Abraham Lincoln signed it into law to protect the government against fraudulent suppliers of war equipment. Under the Act (31 U.S.C ) a Relator (the Plaintiff pursuing the claim) files a claim under seal to be investigated by the government. Prior to filing the complaint, the Relator must first file a preliminary disclosure to inform the Government of the specifics regarding the claim and potential damages. Under Section 3729(a), the most common basis for liability and damages include the following: A. Where a Defendant knowingly presents or causes to be presented a false or fraudulent claim for payment or approval (Section 3729(a)(1)(A)) or knowingly makes or causes to be made a false record or statement material to the false or fraudulent claim (Section 3729(a)(1)(B)). Amendments broaden liability by removing any requirement that a claim be presented to an officer or employee of the federal government. Now liability results when a claim is presented to the federal government or to third parties. Section 3729(b)(2)A & B. B. No proof of specific intent is required to prove the case. The government need only show that the Defendant either acted in deliberate ignorance or falsity of the information (Section 3729(b)(1)(A)(ii)) or that the Defendant acted in reckless disregard of the truth or falsity of the information (Section 3729(b)(1)(A)(iii)). C. False Certifications. A Relator can recover damages where the Defendant makes false certifications or representations that form the basis for a government payment. Liability will result where a claim expressly and falsely states that it s submission for payment complies with a particular statute, regulation or contractual term that is a prerequisite for payment. See, Chesbrough v. VPA, 655 F.3d 461, 468 (6 th Cir. 2011). D. Conspiracy to commit a violation of the FCS can give rise to liability. Section 3729(a)(1)(c). E. Damages. A person who violates the False Claims Act is liable to the government for (1) three times the amount of damages which the government sustains because of the act; and (2) mandatory civil penalties ranging between $5,500 to $11,000 per false claim. F. Attorney s fees for successful prosecutions or settlements are recoverable as a separate element of compensation. Prejudgment interest is not recoverable under the Act because enhanced damages and penalties compensate the government for lost interest. See, United States v. Foster Wheeler Corp., 447 F.2d 100 (2d Cir. 1971). G. Statute of Limitations. The statute of limitations provisions in Sections 3731(b)(1) and (2) specify that an action must be brought within six years from the date that a violation was committed or within three years from the date when material facts to the right of action were known or reasonably should have been known by a government official charged with responsibility to act, but in no event more than ten years after the date upon which the violation was committed. Under Section 3731(c), if the government elects to intervene and proceed with 2

3 an action under Section 3730(b), the government may file its own complaint or amend the complaint to allege additional claims. The statute of limitations for any amended government pleading will relate back to the filing date of the original complaint to the extent that the government s amended complaint arises out of the conduct, transaction or occurrences set forth or attempted to be set forth in the original complaint. H. Venue is proper in any jurisdiction where the Defendant is found, resides, does business or where acts prescribed by Section 3729 occurred. Section 3732(a). I. The burden of proof in all False Claims Act cases is preponderance of the evidence. Section 3731(d). J. Virginia Fraud Against Taxpayers Act, Va. Code et seq. Most states, including Virginia, have state law provisions prohibiting fraud that is modeled on the federal law. A Relator must serve the Virginia Attorney General with a disclosure of substantially all material or evidence in possession of the Relator before filing a complaint. Where the Commonwealth intervenes and proceeds with the case, the Relator shall receive at least 15% but not more than 25% of the proceeds. Typically, state law claims will involve fraudulent Medicaid dollars, as opposed to Medicare. III. The Intervention Decision Relator s counsel should focus their efforts on convincing the government to intervene in a case, as this decision will likely determine the fate of your case. Pre-suit investigation and development of supporting witnesses and documents is essential. Counsel should also explore potential alternative venues, as U.S. Attorney offices can have differing resources and interests in taking on certain cases. Generally, U.S. Attorneys gravitate towards cases of clear cut fraud involving large chains or significant revenues. However compelling criminal fraud (like billing for services not provided) or cases involving significant neglect/abuse can sometimes motivate the government to intervene in matters with a low dollar value. An initial complaint is filed under seal and served upon the U.S. Attorney in the district where the case is filed and upon the U.S. Attorney General. The government has sixty days to intervene and proceed with the action or notify the court that it is declining to intervene, Section 3730(b)(4)). However, the government may seek an extension of time in which a complaint remains under seal, which can be supported by affidavits or other submissions filed in camera. Section 3730(b)(3). In practice, the government routinely seeks extensions to evaluate whether they are going to intervene in a case. In larger cases it is not unusual to have the government keep a file under seal for years before they make a formal intervention decision. In some cases they may reach a settlement during the period that the case is under seal. Where the government intervenes, the Relator still participates as a party. He can issue discovery. The government retains primary responsibility for prosecuting the action. The government may intervene on all or part the claims asserted by the realtor. The government may also amend the complaint to include additional fraud allegations. Where the government declines to intervene, the Relator has the right to proceed with the case. Section 3730(b)(4)(B). Prosecuting FCA cases that have been declined by the government 3

4 represent an uphill battle, as many judges tend to treat the cases less favorably than when the government intervenes. Even if the government chooses not to intervene, they can later change their decision, or alternatively, they can file amicus and other legal briefs on any issues that may arise during the case. The government will review any proposed settlement between a Relator and Defendant to determine whether the settlement is fair, reasonable and equitable. The government will typically advise the court as to whether it consents to the settlement. Even where the government chooses not to intervene, it can still pursue alternative remedies, like administrative or criminal proceedings. Cases with potential value of less than $1 million are usually handled by the local U.S. Attorney s office where the complaint is filed. Actions that seek damages in excess of $1 million may be monitored by the Department of Justice, who may also coordinate the prosecution of certain FCA cases. IV. Defenses or Jurisdictional Bars to Prosecution A. The Public Disclosure and Original Source Provisions The Public Disclosure Rule bars the prosecution of any FCA case where the filing of a complaint is based upon publicly disclosed information in a criminal, civil, administrative, congressional or other hearing. Section 3730(e)(4)(A). Publicly disclosed information can include information gleaned from litigation files in the clerk s office. United States ex rel Kreindler and Kreindler, 985 F.2d 1148, 1158 (2 nd Cir. 1993). The public disclosure must involve the critical elements of information exposing the fraud. Glaswer v. Wound Care Consultants, Inc., 570 F.3d 907 (7 th Cir. 2009). There is an exception to the Public Disclosure Rule where an individual is the original source of the information that forms the basis of the complaint. An original source is someone with direct and independent knowledge of the information upon which the complaint allegations are based and who voluntarily provided the information to the government prior to filing suit. Kreindler, 985 F.2d at Employees of the company that is engaging in fraud can often qualify as an original source. B. Previously Filed Complaint and First to File Rule No FCA case can be based upon allegations that are already pending in a civil suit or administrative proceeding to which the government is a party. Section 3730(e)(3). The so called First to File Rule has serious implications for a Relator who files his claim after another Relator has already filed a complaint involving the same defendant. The second Relator needs to closely scrutinize the first complaint to determine if it meets the (9)(b) fraud with particularity requirements. Similarly, if there are additional independent grounds of fraud that are not stated in the original complaint, or additional defendants, the second Relator has a chance at participating in the recovery should the government recover funds under that additional theory or separate defendant. Sometimes, counsel in cases involving multiple Relators may work out a deal in which the First to File agrees to give subsequent Relators a smaller piece of the action, typically to avoid a battle at the end of the case regarding the division of the settlement proceeds. 4

5 V. Monetary Awards & Corporate Integrity Agreements If the government intervenes and obtains a recovery, the Relator receives between 15% and 25% of the proceeds of the action. This amount is paid from the damages received by the government. Section 3730(d)(1). The Relator is also entitled to the payment of attorney s fees and costs. (Id). This attorney fee award is not paid from the proceeds received by the government. Counsel should treat every False Claims Act case as a hourly billable case, creating detailed billing records from the onset. Where the government declines to intervene and the case proceeds to a successful conclusion, the Relator shall receive an amount the court decides is reasonable, but not less than 25% nor more than 30% of the proceeds plus costs and attorney s fees. Section 3730(d)(2). As a practical matter, the U.S. Attorney will make recommendations to the government as to what percentage the Relator should obtain in settlement. The U.S. Attorney s office typically recommends Relator percentages between 16-18%. If the Relator is unsatisfied with the recommended allocations of the U.S. Attorney, they can petition the court for a different award. Healthcare fraud investigations by the Office of Inspector General (OIG) or the Department of Justice often result in the OIG entering into a Corporate Integrity Agreement (CIA) with the subject of the investigation. These agreements help assure that the fraudulent actor will not be able to continue its illegal practices. The fraudulent actor must agree to various conditions under the agreement in exchange for not being excluded from participating in federal programs. According to the OIG, the typical CIA lasts approximately 5 years and may include the following conditions[1]: hiring of a compliance officer/appoint a compliance committee; development of written standards and policies to prevent fraudulent practices; implementing a comprehensive employee training program; retaining an independent review organization to conduct annual reviews; establishing a confidential disclosure program; reporting overpayments, reportable events, and ongoing investigations/legal proceedings; providing an implementation report and annual reports to OIG on the status of the entity s compliance activities in preventing future fraud For a sample corporate integrity agreement visit this link : agreements/glaxosmithkline_llc_ pdf) VI. Types of Case Prosecutions under the False Claims Act Although this article will focus on fraud in the health care arena, it should be remembered that the False Claims Act can apply to any fraud that results in any illegal or improper government payment. Fraud against the government can come in many forms: pharmaceutical marketing fraud and kickbacks, Medicaid Best Price violations, government contract fraud, Foreign Corrupt Practices Act fraud, and/or SEC violations. Even failure to pay taxes can give 5

6 rise to a FCA claim, although that violation is prosecuted under a separate provision of the internal revenue code. IRC 7623, et seq. Here are some common examples of healthcare fraud cases prosecuted by the Government: Billing for services or supplies that were never actually provided Altering claim forms to obtain a higher reimbursement amount Applying for duplicate reimbursement in order to get paid twice Completing Certificates of Medical Necessity (CMNs) for patients not personally or professionally known by the provider Unbundling or exploding charges Soliciting, offering, or receiving a kickback, bribe, or rebate False representation with respect to the nature of the services rendered or charges for such services, identity of the person receiving or rendering the services, dates of the services, etc. Filing claims for services that are non-covered but billed as if they were covered services Up-coding or billing at an inflated rate Claims involving collusion between a provider and a beneficiary, resulting in higher cost or charges to the Medicare program Use of another person s Medicare card in obtaining medical care A. Fraudulent Physical, Occupational or Speech Therapy Skilled Physical, Occupational and related specialized therapies can be particularly vulnerable to Medicare fraud given the government s higher reimbursement rates for skilled therapy. However, in the nursing home or rehab context, Medicare should not be paying for various services that are considered non-skilled because they can be performed by nurses or nurse aids. Assistance with walking, toileting, range of motion exercises and eating can sometimes be improperly billed as a skilled care service by having therapists performing the job of a nurse or nurse aides. Federal regulations contain various restrictions on who can receive skilled therapy, whether that therapy takes the form of speech, physical, occupational or speech therapy. Sometimes patients may also be treated in group settings or by non-licensed professionals, which depending on the circumstances, can constitute a violation of Medicare regulations. Understanding Medicare regulations is an important step in evaluating whether a potential claim constitutes Medicare fraud. 1. Life Care Centers of America (SNFs) In November 2012, the United States Department of Justice intervened in a Qui Tam action against Life Care Centers of America, a large chain of skilled nursing facilities. The case was originally filed in 2008 by Glenda Martin, a registered nurse and former staff development coordinator for Life Care. The government alleged a corporate-wide effort by management to defraud Medicare though overbilling for skilled therapy. Life Care allegedly used a combination of coercion and incentives to pressure therapists to provide either unnecessary or excessive therapy and delay the discharge of patients to justify ever-increasing charges to Medicare. The 6

7 SNFs also up-coded RUG levels, which are billing categories used to bill Medicare for skilled therapy. 2. Fairfax Nursing Center In February 2013 the Justice Department reported that Fairfax Nursing Center will pay $700,000 to resolve False Claims Act Allegations involving alleged unnecessary skilled therapy services. Relators alleged that Defendant knowingly submitted false claims to Medicare for nonreimbursable rehabilitation therapy services. The settlement resolves claims that FNC provided excessive, medically unnecessary, or otherwise non-reimbursable physical, occupational, and speech therapy services to 37 Medicare beneficiaries serviced by FNC between January 2007 and December The United States alleged that the rehabilitation therapy services provided by FNC to these beneficiaries were not reasonable and necessary for the treatment of their condition. The therapy services were often excessive, duplicative, performed without clear goals or direction, and, in some instances, performed primarily to capture higher reimbursement rates. B. False Claims based on substandard care Basing a false claims act case upon negligent care or neglect can be an uphill battle as these are not the type of clear-cut fraud matters that are favored by the government. However, as nursing homes must certify compliance with federal regulations that set various standards for nursing facilities, such claims can be based on false certifications to Medicare or upon worthless services. In US and State of Illinois v. Momence Meadows Nursing Center, et al, Law No (D. Ill 2013) summary judgment was denied where Relators alleged continued neglect and lack of adequate staffing leading to bed sores, infections, medication errors and other adverse patient outcomes. The government declined to intervene in the case but the Relators moved forward with the prosecution. The Court analyzed the claim under a theory of liability based on worthless services and found that the long pattern of alleged patient neglect that would be substantiated by former staff of the nursing facility created a factual dispute for the jury to resolve. The court also held that there was no public disclosure barring prosecution based on publically available government surveys evidencing poor care. C. Upcoding And Excessive Charges Improper up-coding represents a common type of fraud seen in the health care industry and can take several forms. Most commonly, the practitioner will use a diagnostic code that will make it appear that the patient has a more complicated medical diagnosis than he actually does. Obtaining Explanation of Benefit forms from clients or potential witnesses can be an important first step in investigating such cases as these documents will usually include the diagnostic code used to bill Medicare and identify the payee. The Department of Justice entered into a $22.5 million settlement with the University of California for alleged claims by five teaching hospitals that involved reimbursement under Medicare and other federal health insurance programs. The complaint alleged that services were performed or supervised by faculty physicians rather than residents without supervision and for 7

8 up-coding, which involved the improper assignment of diagnostic codes for purposes of increasing reimbursement amounts. The Department of Justice reported a 48 million dollar settlement with Ensign Group. The whistleblower lawsuits, filed by Ensign skilled therapists, accused the company and its operating subsidiaries of misrepresenting bills to Medicare from 1999 to 2011 for services that were either never performed or unnecessary. The settlement is one of the largest of its kind in United States history, involving a company that regularly bilked Medicare by submitting inflated bills, stated United States Attorney André Birotte Jr. Two former Ensign Group therapists had accused the company in whistle-blower lawsuits of performing unnecessary rehabilitation therapy at six skilled-nursing facilities in California. "Ensign provided therapy to patients whose conditions and diagnoses did not warrant it, solely to increase its reimbursement from Medicare," the Justice Department said in a news release. "Skilled nursing facilities that place their own financial interests above the needs of their patients will be held accountable," said Stuart F. Delery, assistant attorney general for the Justice Department s civil division. "We will continue to advocate for the appropriate use of Medicare funds and the proper care of our senior citizens." D. Hospice Fraud Hospice fraud has been on the radar of the Justice Department for the past few years. Hospice fraud can take a variety of forms. Hospice agencies may submit billing for patients who simply do not qualify for hospice care. Hospice relationships, especially those with nursing homes or assisted living facilities, can also violate the anti-kickback provisions of the Social Security Act. 1 Hospice agencies may provide duplicative nursing services in a skilled nursing facility (SNF) or up-code their billing levels to capture a higher reimbursement rate. Alternatively, the nursing home may reduce services to the hospice patient, but maintain their standard billing rate. Finally, Hospice agencies may bill for supplies (ie, oxygen therapy) or medications that are not medically necessary. Hospice of Arizona L.C., along with a related company agreed to a $12 million settlement to settle claims that they engaged in Medicare fraud by submitting inflated bills to Medicare, and in some cases sought collection of billings for hospice services which were ineligible for reimbursement. In order to be eligible for reimbursement for hospice care services, the Centers for Medicare and Medicaid Services (CMS) specifies that patients must have a life expectancy of six months or less under normal conditions. Hospice facilities administer care with an aim toward relieving the suffering of patients with terminal illnesses rather than treating the underlying condition. From September 2002 to December of 2010, the government alleges, Hospice of Arizona submitted claims to Medicare for reimbursement at rates for which the provider was ineligible or for patients who did not qualify for end of life care. Providers participating in federal health insurance programs must certify compliance with the terms and conditions of participation, and submission of ineligible claims for reimbursement gives rise to liability under the False Claims Act. Specifically, the United States claimed that Hospice of Arizona pressured 1 Social Security Act Section 1128B(b); 42 U.S.C. 132(a) 7b(b). 8

9 staff to locate Medicare-eligible patients, implemented norms which discouraged the discharge of patients for whom hospice care was no longer appropriate, and failed to put in place sufficient regulatory compliance procedures. As part of the settlement, Hospice of Arizona will enter into a corporate integrity agreement with the Inspector General of Health and Human Services, a remedy often employed in Medicare fraud and abuse cases to allow for continued monitoring of the provider s conduct and the implementation of proper compliance protocol. E. Pharmaceutical Fraud The Justice Department under the Obama Administration has reached some historically large settlements against drug manufacturers, mostly involving the promotion of drugs for offlabel purposes or obtaining FDA approval based upon false or misleading government disclosures. Off label FCA cases typically involve allegations that the judgment of a physician prescribing the medications was altered by the Defendants fraud involving improper payments, inducements or misinformation. See, United States ex rel. Carpenter v. Abbott Labs, 723 F.Supp.2d 395, 398 (D. Mass. 2010), involving kickbacks, misrepresenting studies and FDA approval and presenting doctors with studies supporting off-label usage. 1. Pfizer Kickbacks And Off Label Marketing Result In $2.3 Billion Qui Tam Settlements. On September 2, 2009, the Department of Justice announced the pharmaceutical giant Pfizer had agreed to pay a total of $2.3 billion under a recent Qui Tam settlement of which $1.3 billion was a criminal fine for kickbacks and off label marketing. One billion dollars was paid under the False Claims Act for violations involving the drugs Citromax, Depro-provera, Geodon, Lipitor, Lyrica, Norvasc, Pextra, Viagra, Zyrtec, and Zyvox. The settlement agreement required reimbursement to both the federal Medicare and state Medicaid programs. There were multiple Relators who participated in the bringing of this lawsuit. The top Relator, John Kopchinski, recovered a Relator share of $51,599,000. The actual settlement can be reviewed at: 2. GlaxoSmithKlein Off label marketing In July, 2012 GlaxoSmithKlein agreed to pay $3 billion in fines levied by the Justice Department after failing to report safety data on some of the company s most popular drugs. $1 billion of the settlement proceeds will cover criminal wrongdoing and $2 billion will cover civil liabilities in one of the largest fraud settlements in U.S. history. Essential allegations in the case included the Defendant s marketing of off label drugs for treatment of conditions which had not been approved by the FDA. Paxil, which is approved to treat depression and anxiety disorders in adults, was improperly marketed to children and adolescents. An additional count involved the failure to report safety data about the drug Avandia, a diabetes drug, to the Food and Drug Administration. The agreement with the Justice Department included a five year compliance agreement in which the company executives could forfeit annual bonuses if they or their subordinates engage in significant misconduct and sales agents are now being paid based on quality of service rather than sales targets. 9

10 F. Kickbacks Healthcare providers may be implicated in kickbacks that violate federal Anti-kickback statutes. 42 U.S.C. 1320a-7b. This statute addresses referrals of residents for services which are paid for by any federal health care program. The statute prohibits the giving, accepting or soliciting of money (or items of value) from another party for the purpose of inducing or rewarding another party for referrals of services paid for by a federal program. Nursing homes may make or receive referrals from a number of companies or health care providers including Hospice agencies, durable medical equipment suppliers, hospitals, physicians, podiatrists, diagnostic or X-ray companies and physical or occupational therapy providers. There are a number of transactions that get closely scrutinized by OIG as potential kickbacks. They include, but are not limited to the following: Providing free goods or services that are actually disguised payments; The giving of free computer or other electronic equipment; Placing free staff in a facility who then perform functions not related solely to the services for which the contractor was hired. A common example is a lab placing a phlebotomist in the nursing home who performs other nursing home functions unrelated to drawing blood; Pharmacy consulting services or medication management offered free of charge in exchange for using the pharmacy. Nursing homes are already required to provide these services as part of their daily rate; Free infection control services or chart reviews provided by labs or other suppliers; Use of skilled therapy personnel for non-skilled services; and Hospice nurse providing services for non-hospice patients. G. Government Contract Fraud Network Appliance, Inc. GSA Supply Procurement Fraud In March 2009 the Department of Justice announced a $128 million fraud settlement against McLean-based company Network Appliance, Inc. This fraud settlement was associated with the General Service Administration s federal supply service procurement program. Under long-standing GSA guidelines, companies that contract with the GSA are obligated to provide the Government with favorable pricing for the items they sell. According to allegations in the lawsuit, Network Appliance, Inc. did not give the Government accurate and complete data about the discounts offered to commercial customers nor did it afford the Government an opportunity to achieve its most favored customer status in violation of the Best Price Rule. 10

11 H. Financial Fraud Sarbanes-Oxley Act (Pub.L , 18 U.S.C. 1514A) Originally passed in 2002 this act sets enhanced standards for all U.S. public companies, including the requirement that top level management certify to the accuracy of financial filings. The act covers all employees of companies that sell stock on public exchanges. SEC v. Jenkins, No. CV (D. R. I. 2011) The act also allows the government to claw back or recoup CEO bonuses and other compensation that occurs during a period that the company is committing fraud. On On November 15, 2011, the SEC announced a settlement in which it clawed back incentive based compensation from a former CEO who purportedly was not involved directly in any wrongdoing. Although civil and criminal charges were brought against four other CSK Auto executives, the SEC did not charge Jenkins with any wrongdoing in connection with the accounting fraud that occurred at CSK. However, relying on 304 of Sarbanes-Oxley, the SEC filed a complaint seeking to claw back $4 million of incentive compensation that Jenkins received during the period of the fraud. Jenkins s Motion to Dismiss the complaint was denied in June VII. Final Practice Points for Consideration A. Criminal Exposure Medicare fraud is typically a crime that can be prosecuted by the state or federal government. Potential Relators need to be advised accordingly. While the U.S. Attorney has discretion to pursue criminal charges directly against your client, it rarely happens. In the vast majority of cases, coming forward and reporting the illegal conduct helps protect the Relator from criminal prosecution or loss of license. However, as the U.S. Attorney also makes recommendations as to the share the Relator gets at the end of the case, the extent to which he participated in criminal conduct can be used as a justification for a lower share. Prior to filing a complaint an attorney should consider calling the U.S. Attorney s office where the complaint will be filed to feel them out on this issue. While you would be well served by discussing transactional or other types of immunity, do not expect the U.S. Attorney to agree to anything in advance. Even if they accept the case for prosecution, it is unlikely that they will ever offer formal immunity. B. Potential Conflicts of Interest Among Relators Some of the stronger Qui Tam cases involve multiple Relators in the same filed action. Having multiple Relators is especially useful in establishing a corporate scheme to defraud involving a chain of multiple facilities. If you represent multiple Relators in one case there are special conflict issues to consider. You should have your Relators agree in advance to a division of the settlement proceeds and have them execute a joint venture or common interest agreement, separate from your fee agreement. You need to spell out clearly the potential conflicts and waive any conflicts that may arise from jointly sharing confidential information. If your Relators end up disagreeing at the 11

12 end of the case regarding the division of the settlement proceeds, you could have some serious conflict issues without a proper common interest agreement in place. C. Disclosure of Relator s Names and Blacklisting Depending on the industry, some Relators may be concerned about having their name come out as a whistleblower. Whether or not a Relator s name will be disclosed can be a complicated issue and there is no guaranty that a Relator s name will not be disclosed even where a case is rejected by the government and dismissed. Typically, Relators names appear on the internet after the Department of Justice announces a settlement. Once the case is posted, it is picked up by various law firms that are trying to keep their websites well optimized and will likely rise to the top of a Google search. In cases where the government does not intervene, it is very unlikely that your Relator s name will get posted on the internet, but the Defendant, if it is sophisticated, will likely pull the originally filed complaint and may circulate the name of the Relator. I have had well credentialed clients (whose names have been disclosed publically) who strongly believe that they are not getting new jobs because they have been blacklisted. While it is illegal to discriminate against a job applicant on the basis that he had previously engaged in a protective activity, proving such a claim is nearly impossible. Prior to filing any Qui Tam claim the Relator needs to be informed of this possibility and advised as to avenues that may be available to avoid public disclosure. One possibility is to file as a John Doe. Other options include creating a joint venture between the Relators or using a partial name, like a first initial in combination with a last name, when filing a complaint. Relator s counsel should also negotiate the form or content of the Justice Department s press release which will occur at the end of any significant case. For additional information or to ask questions, contact the author directly. Jeffrey J. Downey, Esq. The Law Office of Jeffrey J. Downey, P.C I Street, N.W., Suite 600 Washington, DC DC Phone: Virginia phone: jeffdowney@dmggroup.com Web: whistleblowerlegalinfo.com 12