Litigating the Non-Intervened Case

I. SCREENING CASES Litigating the Non-Intervened Case Statistically the Government intervenes in only 21.6% of all qui tam cases filed. i Included within that percentage are cases where the Government intervenes only days before the settlement documents are filed with the court. Therefore, the actual percentage of cases where the Government is actively involved in litigating the case is lower than 21.6%. Given these statistics, prudent Relator=s counsel should work from the assumption that the Government will not intervene in their particular qui tam case. With that assumption, the practice of screening cases is of vital importance. Our firm screens cases from the perspective of not accepting employment in a qui tam case that we would not be willing to litigate to a trial on the merits. The logic being, if the facts of the case are not good enough for us to be willing to litigate the case without the Government, why should the Government want to intervene on the same set of facts? II. CONTINUE YOUR INVESTIGATION AFTER FILING THE COMPLAINT After you have accepted employment, met with the local United States Attorney, provided a Relator statement and a disclosure of all material evidence to the Government ii, and filed the Complaint under seal iii, what should you do next? After filing, the Government is given a statutory right to investigate the allegations you have filed under seal for sixty

days. iv Does that mean you should sit back and wait to hear from the Government? The answer is absolutely not. While the statute gives the Government sixty days to investigate your client=s allegations v, the statute also allows for the sixty day time period to be extended for Agood cause shown.@ vi In practice, it is not uncommon for investigations to proceed for one to two years before the Government completes its investigation and/or the seal is lifted by the court. If you sit idly by and wait on the Government to investigate, you are losing valuable time, while critical evidence is growing stale. Because of the Afirst to file@ rule vii, Relator=s counsel is often forced to file the Complaint before all of the particulars of the false claims scheme are known. In addition, the first motion filed by defense counsel is usually a motion to dismiss for failure to plead with particularity under Federal Rule of Civil Procedure 9(b). The time period while the case is under seal is an excellent opportunity to continue the Relator=s investigation, before the Defendant is aware the case has been filed. The Relator is likely to know former employees of the Defendant who have valuable information about the allegations in the Complaint. Talk to these former employees. viii Find out what information they have to substantiate your client=s allegations. Will they give you a sworn statement under oath so that you may nail down their testimony for the future? These former employees may provide leads to other 2

sources of information as well as documents to support your allegations. Keep in contact with the Government while the seal is in place. Provide the local United States Attorney and the Department of Justice line attorney with additional information and evidence you have gathered that may assist in their investigation. The False Claims Act allows the Government to issue civil investigative demands to the defendants requesting documents, answers to interrogatories and requests for oral testimony. ix Offer to have the Relator assist the Government in the drafting of civil investigative demands. While the statute prohibits the Government from sharing information received pursuant to civil investigative demands without the consent of the Defendant x, collaborating on the drafting of the demands can give both the Government and the Relator additional insight into the other=s theory of liability. Another tool for gathering information about the defendant, and in support of your allegations, is the Freedom of Information Act (AFOIA@). xi Use FOIA requests to obtain copies of the defendant=s contracts with the Government and any documents the defendant had to file with the Government to secure those contracts. The Office of Inspector General (AOIG@) and the Health Care Financiary Administration (AHCFA@) issue fraud alerts to warn providers about fraud in a particular area. OIG Special Fraud Alerts are available on the Internet at 3

http://www.dhhs.gov/progorg/oig/frdalrt/index.htlm. Fraud alerts, which warn a particular provider of a particular fraud, and restricted fraud alerts, are not available absent a FOIA request. HCFA issues unrestricted National Medicare Fraud Alerts and Restricted Medicare Fraud Alerts. Unrestricted alerts focus on a particular scheme. Restricted alerts focus on a particular provider. These documents should also be requested via FOIA. These documents can be useful in establishing the Aknowing@requirements of 31 U.S.C. '3729. III. ORGANIZE YOUR DATA A. Statements If sworn statements are taken, the use of a court reporter to obtain recorded transcripts and electronic copies is beneficial to data organization. Loading the statements into a case management database program such as SummationJ will allow counsel to code the testimony by issue or chronology. Additional statements and depositions can be loaded electronically into the same database and coded according to a list of issues developed by counsel and the Relator. This practice will allow counsel, at a later date, to access all testimony about a particular issue in a single keystroke making future deposition preparation and brief writing easier. B. Documents While a valuable source of information, documents, if gathered and produced in significant quantity, can quickly overwhelm unorganized counsel. On the other hand, competent organization and 4

categorization of documents can often be the key to victory. The first step to organizing the documents you receive is to create a detailed inventory of the contents of each box of documents. The inventory will allow counsel to quickly locate needed documents by hand. After the documents are inventoried, they should be coded into a database so that detailed information can be recorded and retrieved by the database search engine. Coding of documents is discussed further in section VII(B). IV UPON RECEIPT OF THE DECLINATION LETTER When the Government declines to intervene in your Relator=s case, the Department of Justice will send you a standard declination letter outlining your duties and responsibilities in continuing the prosecution of your client=s case. The two primary responsibilities are: (1) Serve all pleadings on the Government. Include the United States Attorney and DOJ Attorney on your certificate of service; and, (2) Advise the Government when settlement negotiations commence. The Government asserts a right to approve all settlements. There is good reason to want to keep the lines of communication with the Government friendly and open. First, the Government may always elect to intervene at a later date upon a showing of good cause. xii Keeping the lines of communication open, and the Government informed about the progress and evidence in the case, will help facilitate the possibility of future intervention. Second, an open and friendly dialogue is beneficial to your client. Open communication will provide opportunity to discuss the 5

reasons why the Government declined to intervene. This discussion may reveal holes in your evidence that you can develop during the discovery process. Finally, the Department of Justice will monitor all pleadings in your case. If an issue is raised that is important to the Department in terms of policy or qui tam legal precedent, the Government may elect to write an Amicus Curiae Brief. After you receive the declination letter and the seal is lifted, you have 120 days to serve the defendant. xiii During this time, you may choose to amend the Complaint to include additional supportive facts uncovered during your ongoing investigation. 1 Amendment at this point may increase your chances of defeating defendant=s sure to be filed motion to dismiss for failure to plead with particularity under Federal Rule of Civil Procedure 9(b). V. ASSESS YOUR RESOURCES 6

Now that you know the Government will not be participating in the prosecution of your Relator=s case, it is time to assess the resources you will need to prosecute the case on your own. The case will begin with a vigorous motion practice. The defendants will likely move to dismiss your case on multiple grounds including failure to state a claim, failure to plead with particularity, constitutionality of the qui tam provisions of the False Claims Act, and the jurisdictional bars. 15 Do you have enough lawyers to respond to all of these motions from multiple defendants? Do you need to associate additional lawyers to assist in responding to these motions? How many witness depositions do you anticipate? Do you anticipate videotaping every deposition? Where will the depositions be taken? Will extensive costs and travel be involved? How will you manage the information and testimony you gather via depositions? What is the anticipated discovery schedule for taking these depositions? Do you need more lawyers to assist with taking of depositions? What volume of documents do you anticipate receiving during the discovery process? How will you best manage and utilize this volume of documents? What are the anticipated costs of copying and reviewing all of these documents? All of the foregoing questions should be answered prior to serving the unsealed complaint. Answering these questions will assist you in deciding whether you 7

have enough manpower, money and legal resources to prosecute this case on your own, or whether you need to associate additional counsel to increase your chances of success. Association of additional counsel has the advantages of spreading the work load, financial burden and risk. New and additional counsel also bring a fresh perspective to a case you have been working with for a year or more. Their insight and perspective may also help to sharpen your focus, point out and fill in holes in the case before you get too far along to correct them. VI. PARTIES PLANNING MEETING Federal Rule of Civil Procedure 26(f) requires that the parties Ameet to discuss the nature and basis of their claims and defenses and the possibilities for a prompt settlement or resolution of the case, to make or arrange for disclosures required by subdivision (a)(1), and to develop a proposed discovery plan. Prior to this meeting, you should develop your own proposal for a discovery and trial schedule that takes into account the questions you answered above regarding depositions and documents. You should keep your schedule as tight as possible within reason, as defendants will likely request much more time than you need to develop and prosecute your case. Remember, one to two years have probably passed since the filing of the Complaint while the Government exercised its statutory right to investigate. Evidence has begun to grow stale. Memories have begun to fade. Documents may have 8

begun to disappear. The defendants will want to drag the case out as long as possible so more of the same continues to happen. It is your job to move the case forward vigorously, while the evidence remains fresh and intact. One way to get the case moving, and show the defendants you are ready to prosecute without the Government, is to provide the defendants with a list of witnesses you want to depose immediately. This list should be developed in consult with the Relator and from the documents and evidence you have gathered during your continuing investigation. VII. Discovery Discovery is the muscle that powers the skeleton of your Complaint. The more you developed your discovery process, the stronger your case will be. In addition to obtaining discovery from the defendants, you may also obtain valuable discovery from the Government. As discussed previously, the Freedom of Information Act may provide an avenue to obtain the information you seek. Further, discovery may be had from the Government by using a Rule 45 Subpoena Duces Tecum. Other non-defendant sources of information include the Internet, the media, interested organizations and experts. 16 A. Interrogatories and Requests for Admission. Interrogatories and requests for admissions should be created with heavy input from the Relator. Interrogatories and requests 9

for admission should be crafted so that the answers will assist in damage calculations, prove an element of the claim, or identify the source of needed information (i.e. documents or deponents). B. Document Management 1. Start with a Plan If your case involves significant document production, technology is the key to properly managing this aspect of discovery. You must first decide what type of information you want to extract from the document production. Involve your Relator in these decisions. The Relator knows the factual intricacies better than anyone on your legal team. You and the Relator should consider the allegations and issues in the case and the elements you must prove to substantiate those allegations. You should also seek to organize your information so that you can retrieve information by date, name of author or recipient, defendant, issue, or Ahot@ document. Taking these factors into consideration, you should select a legal case management software that will help you achieve your goals. The author has used the case management software SummationJ to organize and manage hundreds of thousands of documents and integrate those documents with deposition testimony and hearing transcripts. 2. Create Clear Instructions Once you have established your goals and selected your software, it is good practice to create an instructions and procedures manual for the personnel that will be reviewing and coding the vast document production. Written instructions and procedures will allow you to have consistency and reliability in your data. Instructions and 10

procedures allow all of your coders to work with a consistent set of rules, no matter if they were hired at the beginning or middle of the project. The instructions and procedures manual should be written before the first person begins coding the first document. Without instructions and procedures you can be certain that putting garbage in will create garbage out. 3. Hire Quality People Once you have your procedures in place, it is important to take the time to interview and hire good, smart, trainable people to code your document production. It is the experience of the author that the typical employment agency Adata entry@ person is not right for this position. The ideal coder needs to be able to perform a subjective analysis of the documents, not simply an objective data entry function. A good candidate for document coding is someone with some prior legal experience, self-motivated, that takes an interest in the facts of your case. 4. Conflicts and Confidentiality Before you begin training your coders, it is a good idea to have the coder sign a conflict of interest and confidentiality form to reveal and avoid any potential problems with coders having worked for a defendant, or going to work for a defendant=s law firm, should they leave your employ during the pendency of the case. 5. Training is Essential After you have hired a sufficient number of coders, they need to be properly trained about the facts and issues in the case. Give each coder a copy of the Complaint and ask them to read it and be 11

familiar with the facts at the first training session. Take a day or two to train them on your coding procedures and the facts of the case. Subjective coding requires a knowledge of both the case and the coding procedures. Spend another day allowing the coders to code sample batches of documents so that you may locate and correct mistakes in each coder=s understanding of the facts and procedures. The days you spend training will pay off tenfold in the consistency and usefulness of your data. 6. Imaging Important Documents Part of your coding instructions and procedures should identify those documents that are worthy of imaging for inclusion on your document server. Documents that are coded for imaging should be clearly marked so that the image can be made, tagged and linked with the database. Imaging important documents will allow you to access those documents and print copies directly from your computer screen. For example, if your database is properly constructed, the documents properly coded and the images properly scanned and linked, a simple search for all certificates of medical necessity with Dr. Smith=s signature will pull up a list of those documents, allow you to view them on screen, and print hard copies for use at deposition. Having the images in your database will allow you to burn copies of those images to a CD for use at deposition. If you carry a laptop computer and portable printer, you can eliminate the need to carry thousands of potentially relevant documents by using the CD to print a copy of the particular documents that need to be discussed during 12

the deposition. At trial you can use a CD or bring your server to court. You can link your trial exhibits to a bar code so that the swipe of a scanning pen will project an image of your trial exhibit onto a large screen for the jury. This technique can eliminate the need for costly document enlargements, while keeping the jury visually engaged in your case. 7. Privilege Logs Another document production issue that will invariably rear its ugly head is lengthy privilege logs from the defendants. Handled improperly, battles over documents, for which the defendants claim a privilege, can take months and waste the resources of Relator=s counsel. To avoid this problem, Relator=s counsel should attempt to agree with defense counsel, at the outset of litigation, that privilege logs will set forth sufficient detail to determine whether the privilege is warranted or should be challenged. Counsel should consult the law of the Circuit to determine the particular elements that must be proven to assert each potential privilege. Counsel should then endeavor to ensure that the logs are required to set forth sufficient information to prove each element required for the asserted privilege. Further, the parties should agree to certify in writing that the privileges asserted are warranted by a good faith interpretation of existing law. If Relator=s counsel cannot seek the agreement of defense counsel, it is not unreasonable to seek a court Order setting forth the parameters of privilege logs in order to save future judicial resources over privilege log disputes. C. DEPOSITION MANAGEMENT 13

Most qui tam cases involve a significant number of witnesses. To manage the witness depositions and use them as an offensive weapon, Relator=s counsel can again use technology to gain the upper hand. SummationJand other legal case management software programs have a AReal Time@ feature that allows you to view the deposition transcript, during the deposition, as it is being transcribed. Utilized properly, this software can allow counsel to summarize the deposition as it takes place and add his or her subjective thoughts and comments about the testimony. To take full advantage of the software, counsel should create a list of case issues similar or identical to the issues identified for document coding. Counsel can then mark particular testimony as related to a particular issue with a simple keystroke while the testimony is being given. It is the experience of the author that this method works best in teams of two attorneys. One attorney asks the questions of the deponent, while the other views the transcript, marks the testimony by issue, and adds commentary to the testimony. The entire transcript, complete with comments, can be instantly downloaded into the database for viewing by all counsel. When the clean and proofread copy is received from the court reporter, the software automatically updates the transcript you have loaded through the use of time stamps. Marking the testimony by issue also allows counsel to print an instant digest of all testimony by key issues in the case. Loading the transcripts into the database also allows for all 14

transcripts to be searched simultaneously by issue, by word, or phrase. This method makes the testimony instantly useful for motions, future deposition preparation and analysis. It also avoids weeks of time spent trying to summarize the depositions for trial. SummationJ and other legal software programs allow the depositions and documents to be stored in the same case folder making organization and analysis even easier. VIII. Pre-Trial Considerations In addition to the foregoing, two additional items should be considered in pre-trial preparation. First, attempt to secure a Government representative=s presence at counsel table during the trial of your case. Having the local AUSA, or a member of the branch of government that has been defrauded, sit at counsel table during the prosecution of the case can go a long way in diffusing the defendant=s argument that the Government doesn=t care about this case. Second, consider using focus groups to analyze and overcome difficult issues in your case. Some examples may include: how effective is your damage model?; how will the jury react to the absence of the Government in the prosecution?; or, which arguments in response to the defendant=s claimed defenses are most effective? i. The Department of Justice has intervened in or otherwise pursued 462 cases and declined 1,673. (as reported by the DOJ in November of 1999). Taxpayers Against Fraud website http://www.taf.org/taf/docs/qtstats99.html. 15

ii. 31 U.S.C. ' 3730(b)(1)&(2). iii. 31 U.S.C. ' 3730(b)(2). iv. Id. v. Id. vi. 31 U.S.C. ' 3730(b)(3). vii. Under the 1986 Amendments to the False Claims Act, "the first eligibility restriction is, in effect, a `race to the courthouse' rule among relators. Once a qui tam case is filed, no person other than the government may intervene in the case or bring a related case based on the facts underlying the pending action." Vogel, Robert L., Eligibility Requirements for Relators Under the Qui Tam Provisions of the False Claims Act, 21 Pub.Cont.L.J. 593, 598 (Summer 1992). In fact, section 3730(b)(5) of the False Claims Act was adopted "to prevent `multiple separate suits based on identical facts and circumstances.'" United States ex rel. Precision Co. v. Koch Industries, Inc., 31 F.3d 1015, 1017 (10th Cir. 1994)(citing S.Rep.No. 99-345, 99th Cong., 2d Sess. 25 (1986), reprinted in 1986 U.S.C.C.A.N. 5266, 5290). viii. Counsel should consult their local ethics rules before making such contact. In Alabama, the following opinion appears to permit contact with former employees: Rule 4.2 of the Rules of Professional Conduct prohibits communication about the subject matter of the representation with a "party" known to be represented by other counsel. Consent of the other counsel obviates the problem. Rule 4.2 is a successor to Alabama DR 7-104(A)(1) and two provisions are substantially identical. In RO-88-36 (also published in the Alabama Lawyer), the Disciplinary Commission held that a plaintiff's counsel in a tort claim action could contact and interview current corporate employees/witnesses. There can be no ex parte contact when the employee is an executive officer of the adverse party or could otherwise legally bind the adverse party by his/her testimony, or if the employee was the actual tort feasor or person whose conduct gave rise to the cause of action. In any of these situations, prior consent of counsel for the adverse party would be required. Ex parte contact with a former employee, as here, is not subject to the same scrutiny. In fact, there is a strong argument that Rule 4.2 does not even apply to former employees at any level. A former employee cannot speak for the corporation. The ABA Committee on Ethics and Professional Responsibility in Formal Opinion 91-539 (1991) stated that former employees of a corporation may be contacted without consulting with corporation's counsel because they are no longer in positions of authority and thus, cannot bind the corporation. The Disciplinary Commission believes that contact with a former employee is ethically permissible, unless the ex parte contact is intended to deal with privileged matter, i.e., the inquiring counsel is asking the former employee to divulge prior communications with legal counsel for the adverse party, and these communications were conducted for purposes of advising the adverse party in the litigation or claim. If the former employee was the actual person giving rise to the cause of action, contact is also permissible so long as that person is not represented by counsel. Nat. Rep. On Legal Ethics and Professional Responsibility, Alabama Ethics Opinion RO-92-12. ix. 31 U.S.C. ' 3733. x. Id. xi. 5 U.S.C. ' 552 (1989). 16

xii. 31 U.S.C. ' 3730 (c)(3). xiii. Fed. R. Civ. P. 4(m) 17