The Department of Justice is the government agency that can intervene in a False Claims Act. The Department of Justice has a civil frauds division in what is colloquially called main justice. It also has US Attorneys’ offices throughout the country and they share jurisdiction and depending on the size of the damages of the case may take the lead and or collaborate on cases. The Department has the authority to intervene on behalf of the government in False Claims Act cases at a federal level. At a state level, it varies state to state. In DC, it is the District of Columbia’s Attorney General that has the authority to intervene, which is standard procedure for each state.
With respect to other whistleblower laws, they are set up a little differently. Only the False Claims Act works in the sense of having a government agency intervene with an action filed in court by the whistleblower. In the SEC, the IRS whistleblower law, and the CFTC whistleblower law, these are actions that are filed with the government agency and they decide what to do with that information. The case does not originate with an individual filing the case in court. The government already effectively control the action from the minute that someone files it, as opposed to a court case where they have to act to intervene. The structure and procedure is a little different under those laws. The IRS has the authority to act on behalf of the government to investigate and prosecute claims filed with the IRS Whistleblower office to intervene in tax fraud claims.
Steps Once a Government Takes a Case
The whistleblower should still show up to the court once the government takes over a case. The whistleblower does not necessarily take the stand, although possibly one party or another may call the whistleblower.
The government spends a great deal of time putting the case together and being sure they are ready to take it to trial prior to intervention, so they usually request some form of variation of the seal. They may see permission that does not require them to formally serve the case on the defendant, but still confront the defendant in order to find out more information about the case and/or attempt to settle the case prior to bringing it to trial.
The whistleblower will still be party to the case. The government is considered the real party in interest in these cases, and would therefore has a superior role to the plaintiff-relator when they intervene, but the plaintiff-relator can collect a share of the proceeds based on the idea that they have brought the case forward on behalf of the government.
What Happens If The Government Does Not Intervene In a Whistleblower Case?
The decision is made by a combination of officials of the United States Department of Justice. Usually the Assistant U.S. Attorney assigned to the case and the Department of Justice trial lawyer will make a decision after they consult with an investigator and review all the evidence they have compiled in the case.
They have a chain of command and report up through the Civil Frauds Division of the Department of Justice. So, it is hard to say when any one individual decides. It is a large government agency and many people will be involved in such a decision.
The people that you can impress are the people you will meet when they interview you about your case. Unless you are filing a completely frivolous action, or unless your action is rejected on some technical grounds, you are likely to get an opportunity to discuss the issues with the officials of the government.
Such a meeting is informal. You will not hear lawyers shouting “objection.” You most likely not be sworn in at the meeting. There may not even be anyone recording what you say.
Make no mistake about the informal nature of this meeting, though. It is extremely serious. The lawyers and investigators you meet will want to know everything you know about the False Claims case. They will want to know who else they can talk to who can corroborate your allegations. They will want to know where they can obtain documents. They will, of course, judge your credibility too. All this goes into a meeting.
So what can you do? You can work with your DC lawyer to prepare the best Complaint possible, and you can be as knowledgeable about the facts and as truthful and co-operative as possible. You want to make it possible for the Justice Department to pursue your case. If they do, you have a greater chance of success.
Pursuing Cases Without Government Intervention
Under the Federal False Claims Act and most State False Claims laws, the whistleblower still has a right to sue if the government does not intervene in your whistleblower case. Because of that, it may not be the end of your case when the government declines to intervene. There have, in fact, been several successful cases in which the plaintiff pursued a claim even after the government declined to intervene in the case.
That decision by the government is discretionary. So, they do not have to intervene in any particular case and they do not have to decline any particular case. They may have a really good reason not to intervene and then again they may not. They usually will not write down a reason, but sometimes most often they will tell you their reason.
You and your lawyer in Washington DC each have a tough decision. If you go forward and you do so in the face of real evidence that you should not, in other words, if you go forward in a frivolous way, it could be tricky. There are reverse attorneys’ fees in the law if you pursue a frivolous claim.
On the other hand, if you go forward and win without the government’s help, your share of any potential recovery increases to a minimum of 25% and a maximum of 30%. Under some state False Claims Acts, the percentage is even higher. For example, the California False Claims Act has a maximum award of 50% for a case which is pursued after it is turned down by the State. It is a very tough decision, so talk to your lawyer.
When to Make the Decision
You usually have 90 days from the moment the case is unsealed to serve the Complaint on the defendant and begin active litigation. The resources you will need to pursue the case at this point may be more daunting. The one thing you should have is a relationship with a lawyer you have worked with for a long time who should also know the case pretty well. This is one time you may want to have a long conversation with that person.
That lawyer may not be willing to forward at this point for any number of reasons as well. You will want to think about those reasons. Do they make sense to you? Do they affect your opinion of the case? It may be that the lawyer’s reasons make perfect sense and involve facts you could not have anticipated. Obviously, you may need a new lawyer if you disagree with your old lawyer about pursuing the case. Both of you may agree to go forward and both of you may agree to drop the whole thing. Either way, you will want to know what your obligations are if you do go forward.
These are the tough decisions you will have to make if the government declines your case. Fortunately, you do not have to make those decisions until the government makes its decision regarding intervention. You have plenty of time to work with them on supporting your case first.