Discretion is the better part of valor…and it is also a big part of a qui tam practice.
In the last 18 months, there have a been a number of huge recoveries, including several settlements of more than one billion dollars. As a result, many lawyers have started to take an interest in qui tam practice and in false claims act litigation. This is a good thing, in my humble opinion (and indeed generating interest in qui tam in the legal community is one of the reasons I started this blog). Simply put, I think the more lawyers there are with an interest in qui tam (or any other area of practice for that matter) the more business there is out there for all of us, but that is a different topic for a different day.
This uptick in interest in the qui tam provisions of the federal False Claims Act and the Virginia Fraud Against Taxpayers Act (among other state false claims statutes) has caused a great many folks to try thier hand at evaluating qui tam cases. Today I want to talk about how I size up a potential qui tam case, and the types of things I look for. I think that proper screening of qui tam cases is crucial, and any government lawyer will tell you that the better you can screen the cases, the more likely you are to make the government interested in your case.
Let me also say that this is not a volume practice, and screening cases is not easy. As I have discussed in other posts, it is just not possible to devise a shortcut — for example, in the past I discussed the idea that state unclaimed property laws could not form the basis of a false claims act case as well as whether the failure to pay Davis-Bacon wages could result in a false claim to the government.
The answer to both is that it depends on many factors.
FIRST RULE OF FALSE CLAIMS ACT PRACTICE — LOOK FOR THE CLAIMS THEN LOOK FOR THE MONEY
It might sound like a no-brainer, but evaluation of a qui tam case should always start by looking for the “claims.” Much ink has been spilled over the last 26 years about what is and what is not a “claim” and there is more ink yet to be spilled. There are basically an unlimited number of ways for a wrong-does to submit false claims to the government and a “claim” can be many many things.
An example of a simple case might involve billing the government twice for the same goods — sometimes known as a “double-billing case” for the obvious reasons. There the false claim could be the invoice submitted to the government for which no goods were recieved. Another simple example is what I call “The Houdini.” A defendant submits invoices for the work of one or more employees on the same day, at the same time, in two different cities. (I nicknamed this scenario “The Houdini” because no person can be in two places at the same time.)
But things can more complicated quickly, and in fact I dare say that more complicated scenarios are more common than the simple examples above. So you first need to identify clearly and unmistakeably your theory of the claim, and I think you need to to do that before you even think about the amount of money involved. Note that this aspect of qui tam/false claims act practice is the exact opposite of how other plaintiff cases (for example, personal injury) are evaluated — there, it is smart to look at the damages first, and then look at the rest of the case.
In fact, as I will discuss in future postings in this series, I think looking at the money is the third step — the second step, evaluating whether the claim is an “objective falsehood” has been discussed previously, and will also be the subject of the next post in this series.