As I have said many times, there is no practice area quite as complicated as false claims act litigation under either the federal False Claims Act or the Virginia Fraud Against Taxpayers Act (or for that matter under any of the other state false claims acts).
The complexities and nuances continue right on through to settlement of these cases. The issue of settling claims under the Virginia Fraud Against Taxpayer’s Act presents the same sort of thorny issues as settlement in a Federal False Claims Act case.
In non-intervened qui tam cases under the VFATA, the Virginia Attorney General must approve the settlement, just like the Attorney General of the United States must approve settlement of a federal FCA case.
However, whether the case is intervened or non-intervened, when it comes to the language of the settlement agreement, the Commonwealth should act to protect its interests in a number of ways, many of which might not be apparent on the face of the statute.
An excellent memo from the Department of Justice’s Commercial Litigation Branch is a must-read for anyone interested in the VFATA. The memo was prepared by Commercial Litigation Branch Director Michael F. Hertz in 1997, and was formerly available from the DOJ’s on-line Civil Fraud Monograph.
In no particular order, some of the more important differences are as follows:
The scope of the release is different in FCA or VFATA litigation . Civil litigators are accustomed to granting—and receiving—the broadest possible releases in exchange for money or other consideration. Phrases like “plaintiff hereby releases all claims, known or unknown, from the beginning of the world, up through the date of this agreement” are fairly common, and are in most civil litigation appropriate. False Claims litigation, however, such broad releases are inappropriate, and the Commonwealth should be unwilling to grant them.
The terms and conditions of the settlement, and the settlement agreement itself, will not be confidential. Confidentiality of terms is normal in most civil settlements. The Commonwealth, however, should not be willing to do so for a number of reasons. First and foremost, the public has a right to know the terms and conditions of settlement in these cases–it is, after all, the public that has been defrauded. Moreover, this is not North Korea–government operations in the United States should be open and available to the extent possible.
Even more important is the deterrent effect of publicity on other wrongdoers. Law enforcement must command a healthy respect in the community. Thus section 11 of the Hertz memo clearly states that “We do not agree to refrain issuing press releases, nor do we negotiate the contents of press releases or agree to allow the defendant to review the press release prior to its issuance.”
These are but a few of the major differences, but the bottom line is that settlement of these cases requires more thought and effort than a normal civil settlement.