A lesson in what not to do if you want to be a qui tam relator
For over five years now I have been blogging about qui tam litigation in Virginia and elsewhere. During that time I have covered quite a few things that qui tam relators and their lawyers can do to maximize their recovery under the federal False Claims Act and the various state false claims acts. But today I want to take a look at something different — how not to be a successful qui tam relator.
An interesting opinion was published this week by the U.S. District Court for the Eastern District of Washington got me to thinking along these lines. In US ex rel. Schroeder v. CH2M Hill, the qui tam relator filed an action under the qui tam provisions of the federal False Claims Act, alleging that the company he worked for engaged in time card fraud that resulted in the submission of false claims to the government. He filed his case in June of 2009 and, as required by statute, the government started its investigation.
And investigate the government did. In fact, in 2011 at least one person pled guilty to a crime associated with the exact allegations Mr. Schroeder made in his sealed qui tam case. Normally, when someone goes to prison as a result of a qui tam case, its a cause for celebration. Not because we lawyers or our clients are vengeful or greedy, but rather because criminal convictions and plea deals say a great many things about the nature and quality of the evidence the government uncovered.
But if the person who goes to prison as a result of his or her false claims act case is the relator him or herself, well, we have a strange situation indeed.
The opinion this week came from a contested — that’s right, I said contested — motion by the United States to dismiss Mr. Schroeder from the case. The United States moved to dismiss the relator, because a relator who is convicted of a crime as part of the qui tam case he or she brings is not entitled to a share of the government’s recovery. On the facts of this case, Mr. Schroeder pled guilty in 2011 to charges of conspiring to defraud the government in connection with the alleged fraud scheme.
I have no idea why the relator and his lawyers fought this. As the District Court found, the federal False Claims Act, at 31 U.S.C. 3730(d)(3) clearly provides for this kind of situation, and it is not ambiguous. The plain language of the statute requires dismissal from the action of a person who has been convicted of criminal conduct arising from his role in the FCA violation that is the subject matter of his or her qui tam case.
And yes, this is exactly what happened to Matt Damon in The Informant …. which is a very underrated movie, by the way.
