The False Claims Act allows a private individual to bring a case on behalf of the federal government for fraud against the government. In other words, if an individual (a “relator”) knows of another person or entity who is cheating the government through fraud, the False Claims Act allows the relator to bring a case on behalf of the government and receive a portion of the proceeds if the case is successful.
The Government Investigates the False Claims Act Case Before Deciding to Decline or Intervene
After filing a False Claims Act case on behalf of the government, the government attorneys will conduct an investigation into the relator’s allegations of fraud. The case is initially filed under seal so that the government’s investigation will be private. The case will not appear on the court docket, and the lawsuit will not be revealed to the defendant.
As part of their investigation, the government will typically interview the relator (with his/her attorneys present), interview witnesses, and analyze documents and data. At the conclusion of the government’s investigation (but sometimes at a different stage of the case, such as at settlement), the government has a decision to make – whether to decline or intervene in the case.
The Government’s Declination/Intervention Decision
The government’s decision to decline or intervene in a False Claims Act case is an important juncture in a case:
- Decline/Declination: When the government declines to intervene, they are no longer willing to take the lead in litigating the case. There may be a number of reasons for a declination such as finite government resources, an insolvent defendant, lack of evidence or low potential damages. A declination is not necessarily a reflection of the merits of the lawsuit. The government declines to intervene in the vast majority (approximately 80%) of False Claims Act cases. At that point, relator and relator’s counsel need to determine if they want to proceed with the litigation on their own or voluntarily dismiss the case.
- Intervene/Intervention: For approximately 20% of cases filed, the government decides to intervene and litigate the case. This means that the government adopts the case as their own. Relator and relator’s counsel are available to assist and support the government as needed, but the government drives the litigation of the case forward. A majority of intervened cases result in a recovery for the government (and relator).
The Relator’s Share in a Declined Case or Intervened Case
In a successful False Claims Act case, the relator is entitled to a share of the government’s recovery. The relator’s share amount depends on whether the government declined or intervened in the case.
For those cases in which the government declined and the relator and relator’s counsel achieved the successful result on their own, relator is entitled to 25-30 percent of the recovery. For intervened cases, the relator receives in the range of 15-20 percent of the settlement or verdict amount.
Berger Montague Has Successfully Litigated Declined False Claims Act Cases
If the government declines to intervene, some law firms representing relators typically will not litigate False Claims Act cases on their own and will seek voluntary dismissal. Berger Montague does not follow that practice, but considers the strengths and weaknesses of each case individually in consultation with the relator to determine whether to litigate a declined case. Berger Montague has reached successful settlements in many declined cases.
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