Reporting Fraud Under the Delaware False Claims Act
Before July 16, 2009, only an “affected person” could bring a False Claims Act action under the Delaware False Claims Act (“Delaware FCA”). The Delaware FCA defined “affected person” as a labor organization or a current or former employee of a person liable for a false claims violation. Del. Code Ann. tit. 6, § 1203 (2000). However, on July 16, 2009, an amendment to the Delaware FCA eliminated this limitation, allowing “any person or labor organization” to bring a suit under the Delaware FCA. Del. Code Ann. Tit. 6, § 1202(b)(1) (2009).
Delaware Qui Tam Action
Additionally, under the Delaware FCA prior to July 16, 2009, if the government declined to take over a qui tam action, the whistleblower and Delaware qui tam lawyer(s) bringing the action had the right to conduct the qui tam action only if the Delaware Attorney General determined that there was substantial evidence that the violation occurred. Del. Code Ann. Tit. 6, § 1203(b)(4)(b) (2000).
What Happens If the Government Does Not Intervene?
Under this prior version of the Delaware FCA, in cases where the government declined to intervene, defendants could argue on a motion to dismiss that the whistleblower’s claim had not met the prerequisites to pursue claims under the Delaware FCA because the government did not issue a written “substantial evidence determination” allowing him/her to proceed with an action under the Delaware FCA. However, the whistleblower and his/her Delaware qui tam lawyer could argue in response, that dismissal under Rule 12(b)(6) on this basis was inappropriate. See United States ex rel. King et al. v. Solvay S.A., et al., 2011 U.S. Dist. LEXIS 117590, *126-9 (S.D. Tex. October 12, 2011) (denying defendant’s motion to dismiss claims under the Delaware False Claims Act on the substantial evidence determination basis). The whistleblower and/or his/her respective Delaware qui tam lawyer could argue that the Delaware FCA does not state that Delaware must notify the court of its determination regarding substantial evidence, and the whistleblower and Delaware qui tam lawyers were not required on a Rule 12(b)(6) motion to come forward with such evidence. Id. at *128.
Delaware False Claims Act: New Law and Provision in 2009
The Delaware FCA was amended on July 16, 2009, repealing the “substantial evidence” determination. The new provision simply requires Delaware to either proceed with the action or notify the court that it declines, “in which case the private party bringing the action shall have the right to conduct the action.” Del. Code tit. 6, § 1203(b)(3)(b) (2009). Thus, a whistleblower and his/her Delaware qui tam lawyer that pursues claims under the Delaware FCA after July 16, 2009 is not restricted by the “substantial evidence determination.”
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