What is an Organizational Relator?

What is an Organizational Relator?

Under the False Claims Act (“FCA”), an organizational relator is a person with knowledge – typically a current or former employee – of a company involved in defrauding the federal government. The FCA incentivizes relators to come forward and report fraudulent activity by enabling the relator to claim a portion of the recovery if a successful case is made against the offending company.

What Can Organizational Relators Expect From Bringing a Claim?

When an FCA action is brought, the complaint is initially kept under seal while the government is given 60 days to investigate the allegations (though extension periods are permitted). The information provided by the relator is kept secret during the investigation period, and at the end, the government will choose to either intervene in the action or allow the relator and her attorney to proceed on their own.

If the government chooses to intervene, it will take the primary duties of prosecuting the action, but the relator and her attorney will still be involved in the case. If the government does not intervene, the relator and her attorney take charge, but still require the government’s consent before dismissing or settling the case.

What Award Can the Relator Expect?

The relator’s award depends on whether the government chooses to intervene. If the government intervenes, the relator’s award will be between 15-25% of the recovery, plus legal fees. If the government chooses not to intervene, the relator is entitled to 25-30%. These ranges depend on how helpful the relator’s information is to prosecuting the claim.

Because FCA claims are only for situations involving serious and intentional fraud, the damages- and by extension the relator’s award- are typically quite high. Awards are even higher because the FCA provides for triple the damages actually sustained by the government. In 2018, $2.1 billion in damages were recovered for the government from FCA claims initiated by relators, while $301 million went to relators in awards.

The only exception to these awards is if the relator either instigated or substantially contributed to committing the fraud, in which case the award is either considerably depleted or eliminated. Furthermore, if the government uses the relator’s information to pursue the fraud using some legal route other than relator’s FCA claim, the relator is still entitled to the same award as if it had been recovered directly from her claim.

What If the Company Retaliates Against the Relator for Bringing the Claim?

The FCA expressly forbids retaliation against the relator. If retaliation occurs nonetheless, that issue can be added to the overall action, and the relator may seek damages pertaining to wrongful termination, demotion, or other retaliatory acts taken against her by her company. More specifically, relators can seek reinstatement to the position formerly held, double the lost back pay, and interest.

What Other Obstacles Might a Relator Face?

Because the FCA is only for certain types of fraud, there are other requirements a relator must overcome to pursue a claim. The public disclosure bar precludes FCA claims if the allegations about the fraud have been publicly disclosed by, for example, the media. Thus, while a relator mustn’t necessarily be a current or former employee of the company, she almost always is because FCA claims require insider information that is not publicly available.

Finally, the relator must be the first to file the claim. If another member of the company has already reported the fraud, it is too late for a relator to pursue an FCA claim. However, if multiple relators want to file the same claim simultaneously, they are permitted to do so and arrange the award distribution among themselves.[1]

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[1] The information in this post was prepared by reference to: https://www.justice.gov/sites/default/files/civil/legacy/2011/04/22/C-FRAUDS_FCA_Primer.pdf

By |2020-08-24T11:45:21-04:00June 3rd, 2019|False Claims Act Information|