False Claims Act Cases
The False Claims Act (FCA) is a Civil War era statute that is used when a “whistleblower” alleges that a person or company defrauded the government. Paul Kish is an Atlanta-based attorney with 36 years of experience in representing people and companies that are alleged to have defrauded the government. Paul’s job is to handle criminal investigations and possible criminal cases that may arise out of these whistleblower allegations, and to help his client decide whether and how to respond to the allegations.
An FCA case is a civil lawsuit filed by the whistleblower, commonly referred to as the “relator.” There can be huge recoveries for these lawsuits, and they are being filed far more frequently in recent years. As a result of these suits, more and more companies and employees are under the microscope and face potential investigation or prosecution for criminal fraud.
The whistleblower or FCA lawsuit is almost always filed under seal, meaning it is a secret, and the Defendant might not even know about the lawsuit for many years. Under the FCA, the United States Government has the chance to join in the lawsuit, meaning the federal government will “intervene.” After the relator sues he or she must prove fraud and then seeks to obtain a recovery from the company or person who defrauded the government. If the relator is successful, he or she can get somewhere between fifteen and thirty percent of the total recovery, depending in large part on whether the government intervenes. The recovery or settlement in these cases can be enormous, meaning the person who blew the whistle in the first place did so knowing that he or she might be earning millions of dollars for uncovering potential fraud.
Many times, the company that is the subject of an FCA suit knows that there are allegations of fraud. An investigation often ensues, sometimes beginning with an internal inquiry launched by the company’s own board of directors. Other times, the investigation is external, and often is handled by a federal law enforcement agency, such as the Federal Bureau of Investigation (the FBI) or the Office of Inspector General at the Department of Health and Human Services (OIG-HHS). The FBI or agents at OIG will interview the whistleblower, and then start their own interviews. Sometimes they will involve a federal prosecutor, known as an Assistant United States Attorney (AUSA). Together, the agents and the AUSA will decide the direction of the investigation. Remember, all of this began with an FCA lawsuit filed by a whistleblower inside the company who hopes to get a huge financial settlement if fraud is proven and the company has to pay or settle. The lawsuit might be on a parallel track with the criminal investigation, or the lawsuit might be temporarily “stayed” while the criminal investigators look into whether the company and its people defrauded the government.
When companies or individuals are the subject of an FCA suit, it usually means that the higher-ranking officers or employees need lawyers who are accustomed to working in these situations. Too many executives think they can just turn the matter over to their usual corporate litigation attorneys and that this is “just another lawsuit.” Unfortunately, there are many former business executives who served federal prison sentences when they failed to recognize that these situations also call for an experienced white collar criminal defense attorney. The white collar criminal defense specialist usually knows most of the lawyers who represent whistleblowers. He or she also usually knows or is known to the federal agents and the AUSA handling the case, mostly because this is a highly refined and specialized area and there are a relatively small number of people working in this field. The criminal defense attorney will want to learn as much as possible about the investigation, the FCA suit, and whether the client has already answered questions from either an internal or an outside investigative group. All of these factors need to be assessed in deciding the best course of action when trying to protect the business executive’s personal interests.
Another huge mistake when defending against an FCA suit is when a business executive has a false sense of security because the company has its own lawyer. The company is a separate entity under the law, and its lawyer cannot represent the individual executives or employees. In fact, the company’s lawyer is often antagonistic to the executives, for it is often better for the company in the long run to throw one of its own “under the bus” in order to save the company itself. Executives need to remember, when an FCA suit has been filed or is rumored, each man or woman needs to protect his or her own interests by hiring separate counsel who is accustomed to working on these matters.
Paul Kish has handled thousands of federal criminal cases, and hundreds of federal fraud investigations and prosecutions. He uses his 36 years of experience when representing individuals if their company or organization faces an FCA suit. Call him if you are in this situation and want to talk about it.