The stakes are high when it comes to a False Claims Act lawsuit. Given the trebling of damages and a potential $11,000 per claim, a company can quickly face exposure to millions of dollars in liability.
A potential False Claim Act lawsuit is filed under seal. How can you learn about a potential false claim filing?
Since most false claims act cases are filed by disgruntled employees, it is likely that they may have filed a complaint internally. There are no requirements under the False Claims Act that a whistleblower initially file a complaint with the company but in practice many file a complaint first with the company. Often, they are unhappy with the pace or the response to the complaint, and then turn to a False Claims Act.
Companies should carefully evaluate claims for merit under the False Claims Act. If the claim appears to have merit, a strategy should be developed to try and dissuade any false claim filing.
Since an FCA complaint is filed under seal, a company will not be served or notified of the filing. It is important to watch for any sign of a government investigation of a false claims act investigation. Some of the standard signs include: (1) government interviews of current or former employees; (2) an unusual government audit or government review; (3) a number of similar employee complaints; (4) statements or suggestions made by employees during a disciplinary process; and (5) rumors, news articles, or postings on websites.
The government’s decision regarding whether to intervene in an FCA lawsuit is made on a case-by-case basis. The government’s evaluation focuses on: (1) whether the allegations are supported by credible evidence; (2) the amount of the potential damages; and the credibility of the plaintiff/complainant. The government understands that the whistleblower is disgruntled and may be seeking a monetary pay-off. For that reason, they need to corroborate the plaintiff’s claims as much as possible. The government also weighs the company’s reputation and history of compliance. If the company has been investigated before, the government is more likely to launch a new investigation when it receives a complaint.
If a company learns of an investigation, the company should conduct an internal investigation as quickly as possible to try and learn as many facts as possible relating to the complaint. It is critical to learn what occurred as quickly as possible so that the company is out front of the government’s investigation.
An assessment of the case is critical for deciding on strategy. If the case against your company is strong, then the issue may boil down to damages and remedial measures. On the other hand, if the company has no liability or questionable liability, the strategy may involve a factual defense against any claim of liability.
It is important to meet with the government to try and persuade them not to intervene. The more the company knows about the facts the better. In order to convince the government not to intervene, it is important to be candid about the findings of an internal investigation, the surrounding facts, the company’s compliance program, and the company’s history of compliance. If the violations were the actions of a rogue employee, or a small group of employees, the company may be successful arguing that the public interest in intervening is minimal.