The Western District of New York recently allowed the government to intervene in an FCA action brought months after the government’s initial notice of declination and more than seven years after the government initiated its investigation. U.S. ex rel. Teresa Ross v. Indep. Health Corp., et al., 12-cv-299, 2021 WL 3492917 (W.D.N.Y. Aug. 9, 2021). While the Government’s motion was filed more than seven years after the FCA action was initially filed under seal, the court allowed the Government to intervene, finding that it had satisfied each of the factors required to demonstrate “good cause” for intervening at a later date.
As background, actions brought by private individuals under the FCA must be served on the Government, triggering a 60-day window where the Government may intervene or request an extension. Here, the Government requested, and received, fifteen 180-day extensions, amounting to over seven years. During this period, the Government continued an active investigation into the matter. On the deadline to intervene, the Government filed a notice of its election not to intervene in the case, but noted its continuing investigation into the matter. The deadline then passed, closing the window for intervention. Nevertheless, a few months later, the Government moved to intervene, claiming that it had good cause.
Under the FCA, the Government must either intervene within the 60-day period (or an extension thereof), or the Government may intervene at a later date upon a showing of “good cause.” Although the “good cause” standard is not defined by the FCA, case law dictates that the Government provide “some justification for its untimely intervention.” The Court considered the following factors:
- “whether intervention would be in the public interest”
- “whether new, probative evidence has been discovered, particularly as to the magnitude of the fraud”
- “whether intervention would unfairly prejudice the relator or the defendant”
In weighing each factor, the Court concluded that the Government had good cause to intervene. The Court reasoned that the public interest weighs heavily in favor of permitting intervention, and that the government can best protect itself from fraud if it “fully participates in the litigation, bringing its considerable expertise and resources to bear against those alleged to have defrauded it.”
Second, the Court reasoned that new, probative evidence had been discovered, and that the Government satisfied this requirement by showing it had “identified previously undisclosed documents containing seven years of data that it views as significant and material to the scope of the alleged fraud.”
Finally, the Court held that the intervention would not cause unfair prejudice to either party. First, the Relator strongly favored the Government’s intervention, which discounted any obvious prejudice to the Relator. Second, the Court reasoned that although the Defendants were “understandably displeased” with the intervention after seven years, the case was still in its “infant stages” with discovery having not yet started. The Court also reasoned that because of the Government’s ongoing investigation, the Defendants were on notice of the potential intervention, thus removing any “unfair surprise.” In summary, the Court concluded that any prejudice toward the Defendants was outweighed by the reasons supporting the intervention.
Ross signals the wide latitude courts are willing to give the Government when determining whether to intervene in a FCA case. FCA defendants should remember that even if an intervention deadline has passed or the Government has declined to intervene, it still may possibly intervene at a later point. This is particularly true where an ongoing investigation is taking place, which may be construed as putting the defendant on notice of the possibility of intervention at a later date.