On April 26, 2017, the United States District Court for the Middle District of Florida denied the government’s motion for leave to submit a “statement of interest” in a False Claims Act (FCA) action in which the government had declined to intervene over five years ago.  United States ex rel. Ruckh v. CMC II, LLC, Case No. 8:11-cv-01303-T-23TBM (M.D. Fla. April 26, 2017).

On March 1, 2017, following a six-week jury trial, the district court affirmed the jury’s verdict that defendant operators of 53 skilled nursing facilities in Florida had submitted or caused the submission of false Medicare claims and that one defendant had knowingly made, used, or caused to be made or used false records or statements material to false or fraudulent Medicaid claims.  After trebling and applying penalties, the court awarded the relator $347,864,285.  The government had previously declined to intervene in the action five years ago, deferring to the relator to conduct the action on the government’s behalf.

After defendants filed a renewed motion for judgment as a matter of law, the government sought leave under 28 U.S.C. § 517 to submit a “statement of interest” to address the following issues raised in defendants’ motion: (1) the proper test for materiality under the FCA as explained by the Supreme Court’s decision in United Health Services, Inc. v. United States ex rel. Escobar, 136 S. Ct. 1989 (2016) (Escobar); (2) the proper test for knowledge of materiality in implied certification cases as addressed by the Escobar court; and (3) the causation and scienter requirements under the FCA.

On April 26, 2017, the district court denied the government’s motion for leave to submit a statement of interest.  First, the court found that 28 U.S.C. § 517 provided no right for the government to submit a “statement of interest.”  The court explained while Section 517 permits the Attorney General to dispatch the forces of the Solicitor General or another attorney at the DOJ to any federal or state court to attend to an “interest of the United States,” it says nothing about a “statement of interest.”   

Second, the court found that even if Section 517 permitted the government to submit a statement of interest, the government failed to identify an interest inadequately protected by the relator.  The court explained that the government’s purported interest in the development of FCA law was an interest manifest in the underlying action (and every other qui tam action) from the outset, and “little, if anything, distinguishes this action from all the others, except the prospect of the lion’s share of $350 million.”  The court also found that the government provided no explanation why relator’s counsel, who successfully represented the relator in Escobar, could not adequately interpret Escobar. 

Finally, the court found that even if Section 517 authorized a “statement of interest” and the government had identified an interest inadequately represented by relator, Section 517 appeared inapplicable in an action under the FCA.  The court explained that because the government declined to intervene, the FCA specifically limited the government’s participation to receiving a pleading and a transcript of deposition in accordance with 31 U.S.C. § 3730(c)(3).  The court concluded that the government’s invocation of Section 517 to proffer argument about the interpretation of the FCA impermissibly circumvents the narrow role prescribed in Section 3730(c)(3).  The court’s decision is available here.