Posted by Brian P. Morrissey and Kristin Koehler
A. Brian Albritton at the False Claims Act and Qui Tam Law blog discusses an interesting interview recently published in the Corporate Crime Reporter with Joseph E.B. “Jeb” White of the firm Nolan & Auerbach, P.A., which focuses its practice exclusively on representing qui tam relators in healthcare fraud suits. The interview discusses White’s view on the types of cases in which the Department of Justice is most likely to intervene. In a particularly notable passage, White briefly mentions DOJ’s practice of “deferring” its decision on whether to intervene in a qui tam suit when the deadline for that decision comes due. That topic warrants a bit of exploration here because, as readers may have observed in their own practice, DOJ appears to be relying on this practice with increasing frequency.
The FCA provides that, once a relator files a complaint, the complaint “shall remain under seal for at least 60 days,” affording DOJ a window within which to investigate the relator’s claims. 31 U.S.C. § 3730(b)(2). At the end of that period (which is routinely extended for months or even years), DOJ is required to either intervene and take over the action, or decline and allow the relator to conduct the litigation instead. Id. § 3730(b)(4). Even if DOJ declines, the FCA grants the Department the right to join the case at a later time, provided it can show “good cause.” Id. § 3730(c)(3).
It is increasingly common for DOJ prosecutors to file a statement with the court indicating that the DOJ has made “no decision” on intervention, but reserving its right to intervene at a later time. In light of the FCA provisions discussed above, these “no decision” statements have the very same effect as a statement declining intervention. After DOJ files its “no decision” statement, the relator proceeds with the litigation alone, and DOJ preserves the same statutory right to intervene later, just as it would if it had formally declined to intervene.
Yet DOJ may achieve some benefits in labeling its choice on intervention as a “no decision” rather than a declination. White suggests one. He observes that, in some cases, a “no decision” statement allows the DOJ to signal to relator’s counsel that DOJ is, in fact, interested in the case, but simply cannot intervene at the moment because of resource constraints or because the relator has not yet fully fleshed out his or her allegations. By making “no decision,” DOJ sends a message to the relator saying “please keep this case alive, we are going to come back later.” But a second consideration may motivate “no decision” statements in other cases. Sometimes, DOJ may conclude that a relator’s allegations are unlikely to establish a violation of the FCA, but may also be aware that DOJ’s failure to intervene in the relator’s case could prompt a negative reaction from certain politicians or members of the media. The scores of recent qui tam complaints filed against participants in the mortgage securitization industry provide an example of this phenomenon. Some such complaints have merit, some do not, but the default presumption among certain sectors of the general public is that the DOJ should be actively pursuing all forms of fraud in that industry. By styling its choice on intervention as a “no decision” rather than a “declination,” the Department provides itself with some public relations cover, emphasizing to the public that while it is not formally joining the relator’s suit, it is retaining its right to do so later, which the FCA would have provided to the Department anyway, even if it had formally declined to intervene.
Whatever the reasons for DOJ’s “no decision” statement in a particular case, it is clear that DOJ’s practice of using such statements is on the rise and likely to continue in the future.