02 March 2012

District Court Decision Highlights Relator’s Behind-The-Scenes Involvement in Government Investigation

Posted by Robert J. Conlan

In an opinion providing a view of the interactions between DOJ and a qui tam relator during the Government’s investigation of the relator’s claims, the U.S. District Court for the District of Columbia last week ordered the Government to pay the relator more than DOJ had argued the relator was entitled to receive as a share of the Government’s recovery pursuant to 31 U.S.C. 3730(d). The case, U.S. ex rel. Shea v. Verizon Communications, Inc., No. 07-111(GK) (D.D.C. Feb. 23, 2012) (reported at 2012 U.S. Dist. LEXIS 22776), is one of relatively few judicial decisions addressing relator’s-share issues in detail.

The relator in Shea filed his qui tam action in 2007, alleging that MCI/Verizon had submitted false claims for improper surcharges on invoices submitted under two telecommunications contracts with the United States. The case remained under seal for several years while the Government conducted its investigation. In February 2011, the Government intervened and settled the case. The Government and the relator were not able to agree on an appropriate relator’s share, so the parties litigated the issue.

Conducting its analysis under factors identified in the Senate Report accompanying the 1986 amendments to the FCA (S. Rep. No. 99-345, at 28 (1986)), as well as in accordance with a set of “Relator’s Share Guidelines” that DOJ issued in December 1996 (11 FCA and Qui Tam Quarterly Review, at 17-19 (Oct. 1997)), the Shea court ultimately concluded that the relator in the case before it was entitled to 20% of the settlement. The court focused much of its analysis on the extent to which the relator was involved in the Government’s investigation, and it thereby provided a fairly detailed account of the interactions between DOJ and the relator in this case. Among other things, the court noted the following:

  • The relator “participated fully in all aspects of the Government’s investigation and settlement discussions with Verizon,” and estimated “he spent hundreds of hours each year on the case.”
  • The relator hired a “leading” telecommunications attorney to assist in the effort.
  • Early in the case, the Government requested that the relator provide a memorandum stating relator’s position on why each surcharge relator identified was prohibited under the Federal Acquisition Regulation and the contract in issue. The Government also asked the relator to rank the charges in priority for investigation. The relator and his counsel provided an “exhaustive” chart and a legal memorandum setting forth the factual and legal bases for the allegations about each surcharge. The court stated that the relator’s and his counsel’s work “sav[ed] the Government enormous resources” and “helped the Government’s auditors to identify relatively quickly the ad valorem charges in Verizon’s back-up billing data.”
  • The relator, through counsel, worked with the Government to draft proposed categories for subpoenas to be issued.
  • The relator, “[o]n numerous occasions, . . . discussed with the GSA auditors the methods they were using to identify illegal surcharges.”
  • The relator signed a non-disclosure agreement so “he could have access to the findings of the GSA audit team and analyze their usefulness to the litigation.”
  • The relator reviewed a PowerPoint presentation Verizon had used to present its defenses to the Government. The relator thereafter made a “multi-hour presentation” to DOJ addressing Verizon’s positions.
  • The relator “was forced to ask [the] Court to enter an Order, which was granted, directing GSA and [DOJ] to share the Government’s underlying damages estimate with him so he could analyze the methodology used.”

While each FCA qui tam case is, of course, different, the recent opinion in <lt;EM>Shea demonstrates the significant involvement that relators can have, behind the scenes, in the Government’s investigation of qui tam allegations.

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