I am a False Claims Act lawyer, and I am doing a series of articles addressing criticism of the Act. A recent article in the Public Contract Law Journal, published by the American Bar Association, gave grim statistics about the success rate for relators (whistleblowers) in False Claims Act ("FCA") cases where the Government chooses not to intervene in the case. According to author David Krok, by using data he received as a result of the Freedom of Information Act he was able to determine that relators have a 95% chance of winning if the Government chooses to intervene in the case; conversely, they have only a 9% chance of winning if the Government chooses not to intervene. Citing statistics such as those Krok cites in his article, Does Private Enforcement Attract Excessive Litigation? Evidence from the False Claims Act, critics have suggested that these statistics are evidence that relators should not be allowed to prosecute non-intervened cases.
For more about "intervention", see my earlier blog post, Why Whistleblower Cases Seldom Succeed After the Government Declines the Case.
Critics argue that the relators must not be bringing meritorious suits since the relators generally do not succeed when the Government chooses not to intervene, but they are missing a critical point: the impact on the case that occurs simply because the Government refused to intervene.
Three important things happen when the Government does decide to intervene. First, because the Government chose to intervene in the case, courts tend to assume that the case must have merit. Second, the courts tend to give the Government the benefit of the doubt about whether the case is pled sufficiently. And third, the Government usually has sufficient information to plead the case appropriately.
When the Government does not intervene, the opposite occurs. The defendant usually files a motion to dismiss in which the defendant argues that the case must not be any good, because -- after all -- the Government refused to intervene in the case. In my experience, the argument is almost always false; the intervention decision most often is related to dollars and cents, and not to facts. Nonetheless, defendants make the argument precisely because they realize that it likely will resonate with the judge. Since the Government does not put anything in writing about why it chose not to intervene, the relator has little to work with in convincing the court that the Government did not believe the case was unfounded.
Because the court already is skeptical about whether the case is meritorious, the court then looks with a jaundiced eye on the claims, and is much more likely to grant a motion to dismiss as a result.
Third, the relator, who is usually an individual, generally has only a limited amount of information. The defendant typically argues that the fact that the relator's information is limited means that the case should be dismissed because the relator cannot prove every detail of the claim in advance, without any discovery. For example, even when the relator has ironclad proof of the fraud that went on, the defendant typically will claim that the relator is missing some other piece of information, such as copies of the bills that were submitted to the government agency. The argument typically is absurd. Does anyone seriously doubt that a hospital is submitting its claims to Medicare? No hospital could stay in business if it failed to submit the claims. Nonetheless, even where a hospital employee can prove that the hospital was billing for procedures that were never performed, the hospital will argue that the case ought to be dismissed because the employee does not have copies of the bills that went to Medicare.
Or course, the irony of the argument is that jobs are typically segmented enough that the relator who knows about the fraud does not know have access to the billing, and vice versa. Some courts have raised the bar unnecessarily high in this situation. The upshot is that courts dismiss clearly meritorious cases, and the Government never recovers the money stolen from it by fraud.