Screening False Claims Act Cases

It’s important to understand that a successful False Claims Act – qui tam action starts with the proper screening of a whistleblower and his, or her, allegations. The initial interview of the whistleblower is important in order to properly evaluate the whistleblower’s allegations and credibility. During this process, you want to obtain information about the whistleblower such as their background and motivation for wanting to “blow the whistle” on the potential defendant. In addition, you want to obtain a full description of the allegations, if there is a federal nexus, and how, or if, it fits with a false claims violation. This process can take an extended period of time depending on the amount of information and records the whistleblower has.

Determining whether there is a potential False Claims Act violation and what the actual fraud scheme is can be difficult if you do not have an understanding of the federal program or procurement process involved. If this is the case, than you will need to seek out an understanding of the federal process involved. Don’t count on the whistleblower to always have that kind of detailed information regarding the process or how the potential defendant falsely bills to the Government. You will need to do some research and may want to seek the advice of consultants who have expertise of the federal system involved.

In addition to the allegations, you need to determine the potential monetary damages to the government and whether it is sufficient to proceed further. The Department of Justice (DoJ) also considers this important in deciding whether they want to get involved.  Also, for statute of limitations purposes, the period of time the fraud took place is important and whether it is continuing to present day.  Does the whistleblower have direct knowledge of the fraud and has he, or she, reported it to the government.

Establishing “original source” is important and if the whistleblower has reported the fraud to the government, getting all the details of when and to what agency is necessary.  Make sure the whistleblower didn’t obtain the information about the fraud through the media or government records, or even from a Freedom of Information Act request.

Other important questions of the whistleblower should include information regarding the potential defendant, information that will help determine if the defendant is financially capable of paying on a judgment or settlement and whether there are any witnesses and/or documents available to help substantiate the allegations. If the whistleblower has records, it is very important to obtain copies and thoroughly review and understand how those records relate to the allegations.

Once the initial information is obtained and evaluated, a decision is then made whether to purse the matter. If your decision is to proceed, then it is important to lay out a plan to substantiate the allegations to a degree that you are comfortable that a false claims violation has occurred and exactly what the scheme is before you file.

There is no hard and fast rule as to how much substantiation is needed in order to file. It depends on the complexity of the allegations, federal procurement process or program involved, and the extent and quality of information provided by the whistleblower. In general, a well documented case that provides some degree of substantiation that lends credibility to the allegations, and allows the government to properly investigate the matter, is necessary in order to give the DoJ motivation to proceed on its own with an investigation.

A mistake made by some attorneys who are inexperienced in filing qui tam actions is to assume that information from the whistleblower alone, without any substantiation, is enough because the DoJ has the resources available to fully investigate the allegations. Under normal circumstances, the DoJ, and the government agencies that investigate the allegations, are strapped with heavy caseloads, many inexperienced investigators, and declining personnel and budgets. Since most government procurement fraud cases are complex and difficult to properly investigate (it normally can take two or three years to fully investigate), it can be very difficult for the government investigative agency to determine the merits of a case within the relatively short period of time given them under the law. Thus, it is even more important to make sure you have enough information that gives the DoJ the best chance of determining that your case has enough merit to intervene.

There many issues whistleblowers feel may be a qui tam, but are not, such as tax violations, government waste and mismanagement, consumer fraud, etc.