An article in the American Bar Association’s Public Contract Law
Journal (p. 241) “Evidence from the False Claims Act: Does Private Enforcement Attract Excessive
Litigation”, is being cited by critics of the False Claims Act. The gist of
the article was no surprise to whistleblower attorneys like me: cases
taken over by the Government (called “intervened” cases) almost
never lose, and “non-intervened” cases almost never win. What
did surprise me, though, was the reaction of critics of the False Claims
Act system, who claimed the statistics are evidence that the qui tam system
– which allows a relator to file a case in the name of the Government
– encourages frivolous cases. These critics fundamentally misunderstand
the practical obstacles facing relators who try to prosecute a case on
their own.
The Intervention System: Under the False Claims Act, the whistleblower (called the “relator”)
brings the lawsuit on behalf of the United States. The United States then
is allowed time to investigate the case. When the United States concludes
its investigation, or when the time for investigation runs outs, whichever
comes first, the United States has a choice to make. It can intervene
in the case, which essentially means that the United States takes over
the case. The relator remains in the case, but takes a back seat to the
United States, which becomes the chief prosecutor of the case. On the
other hand, the United States can refuse to intervene in the case. In
that case, the relator has the option to continue the case on his or her
own, without the help of the United States. The relator also can choose
to dismiss the case.
The Statistics: According to the article, when the U.S. intervenes in a case, the United
States wins the case 95% of the time. On the other hand, when the United
States declines the case and leaves the relator to prosecute it on his
or her own, the relator dismisses the case 25% of the time. Fifty percent
of the time, a court dismisses the case. Only 22% of the cases go on to
trial, and the defendants win somewhat more than half of those cases.
In the end, only 9% of the cases where the Government refused to intervene
end up resulting in a settlement or judgment for the United States. While
the United States intervened in 953 cases, it refused to intervene in
2314 cases, which means that the overall “success rate” was
less than 50%.
An Overview of Why the Critics are Wrong: While the statistics for non-intervened cases are grim for relators, the
fact that non-intervened cases tend to be dismissed or lost is emphatically
not evidence of an abundance of frivolous claims. Put simply, there are
a number of reasons why relators do worse when the Government does not
intervene – and those reasons have nothing to do with whether the
case was good in the first place. In my next whistleblower blog entry,
I will talk about why the critics are wrong to conflate the effectiveness
of the False Claims Act with the success of non-intervened cases.