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AVOIDING CRIMINAL CHARGES

Dr. Nick Oberheiden
Founder

Aaron Wiley
Former State &
Federal Prosecutor

S. Amanda Marshall
Former U.S. Attorney

Lynette Byrd
Former Assistant
U.S. Attorney

  • Federal Criminal Defense
  • Federal Trial Lawyers
  • Search Warrant Defense
  • Grand Jury Subpoenas
  • OIG Subpoenas
  • Whistleblower Cases
  • FBI, DEA, IRS, OIG, HHS Cases

False Claims Act and Whistleblower/Qui Tam Defense Overview

The legal headlines have been increasingly dominated by corporation after corporation undergoing investigations of wrongdoing stemming from tip-offs from disgruntled former “whistleblower” employees. These allegations commonly relate to issues pertaining to fraudulent activity against the government and are typically prosecuted under the federal False Claims Act or a comparable analogous state statute. Oftentimes, fully resolving these costly and disruptive claims are a major source of stress and financial loss for the defendant. That is why it is essential to have an experienced attorney, like the ones you’ll find at Oberheiden, P.C. You will have someone fluent in all aspects of the qui tam legal process in your corner from the moment that you learn you or your business may potentially be involved in these complex legal affairs. Doing so will ensure the matter is responsibly handled at all times and that your rights are protected at every stage of the process.

Defending Qui Tam Allegations: What to Expect

Pursuant to the False Claims Act, there are two main routes that the Department of Justice can advance civil claims for reimbursement and related financial penalties against a defendant corporation.

The first is via a government-initiated investigatory scheme. The Federal Bureau of Investigation (FBI), the Department of Health and Human Services (DHHS), and several other related federal entities routinely conduct investigations of individuals and businesses for submitting inaccurate and fraudulent claims to the government. And based upon the subsequent evidence garnered during these reviews, the DOJ can either initiate a civil lawsuit under the False Claims Act or seek criminal charges against the offender, depending on the severity of the statutory violation.

The second process that individuals and businesses can encounter potential liability under the False Claims Act is through a private citizen originated legal action per the statute’s whistleblower/qui-tam clauses. This has both significant overlaps and unique distinguishing factors from government-initiated enforcement proceedings.

implifying the Qui Tam Legal Process

The following is a brief overview of the main phases involved in a stereotypical qui tam claim brought under the federal False Claims Act:

  • Initial Filing of Whistleblower’s Complaint: A qui tam action is initiated by the filing of a claim on behalf of a private citizen. While whistleblowers are commonly current or previous employees of the defendant corporation, any member of the general public who has first-hand information regarding the alleged fraudulent activity under the False Claims Act can file a civil action. The relator is typically permitted to remain anonymous for a minimum of sixty days during the government’s subsequent investigation.
  • Government Analyzes the Legitimacy of the Relator’s Claim: After a relator submits a formal qui tam claim, the government will conduct a thorough and comprehensive assessment in order to decide whether an investigation is justified. This investigation may involve officials from the DOJ, FBI agents, and comparable investigative personnel from other federal agencies affected by the alleged fraud – including the DHHS in instances of Medicare fraud investigations.
  • The Government Intervenes or Declines: Based on the evidentiary findings resulting from their investigation, the government will choose to either intervene in the legal proceedings or decline to seek further prosecutorial options. As such, it is crucial to have competent legal representation, like the attorneys at Oberheiden, P.C., during all stages of investigation to protect your interests and maximize the chances of your case being dismissed. It is important to note, however, that even if the government ultimately chooses not to intervene in the legal proceedings, the relator can sustain their pursuit of the case independently.
  • Potential Settlement Negotiations and Impending Litigation: Similar to non-governmental civil litigation, False Claims Act suits can (and often do) end in settlement agreements. Settling is generally the fastest, most cost-efficient and convenient manner in which to resolve a qui tam issue affecting the defendant. However, if settlement proves to not be a viable or ideal option, you may need to alternatively proceed to take your case to trial where the litigation will be conducted similarly to other types of federal claims.

The potential civil penalties associated with qui tam cases pursuant to the False Claims Act can be significant. The maximum allowable penalties under the statute include a payment of three times the government’s expenditures (commonly referred to as “treble” damages) in addition to finds of up to $11,000 per false claim the defendant is deemed liable for. What exactly constitutes an independent “false claim” in qui tam litigation is often construed by the court quite narrowly – meaning defendants can potentially face hundreds of thousands or millions of dollars in civil liability debt.

Mounting an Effective Qui Tam Litigation Defense

For corporate entities and individuals facing the threat of qui tam litigation, organizing a sound defense strategy is essential to mitigating the risk for disruptive government intervention and costly financial repercussions in the form of fines and drawn-out trial proceedings. Qui tam suits are those associated with claims filed by private citizens (also known as “relators”) on behalf of the federal government. After a suit has been submitted, the government has a statutorily-mandated obligation to conduct a formal investigation and make a subsequent determination as to whether or not to initiate prosecutorial action pertaining to the alleged fraudulent activity.

Qui Tam Defense Pre- & Post-Intervention Methodologies

Although it only requires a relatively bare-bones allegation of criminal fraud under the federal False Claims Act for a relator to substantiate an initial qui tam legal proceeding, far more evidence is required – both in substantive and procedural respects – for the litigation to progress past the opening pleading phases and ultimately result to a finding of criminal or civil liability against a given defendant. Substantiating liability under the False Claims Act is a notoriously difficult undertaking. Businesses and corporations facing accusations of government contract fraud, Medicare misconduct, and related statutory violations will often have several potential defenses available to them in order to minimize risk of any looming legal backlash.

Some of the most commonly implemented defense strategies in qui tam cases under the False Claims Act include:

  • Procedural Inconsistencies: As is the case in all categories of federal government litigation, relators in qui tam claims must remain complaint (and often strictly so) with the Federal Rules of Civil Procedure (FRCP). Relators would not be granted a free ‘pass’ on any technical and procedural shortcomings, regardless of any potential justifications they may attempt to offer. Calling out and formally challenging these deficiencies from the onset of the litigation proceedings can often, at the very minimum, slow down the legal process against a corporate defendant and start to raise questions from a judicial and governmental perspective about the legitimacy of the relator’s case – a key step in reducing the risk that the government will ultimately choose to dedicate its resources to advance the initial claim.
  • Failing to File Requisite Disclosure Statement: In addition to the initial formal complaint (which is the document that is filed in federal court to start the qui tam legal process) the relator must also submit a disclosure statement to the Department of Justice. Specifically, this statement must include the following clause in order to be deemed legitimate in a court of law: “substantially all material evidence and information the [relator] possesses.” While the disclosure statement is not initially provided for review to the defending party, issues later made discoverable, regarding the pertinent details the relator might have overlooked when drafting the disclosure statement, may lead to grounds for seeking dismissal of the case in its entirety.
  • Insufficient Evidentiary Backing to Prove Liability: In order to establish liability pursuant to the False Claims Act, the relator’s allegations and supporting evidentiary record and documentation must substantiate a judiciary’s finding of a requisite specified level of intent. In general terms, offering an inaccurate invoice or billing for payment to the government does not, on its own volition, subject an entity to liability for federal fraud under the False Claims Act. To be successful in qui tam litigation, the government and cooperating relator must typically be able to prove, at a minimum, that the defending party should have known about the purported fraudulent activity being attempted. Thus, even in instances involving legitimate allegations of false claims, defendants will oftentimes be able to offer mitigating counter evidence to avoid False Claims Act prosecution.

Oberheiden, P.C.: Experienced Representation for False Claims Act Investigations

Given the inherent complexity and substantial risk associated with defending qui tam litigation, it is essential that you consult experienced and responsive legal counsel, at the earliest stages of litigation as possible, to minimize the risk that you are found civilly or criminally liable. Even if your company has not received information regarding a potential threat of a whistleblower action, our dedicated attorneys can assist you in formulating an internal compliance plan. Such a preventative measure is becoming increasingly essential in the modern era of the Sarbanes-Oxley regulatory scheme and the related emphasis on prosecuting corporate wrongdoing. Carefully implemented internal control procedures allow employees to submit complaints regarding issues they discover during their employment and lessen the chances they feel compelled to bring their issues to the attention of the federal government.

If you or your company has been named as a party in a qui tam lawsuit or is considering preventing such matters from arising in the future, it is critical that you hire an attorney to develop an internally regulated compliance program; or, alternatively, strategically intervene in the government’s investigative proceedings from their initiation. To schedule a free, comprehensive and confidential case analysis, contact the legal team at Oberheiden, P.C., today by calling (888) 519-4897 or completing our online contact form.

Who Will Handle Your Case

When you hire us, you will not work with paralegals or junior lawyers. Each lawyer in our Health Care Practice Group has handled at least one hundred (100) matters in the health care industry. So, when you call, you can expect a lawyer that immediately connects with your concerns and who brings in a wealth of experience and competence. For example, you need someone like Lynette S. Byrd, a former federal prosecutor in health care matters, who recently left the government and who is now sharing the valuable insights she gained as a health care prosecutor with our clients.

Dr. Nick Oberheiden

Dr. Nick
OBERHEIDEN

Lynette S. Byrd

Lynette S.
BYRD

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