Gathering Evidence in Qui Tam Actions

Qui tam whistleblowers first discover fraud against the government in a variety of different ways; some learn it from a business owner's own statements, while others witness it in caring for a patient who has patently not received a billed-for treatment. Documentary evidence does not always accompany that first discovery of fraud, but without it, a case brought under the False Claims Act (FCA) can devolve into a swearing match, as the government, relators' counsel, and most whistleblowers are keenly aware. Consequently, even after making the difficult decision to blow the whistle on an employer by reporting FCA violations, a soon-to-be qui tam relator must often gather evidence to support his or her allegations.

Although the FCA encourages citizens to investigate and gather evidence to prove a fraud, a tension exists between the interests of the public, the government, and the relator (or whistleblower) on the one hand, and the defendant's interest in protecting its property, including potential proprietary information, on the other. A potential whistleblower may well ask: How much evidence must
I muster to support a qui tam action? What ethical concerns or legal consequences exist when I gather documents and other evidence from an employer?

These questions should not intimidate or prevent a potential relator from reporting fraud against the government. Generally, a potential relator may gather anything in his or her care, custody, or control that evidences fraud covered by the FCA.

The Relator's Duty to Gather Evidence

Upon filing a qui tam action, a relator must voluntarily provide the government with a “copy of the complaint and written disclosure of substantially all material evidence and information the person possesses” regarding the allegations. 31 U.S.C. ' 3730(b)(2) (emphasis added). The more relevant evidence the relator can provide to his or her attorney and the government, the more likely the relator will be able to substantiate the allegations and ultimately succeed in prosecuting the lawsuit.

Section 3730(h) of the FCA protects potential relators from retaliation for “lawful acts done ' in furtherance of an action under this section, including investigation.” 31 U.S.C. ' 3730(h). Employers often flout the FCA's “protected activity” provision and terminate whistleblowers under a pretext. Nevertheless, this section of the FCA “manifests Congress' intent to protect employees while they are collecting information about a possible fraud, before they have put all the pieces of the puzzle together.” U.S. ex rel. Yesudian v. Howard Univ., 153 F3d 731, 740 (D.C. Cir. 1998) (emphasis in original); see Thompson v. Quorum Health Res., LLC, 2009 WL 4758752 (W.D. Ky. Dec. 7, 2009) (concluding the plaintiff's good faith while gathering documents related to his fraud allegations and speaking with his attorney about his potential qui tam satisfied the requirement to engage in protected activity).

Indeed, the relator needs this protection even after the case is filed because he or she faces special pleading hurdles that apply to fraud cases under Federal Rule of Civil Procedure 9(b) (which requires that allegations of fraud be pleaded with particularity), yet the relator is not provided access to formal discovery beforehand while the case is under seal. Although the government has access to certain tools of discovery during the seal period, it nevertheless relies heavily on relators and their counsel to investigate the fraud allegations while the case is under seal, and in particular, to provide it with documentary evidence. See Robert Fabrikant, In the Shadow of The False Claims Act: “Outsourcing” the Investigation by Government Counsel to Relator Counsel During the Seal Period, 83 N.D. L. Rev. 834, 843 (2007) (“[D]uring the seal period, relator's counsel, at the request of the government, conducts factual and legal research [and] participates in interviewing fact witnesses.”); see also Dep't of Justice Relator's Share Guidelines (Dec. 10, 1996), (noting as item for consideration in determining relator's share in the recovery, “The relator provided substantial assistance during the investigation and/or pretrial phase of the case.”).

In its brief in U.S. ex rel. Grandeau v. Cancer Treatment Centers of America, the government emphasized the importance of a relator's ability to provide documents to the government: “[I]n order to proceed with an FCA action, the FCA requires that relators disclose to the United States alone 'substantially all material evidence and information the person possesses,' 31 U.S.C. ' 3730(b)(2), and ties relator's share to the importance of her participation in the action and the relevance of the information she provided. ' Not only does the FCA contemplate that relators will share evidence with the government, but also that they will do so in secrecy.” Submission of the United States as Amicus Curiae in Support of Relator's Motion to Dismiss the Counterclaims of Defendant Midwestern Regional Medical Center, Inc. at 7, U.S. ex rel. Grandeau v. Cancer Treatment Ctrs. of Am., 99-C-8287 (E.D. Ill. Apr. 2, 2004).

An important reason for such reliance is the risk that a defendant, once asked for a particular document, will respond (truly or falsely) that the document is lost, misplaced, or destroyed in the normal course of business.

Next month, we will discuss further the interplay between employers wanting to control information within their organizations and the interests advanced by a relator's disclosure.

Joel Androphy, a partner at Berg and Androphy, is the author of the treatise, “Federal False Claims Act and Qui Tam Litigation,” Law Journal Press (2010), the research source of the issues discussed in this article. Ashley Gargour is also a partner, and Sarah Frazier and Rachel Grier are associates in the firm.

Qui tam whistleblowers first discover fraud against the government in a variety of different ways; some learn it from a business owner's own statements, while others witness it in caring for a patient who has patently not received a billed-for treatment. Documentary evidence does not always accompany that first discovery of fraud, but without it, a case brought under the False Claims Act (FCA) can devolve into a swearing match, as the government, relators' counsel, and most whistleblowers are keenly aware. Consequently, even after making the difficult decision to blow the whistle on an employer by reporting FCA violations, a soon-to-be qui tam relator must often gather evidence to support his or her allegations.

Although the FCA encourages citizens to investigate and gather evidence to prove a fraud, a tension exists between the interests of the public, the government, and the relator (or whistleblower) on the one hand, and the defendant's interest in protecting its property, including potential proprietary information, on the other. A potential whistleblower may well ask: How much evidence must
I muster to support a qui tam action? What ethical concerns or legal consequences exist when I gather documents and other evidence from an employer?

These questions should not intimidate or prevent a potential relator from reporting fraud against the government. Generally, a potential relator may gather anything in his or her care, custody, or control that evidences fraud covered by the FCA.

The Relator's Duty to Gather Evidence

Upon filing a qui tam action, a relator must voluntarily provide the government with a “copy of the complaint and written disclosure of substantially all material evidence and information the person possesses” regarding the allegations. 31 U.S.C. ' 3730(b)(2) (emphasis added). The more relevant evidence the relator can provide to his or her attorney and the government, the more likely the relator will be able to substantiate the allegations and ultimately succeed in prosecuting the lawsuit.

Section 3730(h) of the FCA protects potential relators from retaliation for “lawful acts done ' in furtherance of an action under this section, including investigation.” 31 U.S.C. ' 3730(h). Employers often flout the FCA's “protected activity” provision and terminate whistleblowers under a pretext. Nevertheless, this section of the FCA “manifests Congress' intent to protect employees while they are collecting information about a possible fraud, before they have put all the pieces of the puzzle together.” U.S. ex rel. Yesudian v. Howard Univ. , 153 F3d 731, 740 (D.C. Cir. 1998) (emphasis in original); s ee Thompson v. Quorum Health Res., LLC, 2009 WL 4758752 (W.D. Ky. Dec. 7, 2009) (concluding the plaintiff's good faith while gathering documents related to his fraud allegations and speaking with his attorney about his potential qui tam satisfied the requirement to engage in protected activity).

Indeed, the relator needs this protection even after the case is filed because he or she faces special pleading hurdles that apply to fraud cases under Federal Rule of Civil Procedure 9(b) (which requires that allegations of fraud be pleaded with particularity), yet the relator is not provided access to formal discovery beforehand while the case is under seal. Although the government has access to certain tools of discovery during the seal period, it nevertheless relies heavily on relators and their counsel to investigate the fraud allegations while the case is under seal, and in particular, to provide it with documentary evidence. See Robert Fabrikant, In the Shadow of The False Claims Act: “Outsourcing” the Investigation by Government Counsel to Relator Counsel During the Seal Period, 83 N.D. L. Rev. 834, 843 (2007) (“[D]uring the seal period, relator's counsel, at the request of the government, conducts factual and legal research [and] participates in interviewing fact witnesses.”); see also Dep't of Justice Relator's Share Guidelines (Dec. 10, 1996), (noting as item for consideration in determining relator's share in the recovery, “The relator provided substantial assistance during the investigation and/or pretrial phase of the case.”).

In its brief in U.S. ex rel. Grandeau v. Cancer Treatment Centers of America, the government emphasized the importance of a relator's ability to provide documents to the government: “[I]n order to proceed with an FCA action, the FCA requires that relators disclose to the United States alone 'substantially all material evidence and information the person possesses,' 31 U.S.C. ' 3730(b)(2), and ties relator's share to the importance of her participation in the action and the relevance of the information she provided. ' Not only does the FCA contemplate that relators will share evidence with the government, but also that they will do so in secrecy.” Submission of the United States as Amicus Curiae in Support of Relator's Motion to Dismiss the Counterclaims of Defendant Midwestern Regional Medical Center, Inc. at 7, U.S. ex rel. Grandeau v. Cancer Treatment Ctrs. of Am., 99-C-8287 (E.D. Ill. Apr. 2, 2004).

An important reason for such reliance is the risk that a defendant, once asked for a particular document, will respond (truly or falsely) that the document is lost, misplaced, or destroyed in the normal course of business.

Next month, we will discuss further the interplay between employers wanting to control information within their organizations and the interests advanced by a relator's disclosure.

Joel Androphy, a partner at Berg and Androphy, is the author of the treatise, “Federal False Claims Act and Qui Tam Litigation,” Law Journal Press (2010), the research source of the issues discussed in this article. Ashley Gargour is also a partner, and Sarah Frazier and Rachel Grier are associates in the firm.