FCA Settlement Issues for Relators

Article for Immediate Release- Stephen Danz & Associates | FCA Settlement Issues for Relators

Settlement of a Federal False Claims Act case (“FCA”) presents a number of interesting issues when it comes time to “signing off” on the deal.  Here are some points from Los Angeles Employment Attorneys at Stephen Danz & Associates  to keep in mind when settling your long-running or potential FCA case:

First, has the government intervened in the qui tam case? If so, the FCA provides that the action may be settled “notwithstanding the objections of the person initiating the action if the court determines, after a hearing, that the proposed settlement is fair, adequate and reasonable under all the circumstances.”  In addition to a right to a hearing, it may be possible to engage in limited discovery to determine the adequacy of the settlement. Ultimately, the government maintains the right to dismiss an action without settling if it is in the interest of the government.

In a recent “reverse false claims” case we handled against a public entity (yes, all but the State of California or other states) can be named as defendants in qui tam litigation) the government proposed adding claims it learned of which were not in the relator’s original qui tam suit, and could be expected to take the position that the relator was not entitled to participate in those added claims. The relator’s attorney may want to take the position that the settlement is not, in fact, “fair, just and reasonable”.

A relator has a right to recover attorney fees and expenses. This includes a lodestar calculation, which involves a determination of the reasonable hours spent on the matter and the reasonable rates from which to calculate the amount. Generally, the venue in which the claim is filed will control fees, not the actual location of the relator’s legal team. In the District of Columbia the “Liffey Matrix” is relied upon to determine rates for lawyers based on year’s of experience. Keep in mind that defendant’s may have joint and several liability and each defendant may be required to share a pro rate share of the relator’s fees. Some factors are the relative degree of culpability of each defendant; the time the plaintiff was forced to litigate against that entity; the ability of the defendant to pay and whether multiple defendants are joint tort feasors.

A relator may have a right to recover a relator’s bounty in an “alternate remedy case”. In US ex rel Barajas vs. Northrop Grumman, the government received an economic benefit, but left the relator with no separate FCA action. This may also lead to liability for attorney’s fees.

In some situations the government will decline to prosecute all claims and leave others to the discretion of the relator to pursue. These may also include individual retaliation and employment claims under 31 USC Section 3730(h). Relator counsel should make sure these open claims are excluded from the government’s settlement.

Our next article will focus on settlement agreement where the Government Does Not Intervene. Contact us to discuss your qui tam case, nationwide representation. Free consultation and if we can’t help, we’ll try to find someone who can!  Stephen Danz & Associates, 877 789-9707.