Considerations for Whistleblowers and Companies

Practice Management

Considerations for Whistleblowers and Companies

In June 2022, I wrote an article, “The False Claims Act and the Seal: What Whistleblowers Need to Know,” which I encourage everyone reading this article to also read. The United States Supreme Court's decision in United States ex rel. Polansky v. Executive Health Resources (599 U.S. 419; 2023) confirmed that the United States government has nearly unfettered discretion “to dismiss a [federal False Claims Act] suit over a relator's objection” ( Id . at 423; see also State ex rel. Fox v. Thornley, 2023 IL App [4 th ]; citing Polansky as instructive when interpreting the Illinois False Claims Act).


As the Court held in Polansky :


“The Third Circuit, though, was right to note that [section 4(c)](2)(A) motions will satisfy [Federal Rule of Civil Procedure] 41 in all but the most exceptional cases… The inquiry is necessarily ‘contextual.' And in this context, the government's views are entitled to substantial deference. A qui tam suit, as we have explained, is on behalf of and in the name of the government. The suit alleges injury to the government alone. And the government, once it has intervened, assumes primary responsibility for the action. Given all that, a district court should think several times over before denying a motion to dismiss. If the government offers a reasonable argument for why the burdens of continued litigation outweigh its benefits, the court should grant the motion. And that is so even if the relator presents a credible assessment to the contrary” ( Id . at 437-38).


In essence, the U.S. Department of Justice (DOJ) is given a lot of deference in a 3730(c)(2)(A) dismissal; however, the U.S. Supreme Court left the window open for specific instances, which we have not seen yet, where the relator would prevail over the objections of the government. It is also important to note that the government rarely uses its dismissal power under 3730(c)(2)(A).


With this backdrop painted, it brings me to related items that potential clients ask, clients re-ask, and audience members at presentations and webinars pose. This article addresses these questions from the whistleblower vantage point and a compliance perspective.


Questions and Answers (Q&A)


Here are five common questions that I receive, with answers that I routinely provide. The disclaimer, facts, and circumstances, as well as other portions of the statute, could change the response, and it is for this reason that the responses are not meant to constitute legal advice.


Q: What is the difference between intervention, declination, and dismissal at the point the case is about to be unsealed?


A: Under 31 U.S.C. §3730(b)(1), aka “ qui tam provision,” a person “may bring a civil action for a violation of section 3729 for the person and for the United States government. The action shall be brought in the name of the government.” In other words, the government is always the ultimate party in interest in an FCA case brought under the qui tam provision. The ability of the federal government (or a state government under its respective state law) to intervene in the case or decline the case and allow the relator's counsel to move forward ( see infra ) is the government's decision. If the government declines to intervene, then a separate conversation takes place between the relator and his/her/their lawyer(s) to decide whether or not to pursue the case.


An important point to note at the outset is that the government declines approximately eighty percent (80%) of the FCA whistleblower cases that it receives. To paraphrase what the federal and state governments have set forth in different statements of interest in various cases, just because the government declines a case does not mean that the case lacks merit. Indeed, as a September 26, 2022, DOJ Press Release shows:


“Pharmaceutical company Biogen Inc. (Biogen), based in Cambridge, Massachusetts, has agreed to pay $900 million to resolve allegations that it caused the submission of false claims to Medicare and Medicaid by paying kickbacks to physicians to induce them to prescribe Biogen drugs. [ This settlement] resolves a lawsuit filed and litigated by former Biogen employee Michael Bawduniak against Biogen under the   qui tam   or whistleblower provisions of the federal False Claims Act, which permit a private party (known as a relator) to file a lawsuit on behalf of the United States and receive a portion of any recovery. The United States may intervene in the action or, as in this case, the relator may proceed with the lawsuit.”


Regardless of whether the government intervenes or declines at the outset, there are additional items to be aware of, as indicated herein.


Q: Will the relator get regular updates throughout the case on its investigation?


A: In general, after the relator's interview with the government, if the government has questions or needs assistance, they will ask relator's counsel throughout the process. Sometimes, there are additional relator interviews or information that is requested by the government either of the relator or of their counsel. A relator should not expect regular, detailed updates from the government during the course of the investigation. Additionally, as the government always iterates, once the case is under seal, it is the government's investigation. Unless a relator is provided information without asking or stumbles across information that is relevant during the course of their regular duties, they should not continue to acquire information directly.


Q: Will the name of the relator come out from under seal in the public domain?


A: Yes. In all but the rarest of circumstances when a separate motion is filed in the court where the case is pending by the relator's counsel with the blessing of the U.S. Department of Justice, a relator's name will become public.


Q: Can a defendant retaliate against me after a case?


A: 31 U.S.C. §3730(h), which was amended in 2009 and 2010, is the provision of the False Claims Act that addresses the prohibition against retaliation. Unlike other provisions in the FCA, the government does not prosecute “h” claims and there is a state law component to them. A recent Sixth Circuit case is illustrative. In United States ex rel. Felten v. William Beaumont Hospital (993 F.3d 428, 432; 6th Cir. 2021), the Sixth Circuit concluded:


“While there are textual clues suggesting that § 3730(h)(1) could be read to extend to former employees, the Sixth Circuit found that the statute's use of ‘employee' was ambiguous. To resolve that ambiguity, the court honed in on Congressional intent and the purposes of the FCA. ‘The FCA is designed to discourage fraud against the government.' Its anti-retaliation provision promotes that end by encouraging employees to report fraud by ‘protect[ing] persons who assist [in its] discovery and prosecution.' If employers can simply threaten, harass, and discriminate against employees without repercussion as long as they fire them first, the court reasoned, potential whistleblowers could be dissuaded from reporting fraud against the government. For that reason, the Sixth Circuit held that the anti-retaliation provision of the FCA may be invoked by a former employee for post-termination retaliation by a former employer” ( Id. at 434).


The Sixth Circuit specifically pointed out: “Likewise, the provision for special damages can provide relief to former employees. That provision explicitly remedies ‘discrimination'—misconduct that is not dependent on whether the plaintiff is still an employee,” referring to § 3730(h)(2), “Relief...shall include...compensation for any special damages sustained as a result of the discrimination....” ( Id . at 434).


Felten also indicated: “Nobody disputes that former employees can obtain relief under the anti-retaliation provision.   For example, the FCA creates a specific cause of action for retaliatory discharge, which can be brought only by discharged (former) employees.   Or an employee might quit or retire after their employer mistreats them because of their FCA-protected activity. These former employees, however, would have been current employees when they were retaliated against.”


Q: Is credit given by the government for comprehensive compliance programs as a mitigating factor in enforcement actions?


A: Yes. In healthcare, HHS-OIG has the discretion, as it recently indicated in its November 2023 Compliance Guidance. Additionally, the DOJ has a list of factors that it considers in both civil and criminal cases in the Justice Manual .




In my experience, the decision to become a whistleblower is not an easy one for most people. The reason is because some companies and their counsel are caustic and ruthless. In reality, instead of forcing a whistleblower out or firing them, which is a form of retaliation, companies should take the opportunity to adhere to substantive and comprehensive non-retaliation policies and procedures, listen to legitimate, good faith concerns, and commence an equally good faith investigation into the concerns that are being raised. Likewise, whistleblowers should know that the process is long, not to expect regular updates from their lawyers when the government is undertaking its investigation, and that in 99.9% of cases, a whistleblower's name will come out from under seal into the public purview—whether it is a declined FCA case or an intervened FCA case.


In sum, the FCA and other whistleblower statutes' primary purpose is to return money to the federal and state governments' coffers and hold actors accountable who violate a myriad of laws across numerous sectors. By cultivating a culture of compliance internally and by having professionally respectful relationships across the aisle when legitimate whistleblower cases are brought, the public benefits from more ethical companies and having their hard-earned dollars returned to the state and federal fisc, where they belong.


Rachel V. Rose, JD, MBA


Ms. Rose has a unique background, having worked in many different facets of healthcare throughout her career including: work in acute care hospitals including the operating room and dietary department; consultative work as a top performing representative for the pharmaceutical and medical device industry; work for the Chairman of the Reform and Oversight Committee on Capitol Hill; intern at the Department of Health and Human Services; and compiling policy papers at the Royal College of Nursing in London. She has worked on Wall Street and at one of the Big Four consulting firms.


Rachel V. Rose – Attorney at Law, PLLC - Home (rvrose.com)


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