Qui Tam

Important New Opinion from the U.S. District Court for the Eastern District of Virginia

By Zachary A. Kitts

An important opinion was issued today by Judge Cacheris in the U.S. District Court for the Eastern District of Virginia concerning qui tam litigation. 

By way of background, the first step in a qui tam case under the federal False Claims Act is to disclose the claim by serving a written disclosure memorandum on the Attorney General of the United States and also on the U.S. Attorney for the district in which the relator intends to file.  The FCA requires this written disclosure together with "substantially all material evidence and information the person possess..." in 31 U.S.C. 3730(b)(2).
 
An issue that comes up from time to time is the discoverability of these disclosure statements once the case is unsealed and litigation begins.  It is the general opinion of plaintiff-side qui tam lawyers that such disclosures are protected, and as such lawyers most include a paragraph on the first page along the lines of the following: 

This disclosure memorandum is subject to the attorney-client privilege and the privilege afforded to attorney work product.  This memorandum was prepared by attorneys for the relator for submission to the United States Department of Justice in anticipation of litigation, and is therefore also subject to the privilege afforded to communications between parties with a commonality of interest and/or the joint-prosecution privilege.  Submission of this document to the United States Government is not and shall not be construed to be a waiver of any privilege or a waiver of any exemption from discovery of this document that otherwise applies.

Judge Cacheris' opinion holds that disclosure statements to the government are protected.  Here, defendants did not satisfy their burden of demonstrating a substantial need for the factual information contained within the disclosure statement, nor did they demonstrate that they were unable to obtain the information contained in the disclosure by any other means. 

As an aside, I have often wondered why some defense counsel are so very interested in the disclosure statement served on the government.  Given the strict requirements federal courts have placed on FCA Complaints under Fed. R. Civ. P. 9(b) (namely, the allegations of the Complaint must be pled with particularity) there is normally not much difference between the disclosure statement and the Complaint filed under seal with the Court.  Certainly, if a relator's counsel chooses to leave out of the Complaint any facts included in the disclosure, he or she does so at his or her own peril. 

At any rate, congratulations to TAF member David Stone  for his fine work.  There is a split amongst the federal courts to consider this issue, and David's fine work helped to contribute one more decision in our favor.

Full post as published by Virginia Qui Tam Law on March 03, 2010 (boomark / email).