August 15, 2022
The federal False Claims Act and similar state anti-fraud statutes authorize private citizens to redress government fraud by filing a legal action on behalf of the United States, as well as for certain states, to recover for the government the funds that wrongdoers unlawfully obtained, along with substantial penalties. These lawsuits are referred to as qui tam actions, and the private citizens, known as whistleblowers, who successfully prosecute these suits may receive a portion of the recovery. Because the United States and individual states are the real parties in interest to qui tam actions, they have the right to take over, or intervene in, the whistleblower’s action. For a variety of reasons, however, the federal and state governments often opt not to take over qui tam cases even though the whistleblowers’ allegations are meritorious.
When the government declines to intervene in a filed False Claims Act lawsuit, the whistleblower can still pursue the action on the government’s behalf. Numerous whistleblowers who have continued pursuing their False Claim Act cases following a government declination have gone on to successfully recover substantial sums for the government and taxpayers. According to data published by the U.S. Department of Justice, between 2010 and 2021, whistleblowers secured more than $3 billion in judgments and settlements for the government in cases in which the government declined to intervene.
Whistleblowers’ perseverance and success in securing significant recoveries for the government in declined False Claims Act cases continues in 2022. On July 20th, whistleblower Michael Bawduniak announced that pharmaceutical company Biogen agreed to pay $900 million to resolve his qui tam action alleging that Biogen provided kickbacks to induce physicians to prescribe its drugs to Medicare and Medicaid patients. Mr. Bawduniak pursued his case even though the United States and several states declined to intervene. And on August 3rd, a jury sided with whistleblower Ronald Streck and entered a $61 million verdict against Eli Lilly after determining that the drug company deliberately reported false pricing to state Medicaid programs in order to lower rebates that it owed to the states. If upheld, the verdict will be trebled under the False Claims Act. Here again, Mr. Streck pursued his qui tam action and prevailed despite the United States’ and several states’ decisions not to intervene.
For many qui tam cases, a decision by the government not to intervene does not mean that the whistleblower’s allegations lack merit and should not be pursued. Whistleblowers’ continued litigation of meritorious cases after a government declination brings accountability to corporations that defraud the government while returning large sums to our nation’s treasury and deterring future fraud.