817 S.E.2d 318
Va.2018Background
- Relators (qui tam plaintiffs) sued several labs under Virginia Fraud Against Taxpayers Act (VFATA), alleging Medicaid overbilling; Commonwealth declined to intervene.
- Parties settled for $1,250,000, with the Commonwealth approving the settlement.
- Relators and Commonwealth agreed relators were entitled to 28% of the “proceeds,” but disputed whether that 28% applies to gross settlement or to Commonwealth’s net share after refunding the federal Medicaid portion.
- 28% of gross ($1,250,000) = $350,000; 28% of Commonwealth’s post-federal-share remainder = $138,925.
- Trial court awarded relators 28% of the gross settlement; Commonwealth appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether "proceeds of the award or settlement" in Code § 8.01-216.7(B) means gross or net proceeds | "Proceeds" means gross settlement proceeds; relators entitled to 28% of total $1,250,000 | "Proceeds" should mean Commonwealth’s net after deducting the U.S. Medicaid share (so relator’s share comes from state portion) | Court: "proceeds" means gross proceeds; relators get 28% of $1,250,000 ($350,000) |
| Whether relators may claim share for pre-VFATA conduct (retroactivity/apportionment) | Relators seek share from entire undifferentiated settlement (covers 1997–2014) | Commonwealth argues VFATA not retroactive; relator should not get share for pre-2003 claims | Record lacks basis to apportion settlement by date; court affirmed trial court and did not reduce relator’s share for pre-2003 claims |
Key Cases Cited
- Vermont Agency of Nat. Res. v. United States ex rel. Stevens, 529 U.S. 765 (describing qui tam origins and relator concept)
- United States ex rel. Barajas v. United States, 258 F.3d 1004 (9th Cir. 2001) (explaining FCA’s purpose to incentivize relators by awarding a share of recoveries)
- West Virginia Dep’t of Health & Human Res. v. Sebelius, 649 F.3d 217 (4th Cir. 2011) (Medicaid recoveries implicate federal pro rata share)
- Perreault v. Free Lance-Star, 276 Va. 375 (principle of de novo statutory construction review)
- Halifax Corp. v. Wachovia Bank, 268 Va. 641 (use of "net" versus plain "proceeds" as evidencing legislative intent)
- LeMond v. McElroy, 239 Va. 515 (record must support relief; courts cannot apportion settlement absent evidence)