In the Matter of the Enforcement of New Jersey False Claims Act Subpoenas (077506) (Essex and Statewide)
A-5-16
| N.J. | Jun 7, 2017Background
- Relator Paul Denis filed a sealed qui tam suit in D. Del. alleging Medco retained rebates in violation of federal FCA and the New Jersey False Claims Act (NJFCA); he later added New Jersey claims.
- Service of the amended complaint on the NJ Attorney General triggered a 60-day statutory intervention period under N.J.S.A. 2A:32C-5(d), extendable by the court; multiple extensions were granted, totaling ~600 days, with a final deadline of June 2, 2015.
- The Attorney General continued investigatory activity but did not intervene before the final deadline; subpoenas to Medco were served timely, but subpoenas to Henderson and Nardin were served weeks after the deadline and after the qui tam complaint was unsealed.
- Medco (joined by Henderson and Nardin) refused to comply and sought a protective order in federal court; the Attorney General sought enforcement in New Jersey chancery court under the NJFCA.
- The chancery court enforced the subpoenas; the Appellate Division granted an emergent stay and heard consolidated appeals challenging the Attorney General’s post-deadline use of NJFCA administrative subpoena power.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the AG may issue/enforce NJFCA administrative subpoenas concerning the subject matter of a qui tam action after declining to intervene within the statutory period | AG: retains broad investigatory/subpoena power under N.J.S.A. 2A:32C-14(a) and may continue investigating until he belatedly shows good cause to intervene later | Relator/Medco: once AG declines/intervention period lapses and complaint is unsealed, AG’s subpoena power over that qui tam subject matter is precluded | Court: Reversed—AG cannot use NJFCA administrative subpoenas to investigate subject matter of a qui tam action after declining to intervene within the prescribed timeframe; AG’s powers are limited by intervention provisions |
| Whether N.J.S.A. 2A:32C-14(a) provides an independent, continuing subpoena authority post-unsealing | AG: §14(a) is broad and untethered; powers persist despite non-intervention | Relator: §14(a) must be read in context of §5/§6; it does not override intervention limits | Court: §14(a) describes investigatory authority but is not a separate font of power that overrides §5/§6 timing limits |
| Whether the AG’s ability to later seek intervention for good cause implies a continuing right to subpoena | AG: right to later seek intervention supports ongoing investigation/subpoena power | Relator: later-intervention-on-good-cause is limited and does not authorize ongoing subpoenas that interfere with qui tam control | Court: Later good-cause intervention is narrow and does not permit collateral administrative subpoenas once relator controls the action |
| Whether comity and federal court control of qui tam discovery bar state subpoenas that might interfere | AG: investigative needs and liberal construction of NJFCA favor broader authority | Relator: comity and federal case management counsel against collateral state subpoenas | Court: Agrees with relator; comity and federal court control favor barring collateral state administrative subpoenas that could interfere |
Key Cases Cited
- Wilson v. Unsatisfied Claim & Judgment Fund Bd., 109 N.J. 271 (court will not give a general provision a meaning that swallows specific statutory terms)
- Maressa v. N.J. Monthly, 89 N.J. 176 (statutory interpretation principles constraining broad language)
- Bedford v. Riello, 195 N.J. 210 (statutory provisions should be construed to give meaning to every part)
- Sensient Colors, Inc. v. Allstate Ins. Co., 193 N.J. 373 (comity and deference to court control over proceedings)
- Continental Ins. Co. v. Honeywell Intern., Inc., 406 N.J. Super. 156 (appellate discussion of interference with court-managed proceedings)