746 F.3d 157
5th Cir.2014Background
- Relators filed a qui tam FCA action against their former employers for allegedly fraudulent Medicare/Medicaid claims.
- Governmentcriminally prosecuted the Sharmas, resulting in restitution/forfeiture orders; initial restitution was affirmed and later recalculated on appeal.
- Relators filed the FCA action Nov 17, 2011, while the criminal appeal was pending; Government declined to intervene in the qui tam action.
- District court granted partial summary judgment: no alternate remedy under 31 U.S.C. § 3730(c)(5) because no qui tam action was pending when restitution commenced.
- Relators sought discovery to determine their share; appellate interlocutory review granted; June 2013 resentencing in criminal case increased restitution, which is under appeal.
- This appeal evaluates whether restitution qualifies as an “alternate remedy” to the qui tam action under § 3730(c)(5).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether restitution constitutes an alternate remedy under § 3730(c)(5). | Babalola argues the criminal restitution was an alternate remedy since a qui tam action was not pending. | Sharmas argue no alternate remedy existed because no qui tam action was pending at the start of restitution. | No; restitution did not constitute an alternate remedy. |
| Whether a pending qui tam action is required to trigger § 3730(c)(5). | Relators contend the statute protects their rights whenever the government pursues an alternate remedy. | Defendants contend a quo tam must be filed and pending for an alternate remedy to apply. | Yes; a qui tam proceeding must be in existence at the time of the government’s election of the alternate remedy. |
| What does “same rights” in § 3730(c)(5) mean in the race-to-the-courthouse context? | Relators should retain bounty rights if the government pursues an alternate remedy after their disclosure. | If the government pursues an alternate remedy first, relators get no bounty. | Relators retain the same rights as if the qui tam had continued; otherwise the bounty would be forfeited in such race scenarios. |
| Does § 3730(e)(3) reinforce the race-to-the-courthouse risk for relators? | Relators rely on 3730(e)(3) to preserve their ability to pursue a qui tam when the government delays or avoids intervention. | Court relies on § 3730(e)(3) to prevent duplicative actions when the government pursues a civil action first; relators may be barred if no qui tam is filed first. |
Key Cases Cited
- LaCorte v. Wagner, 185 F.3d 188 (4th Cir. 1999) (alternate remedy rights preserved when government pursues an alternate remedy)
- Barajas v. Northrop Corp., 258 F.3d 1004 (9th Cir. 2001) (alternate remedy described as government pursuit after non-intervention)
- Reagan v. East Tex. Med. Ctr. Reg’l Healthcare Sys., 384 F.3d 168 (5th Cir. 2004) (disclosure and qui tam timing under FCA procedures)
- Rockwell Intern. Corp. v. United States, 549 U.S. 457 (2007) (qui tam meaning and public policy context)