The Qui Tam Blog

By: Joel Androphy, Rachel Grier, and Stephanie Gutheinz

The False Claims Act provides that a relator’s complaint “shall be filed in camera, shall remain under seal for at least 60 days, and shall not be served on the defendant until the court so orders.” 

In United States ex rel. Ubl v. IIF Data Solutions, a district court in the Eastern District of Virginia considered whether a relator’s failure to comply with these filing requirements when filing a complaint would require a court to dismiss the complaint for lack of subject matter jurisdiction.  Relying on the language and legislative history of the filing requirements, the court determined that the filing requirements are not jurisdictional in nature; therefore, failing to file a complaint in camera and under seal will not divest a court of subject matter jurisdiction over the claim. 

The court noted that, while other provisions of the FCA include limitations on jurisdiction, the provisions establishing the filing requirements do not include any such limitation.  In fact, the FCA does not provide any consequences for failing to file a complaint in camera or under seal.  As such, the court reasoned that automatically divesting courts of subject matter jurisdiction over qui tam complaints based solely on the failure to file the complaint in camera or under seal would defeat congressional intent and would also frustrate the overall purpose of the FCA—to prevent and combat fraud. 

The court also determined that the FCA’s filing requirements do not necessarily apply to the filing of an amended complaint where the defendant already has notice of the original complaint.  The primary purpose of the filing and seal provisions is to permit the government time to investigate the claims and determine whether to intervene in the action, without alerting the alleged wrongdoers that they are under investigation.  If the alleged wrongdoers already have notice that they are under investigation, however, the in camera and under seal provisions do not serve their intended purpose and therefore do not apply.  United States ex rel. Ubl v. IIF Data Solutions, 2009 WL 1254704 (E.D. Va. May 5, 2009).

By: Joel Androphy, Rachel Grier and Stephanie Gutheinz

To establish liability for submitting false claims under the FCA, it must be shown that the defendant acting knowingly.  Knowing conduct can be demonstrated by showing that the defendant either acted (1) with actual knowledge that the information was false, (2) with deliberate ignorance of the truth or falsity of the information, or (3) with reckless disregard of the truth or falsity of the information. 

A finding of knowing action on the part of the defendant may be precluded, however, if it can be shown that the government had ample knowledge of the defendant’s conduct.  The burden of proof required to obviate a defendant’s liability based on government knowledge is considerable and can only be satisfied with evidence that the defendant and the government had an ongoing dialogue about the activities underlying the submission of the false claims. 

It must also be shown that the defendant completely cooperated and shared all information with the government in such a way that it would not have been possible for the defendant to knowingly submit false claims.  Mere allegations that the government had some knowledge of the defendant’s conduct, audited the defendant, or even reviewed thousands of documents related to the claims are not sufficient to negate the defendant’s liability.  Rather, courts will only find as a matter of law that the defendant could not have possessed the requisite state of mind to be liable under the FCA where the government approved of the defendant’s conduct, or where the government had extensive knowledge of the defendant’s conduct.  United States ex rel. Maxwell v. Kerr-McGee Oil & Gas Corp., 2009 WL 3161828 (D. Colo. Sept. 30, 2009).