The Qui Tam Blog

By: Joel Androphy, Rachel Grier, and Stephanie Gutheinz

For purposes of the FCA’s statute of limitations, an amended complaint filed by the government relates back to the relator’s original qui tam complaint. In United States ex rel. Ven-A-Care v. Actavis Mid Atlantic LLC, a district court in Massachusetts extended this principle to amended complaints filed by the relator as well. Although the defendants argued that the relation back doctrine only applies to the government, the court explained that the FCA contemplates a direct link between the interests of the relator and the interests of the government in every qui tam suit, even when the government declines to intervene. The court also considered the defendants’ argument that allowing relation back under the circumstances of the case would violate their due process rights under the Fifth Amendment due to the delay in unsealing the case. In rejecting this argument, the court noted that the defendants did not allege any prejudice that would implicate due process concerns. The court also noted that the delay was caused by the government exercising its legitimate right to obtain extensions of the seal to investigate the complex allegations of fraud. Therefore, the court held that the relator’s most recent amended complaint was not barred by the statute of limitations because it related back to an earlier complaint that identified the specific drugs at issue.

The court then considered whether relators can invoke the FCA’s tolling provision. Section 3731(b)(2) of the FCA provides that a claim otherwise barred by the statute of limitation may be brought within three years after the date when facts material to the cause of action are known or reasonably should have been known by the official of the United States charged with responsibility to act in the circumstances. While acknowledging a disagreement among the courts on whether the tolling provision applies in cases in which the government has not intervened, the court sided with the line of cases allowing relators to invoke the tolling provision. According to the court, allowing relators to do so is most consistent with the language of the statute because there is no language prohibiting relators from invoking the provision. The court also emphasized that when the government declines to intervene in a case, the relator has the right to conduct the action; therefore, absent clear language providing otherwise, the relator has the right to invoke the provisions of the FCA—including the tolling provision. United States ex rel. Ven-A-Care v. Actavis Mid Atlantic LLC, 2009 WL 3171798 (D. Mass. Oct. 2, 2009).

By: Joel Androphy, Rachel Grier, and Stephanie Gutheinz

Senator Claire McCaskill’s whistleblower protection amendment to the American Recovery and Reinvestment Act of 2009 includes provisions to ensure that employees are able to disclose waste, fraud, or mismanagement related to stimulus funds.  The protections afforded by the McCaskill Amendment are in addition to the whistleblower protections provided by the False Claims Act.  The McCaskill Amendment applies to state and local governments, private contractors, and other non-Federal employers receiving a contract, grant, or other funds made available by the economic stimulus bill.  The McCaskill Amendment protects employees that disclose information, either to a supervisory authority over the employer or to another employee that has the authority to investigate misconduct, that the employee reasonably believes is evidence of:

• gross mismanagement of an agency contract or grant related to stimulus funds;
• gross waste of stimulus funds;
• a substantial and specific danger to public health or safety related to the implementation or use of stimulus funds;
• an abuse of authority related to the implementation or use of stimulus funds; or
• a violation of law, rule, or regulation related to an agency contract or grant relating to stimulus funds. 

Furthermore, disclosures made by employees in the ordinary scope of employment are also specifically protected.  Any employee engaged in protected conduct is protected against retaliation by the employer, including discharge, demotion, or other discrimination.  If an employee suspects that he or she has been retaliated against for engaging in protected conduct, the employee must file a complaint with the appropriate inspector general.  As currently written, the McCaskill Amendment provides no statute of limitations to file this complaint.  In order for an employee to establish a retaliation claim under the McCaskill Amendment, the employee is only required to prove that the protected conduct was a “contributing factor.”  While an employee is required to exhaust all administrative remedies first, the McCaskill Amendment expressly provides that pre-dispute arbitration agreements are not binding for claims brought under the Amendment. If the employee prevails, the employee is entitled to reinstatement, back pay, compensatory damages, attorneys’ fees, and litigation costs. 

By: Joel Androphy, Rachel Grier, and Scott Braden

The Texas FCA does not contain an express limitations period on Medicaid fraud claims. However, under Texas law, if a cause of action does not contain an express limitations period, it is subject to a default four-year limitations period unless the cause of action is one that belongs to the state. The whistleblower argued that a qui tam lawsuit is a right of action belonging to the government and is therefore exempt from the four year limitations period. Relying on Fifth Circuit case law, the court held that if the state has not intervened, the right of action belongs to the whistleblower and is subject to the four year default statute of limitations. The case is United States ex rel. Foster v. Bristol-Myers Squibb Co., a court in the Eastern District of Texas, Lufkin.

In a whistleblower cases against Caremark, Inc., a US District Judge in San Antonio, Texas, relying on a federal case in the Second Federal Circuit Court of Appeals, decided that the statute of limitations is not tolled for the government while it decides whether to intervene.  In other words, if the government takes several years to decide to join a case, it’s complaint in intervention does not relate back to the date of the original complaint filed by the whistleblower.  Why should the whistleblower and the government be penalized? The Court stated that the government should not have taken long to decide whether to intervene, and that Congress did not intend investigations to be protracted. The clear implication: several months is all that is required for a government investigation and evaluation. That is simply contrary to logic and Congressional intent. Congress did not impose any time limits on intervention.  Further, if a Court decides that the government has taken too long, it can deny further extensions of the seal. Do not penalize the whistleblower and the public. The message is clear. At least in the Western District of Texas, if the government is going to investigate and take several years, the whistleblower should implore the government to stay on the sidelines and not intervene.   The case is USA ex rel. Ramadoss v. Caremark, a court in the Western District of Texas, San Antonio.