Government Intervention In A False Claims Act Case From Pill Popping to Pushing

05/21/2013 // Justice News Flash: Featured Column // Kathleen Scanlan // (press release)

April has proven to be a busy month for the Department of Justice in its enforcement of the False Claims Act. DOJ filed its complaint in intervention in the Lance Armstrong case arising out of allegations by Armstrong’s former teammate, Floyd Landis, related to doping on the USPS cycling team. Then the US Attorney in Manhattan intervened in a case against Novartis for an unlawful kickback scheme to encourage doctors to prescribe certain drugs. Novartis allegedly paid for high-end dinners, fishing trips and outings to Hooters as thinly-disguised inducements to get doctors to prescribe its drugs. This intervention announcement came just days after a separate case against Novartis arising out of misconduct in the promotion of a kidney transplant related drug. The two separate actions against Novartis come even while the company was supposedly complying with terms of a corporate integrity agreement for previous False Claims Act violations.

The dramatically different facts giving rise to the case against Armstrong and the ones against Novartis highlight the seemingly infinite ways that a person or company contracting with the federal government can – allegedly – engage in a fraud against the government and incur liability under the False Claims Act. But the two qui tam whistleblower complaints also demonstrate the important role that whistleblowers play in enforcement under the False Claims Act. In each of those cases the whistleblower brought a complaint under seal to the government for its investigation. At the conclusion of its investigation, the government notifies the court whether it will proceed with the action (generally referred to as “intervening” in the action) or decline to take over the action, in which case the whistleblower can proceed with the action. If the government intervenes in the qui tam whistleblower action, as it did in the Armstrong and Novartis cases, the government becomes primarily responsible for prosecuting the action under the False Claims Act. If it declines, the whistleblower and the whistleblower’s lawyers may continue to litigate the case and to recover on behalf of the government.

While the DOJ’s intervention decision (or more accurately its decision not to intervene) is sometimes mistakenly viewed as an indicator of the merits of a whistleblower’s qui tam case, these two highly publicized cases illustrate practical realities in the decision-making process — allocation of government resources. In just one month, DOJ is taking on primary responsibility for prosecuting two massive cases just as competing headlines describe budget cuts and staffing furloughs. Even with the resources of the various US Attorneys’ Offices, DOJ does not have an unlimited bench to litigate every False Claim Act case. That is exactly why Congress provided whistleblowers the right to proceed when the government decides not to intervene. That’s also why government intervention is not a decision on the merits. In fact, sometimes the government initially declines to intervene and then comes in after the whistleblower and the whistleblower lawyer have pushed the case forward. When more whistleblowers come forward with new frauds even as defendants like Novartis reappear as repeat offenders, the government will continue to allocate its scarce resources and selectively intervene in a few cases knowing that whistleblowers and their lawyers will continue to prosecute and potentially recover in a variety of other alleged schemes. After all, the Novartis and Armstrong cases are just about pills. The government contracts for thousands if not millions of other goods and services.

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