Salcido Articles in Government Contracting Law Report Address Circuit Court Splits in FCA Cases

Government Contracting Law Report has published the article series “False Claims Act Circuit Splits: FCA Issues That May Soon Reach the Supreme Court or Lead to Congressional Amendment,” which was written by Akin Gump health partner Robert Salcido.

Salcido begins Part I by giving a brief history of the FCA, describing some of the challenges Congress faced when writing the law. One of them, he wrote, “was to provide private plaintiffs with sufficient incentives to file an action and yet not usurp the executive branch’s constitutional power to enforce the law.” Another was to allow “private persons to receive a statutory bounty from the government that is proportionate to the value that the private person contributed in filing the action,” as long as excessive wealth was not redistributed from the government—the actual victim in any FCA action—to private persons and their counsel. Congress, however, used some ambiguous language when the law was created, Salcido noted, which has led to the circuit court splits we now see.

Resolving the splits, Salcido said, is important for several reasons, which he proceeds to outline. He suggests that, in doing so, the courts could “effectuate the FCA’s purpose, which as multiple courts have recognized, is to advance the government’s interest, and not merely to enrich relators or their counsel.” He also writes that the statute should be interpreted so that “that the United States must expressly consent to the termination of any FCA litigation and have the unfettered right to dismiss any qui tam action that is not in the government’s interest and that relators cannot be deemed to be responsible government officials for purposes of tolling the statute of limitations.”

In Part II, Salcido examines circuit splits addressing whether relators should be permitted to advance actions when they fail to report nonpublic information to the government. He writes that courts have also split “regarding the extent to which the relator must have the ability to state a single false claim with specificity before proceeding with an FCA action.”

Salcido outlines the various splits and how they should be resolved. They include:

• the first-to-file bar, which is designed “to avoid needlessly duplicative qui tam actions based upon the same essential facts when the government has already obtained information regarding the alleged fraud based upon a previously filed qui tam action
• the meaning of the word “public” in the FCA’s public-disclosure bar, which Salcido writes was created in 1986 to “to prohibit those actions in which the allegations or transactions underlying the lawsuit have been publicly disclosed … unless the relator contributes material, independent information that advances the government’s knowledge of the case and hence qualifies as an original source.

Part III, the final installment of the article series, discusses the FCA and Rule 9(b), which provides that a party alleging fraud “must state with particularity the circumstances constituting fraud . . . . Malice, intent, knowledge, and other conditions of a person’s mind may be alleged generally.” In cases involving Rule 9(b), where there have been splits within individual circuit courts, Salicdo writes that “it is more useful not to address circuit splits at the circuit level (which is frequently impossible because the cases within the circuit are hopelessly irreconcilable), but merely describe how panels within the same circuit have diverged.”

Salcido then lays out the steps he thinks courts should take to resolve circuit splits regarding whether a relator provided the government with sufficient, valuable and nonpublic information to merit a substantial portion of the government’s recovery for the fraud committed against the government. In addition, he writes that strict adherence to Rule 9(b) will “effectuate the purposes underlying the FCA.”

Concluding, Salcido notes that “Congress carefully crafted the qui tam provisions to ensure the primacy of the United States over private individuals in determining what allegations advance the government’s interest.” The provisions were also tailored “to ensure that relators obtained only a portion of the government’s funds when the relator actually contributed real value to the government.” Courts should apply these principles, he writes, to resolve the current circuit splits “so that the FCA can be applied uniformly.”

To read the first part of the article series, please click here. For the second installment, please click here. For Part III, please click here.