Spot the Conflict of Interest? Federal Courts Can’t in Expanding Qui Tam Suits

Two recent federal appellate court opinions have expanded the availability of qui tam suits under the False Claims Act (FCA), and created new incentives for abuse.  Briefly, the FCA’s qui tam provisions incentivize private parties, called relators, to bring litigation on behalf of the government by providing a relator with a share of the recovery.  Like private attorney general suits, this mechanism has been criticized for its abuse by politically unaccountable individuals seeking personal gain–monetary, political, or otherwise­–and the Act’s vast expansion beyond its original Civil War era purpose.

In United States ex rel. Little v. Shell Exploration & Production Co., the Fifth Circuit, addressing “who may sue,” determined that government employees–even those whose job is to investigate fraud for the government–can bring a private qui tam suit under the FCA.  The court dismissed the obvious conflict of interest problems as “extraneous” to the legal interpretation of the FCA, and found no textual basis for excluding government employees from the scope of “person[s]” eligible to bring a qui tam suits.

The court noted that in cases where allegations are first publicly disclosed by another party, government officials cannot bring suit because of the FCA’s “original source” rule.  Such sources must voluntarily disclose allegations to the government.  Government officials, of course, cannot be said to voluntarily disclose allegations to the government because, well, that’s their job. Continue reading “Spot the Conflict of Interest? Federal Courts Can’t in Expanding Qui Tam Suits”