Prosecutorial Indiscretion: Encouraging the Department of Justice to Rein in Out of Control Qui Tam Litigation Under the Civil False Claims Act

Posted: 29 May 2009

See all articles by Michael Rich

Michael Rich

Elon University School of Law

Date Written: Summer 2008

Abstract

This Article explores how the incentives created by the civil False Claims Act (FCA), a qui tam statute that is the government’s primary litigation tool for combating fraud, influence the Department of Justice’s (DOJ) prosecution of fraud actions. Over the past twenty years, the government and relators have recovered more than $18 billion in FCA actions, of which more than $11 billion was recovered in qui tam actions filed by private persons. Though other commentators have explored the policies underlying the FCA and even the FCA’s incentives to “blow the whistle” and file a qui tam action, no one has closely analyzed the incentives that impact the government’s subsequent decision whether to take over, dismiss, or allow the relator to proceed with a qui tam action. This Article’s examination of these incentives reveals that the FCA improperly discourages the DOJ from wresting control of errant qui tam actions from relators.

As a result, over the last twenty years, 94% of qui tam FCA suits that the DOJ has allowed to proceed (totaling more than 3,000 actions) have been dismissed without recovering any funds. These non-meritorious suits have exacted a heavy toll on defendants, the judicial system, and the public as a whole. Meanwhile, the non-intervened qui tam actions that have succeeded in recovering funds present a different problem: FCA liability has expanded haphazardly without any guarantee that the new theories of liability will work to the public’s benefit. These problems have combined to alienate regulated industries, threaten public confidence in the legitimacy of the government’s fight against fraud, and endanger future industry cooperation in government enforcement initiatives. Where other commentators have urged drastic changes to the FCA to try to resolve these issues, this Article concludes that the problems can be largely ameliorated by two relatively minor amendments that would encourage the DOJ to exercise its intervention and dismissal powers more aggressively, without losing the current benefits of FCA litigation.

Keywords: False Claims Act, FCA, health care fraud, prosecutorial discretion, procurement fraud, government fraud

JEL Classification: K10, K23, K42

Suggested Citation

Rich, Michael, Prosecutorial Indiscretion: Encouraging the Department of Justice to Rein in Out of Control Qui Tam Litigation Under the Civil False Claims Act (Summer 2008). University of Cincinnati Law Review, Vol. 76, No. 4, 2008, Available at SSRN: https://ssrn.com/abstract=1410184

Michael Rich (Contact Author)

Elon University School of Law ( email )

201 N. Greene Street
Greensboro, NC 27401
United States

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