Two Roads Converged In A Legal Wood: The Intersection of Litigation Funding and the False Claims Act

Abstract

Although the practice of litigation funding has been around for centuries in some form, it has become more popular in the United States legal community in recent years. Ruckh v. Salus Rehab., LLC, 963 F.3d 1089 (11th Cir. 2020), generated increased concern for the practice in the False Claims Act (FCA) community, prompting some practitioners to opine that the practice had no place in FCA cases. This article examines the propriety of litigating funding of qui tam relators in FCA cases. Specifically, this article examines the historical concerns associated with litigation funding alongside the evolution of the role of qui tam cases throughout the history of the FCA. It explains how litigation funding can function in harmony with the FCA and how it furthers the purposes of the FCA’s qui tam provisions. It then offers an analytical framework that the Department of Justice (DOJ) can use in assessing the propriety of litigation funding in individual qui tam cases. Finally, it proposes amendments to both the Federal Rules of Civil Procedure and the FCA itself that can assist the DOJ in performing its review duties and address litigation funding opponents’ concerns.

Keywords: false claims act, qui tam, fca, litigation funding, litigation financing

JEL Classification: K23, K20, H57