For companies facing qui tam lawsuits in North Carolina, building a sound defense strategy is critical to minimizing the potential for government intervention and financial liability. Qui tam cases involve lawsuits filed by private citizens (called “relators”) on behalf of the government; and, once a suit has been filed, the government has a responsibility to investigate and make a determination as to whether to get involved. By taking an aggressive approach to qui tam defense, companies can often influence this determination, and ideally convince both the government and the relator that further litigation is unwarranted.
Qui Tam Defense: Pre- and Post-Intervention Strategies
While it only takes a basic allegation of fraud under the federal False Claims Act for a relator to initiate a qui tam lawsuit, far more is required – both substantively and procedurally – for the lawsuit to move past the initial pleading stages and ultimately lead to a finding of liability. Proving liability under the False Claims Act is a difficult task, and companies accused of government contract fraud, Medicare fraud and other violations will often have numerous defenses available.
Some of the more-common defenses in qui tam litigation under the False Claims Act include:
1. Procedural Deficiencies
As with all types of federal litigation, relators in qui tam actions must comply (and often strictly comply) with the Federal Rules of Civil Procedure (FRCP). Relators should not be given a “pass” on technical and procedural deficiencies, and challenging these deficiencies at the outset of the litigation can often – at the very least – slow down the process and begin raising questions about the relator’s case for the government’s attorneys.
2. Failure to File an Adequate Disclosure Statement
Along with the Complaint (the document filed in federal court to initiate the qui tam lawsuit), the relator must also submit a disclosure statement to the Department of Justice. This statement must include, “substantially all material evidence and information the [relator] possesses.” While the disclosure statement is not initially made available to the defendant, issues later discovered may provide grounds to seek dismissal of the case.
3. Insufficient Allegations to Support Liability
In order to establish liability under the False Claims Act, the relator’s allegations and evidence must support a finding of a certain level of intent. Generally speaking, submitting an inaccurate invoice or claim for payment to the government does not, standing alone, rise to the level of federal fraud.
In order to succeed in qui tam litigation, the relator and the government must typically be able to prove, at a minimum, that the defendant should have known about the false claim. As a result, even in cases involving legitimate allegations of false claims, defendants will often be able to present countervailing evidence to avoid False Claims Act liability.
Contact Cheshire Parker Schneider & Bryan, PLLC in Raleigh, NC
The federal criminal defense attorneys at Cheshire Parker Schneider & Bryan, PLLC provide experienced and strategic legal representation for companies facing qui tam lawsuits in North Carolina. To speak with one of our attorneys about your case, please call (919) 833-3114 or contact us online today.