Panel Topic: Settling Procurement Cases under the False Claims Act
Relators’ View: Get an understanding early in the case what the government’s parameters are and where the government is in terms of case value. As soon as relators and defendants begin discussing settlement, they need to alert Department of Justice and bring them into the discussions. Early settlement discussions can be helpful because it is the first time the relator can share information with defendants, including information the government did not adequately convey to the defendants when the case was sealed. Relators need to ask the government lawyers why they have declined an intervention: (1) lack of resources and time, or (2) something the affected agency told them that makes the case unwinnable?
Defense View: The bad press that often accompanies the unsealing of a False Claims Act complaint can the motivate a defendant to settle early. Defendants can often utilize the Department of Justice to help open settlement discussions with the relator. Defendants have to be concerned about the government intervening later in non-intervened case—sometimes an early settlement in a non-intervened case, where there is merit to the case, is very important because it will stop the government from digging further.
Government View: Involving the government early in settlement discussions in non-intervened cases can be very helpful because the government can help push the parties to the middle ground. The government can often be the honest broker between two extremes. Going to the Assistant U.S. Attorney assigned to the case is probably the best place to start discussions about settlement. The government will never agree to dismissal with prejudice in nuisance-value settlement cases. The government will also never agree to a confidentiality provision in a settlement agreement, although press releases are not required in non-intervened cases. The government has an interest is helping a relator understand why their case lacks merit. On the other side, the government has an interest in assisting meritorious cases, even when non-intervened. The Department of Justice insists upon certain language in settlement agreements in procurement cases: for example, they cannot address taxability issues, must include a cost disallowance provision (exclusion of costs from contracts), and cannot include a release of administrative liability.
Government Agency View (Suspension and Debarment): The government agency wants to act early on suspension and debarment issues—it does not want to wait for the False Claims act case to be resolved. Often the coordination of fraud remedies does not happen due to failure of the Assistant U.S. Attorney to notify the pertinent agency. The agency can only take meaningful action if the issue timely reported—otherwise the procurement window is often expired and it is too late for the agency to do anything about it.