The Rise of the Whistleblower Phase 2

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For years, much has been made about the general rise in False Claims Act cases nationwide. Although Forbes magazine called 2014 the “year of the whistleblower,” Forbes may have spoken a little too soon.

In December, the Department of Justice released its False Claims Act statistics for FY 2015. Although “overall recoveries were down” and “the government and relators filed fewer FCA cases,” a new and interesting trend has emerged: the willingness of relators to pursue cases where the DOJ has declined to intervene. And the numbers show that relators willing to take on defendants without the government’s help are receiving huge dividends.

The numbers tell the tale: not only was 2015 a record year for relator awards in declined cases ($334 million), but relators in declined cases received more in awards than relators in cases in which the government intervened in 2015. 

The willingness of the relators’ bar to pursue declined cases represents nothing less than a paradigm shift. It wasn’t that long ago that the government’s intervention decision was “make or break.” Defendants would heavily lobby the DOJ to stay out of cases, recognizing that a declination would more often than not result in the relator abandoning the case or a quick dismissal. Times have changed–and rather quickly.

These statistics show that not only are relators willing to take declined cases forward, they are having success doing so. Although these numbers don’t tell the whole story, it is possible that relators’ counsel are doing a better job distinguishing between declined cases, recognizing which ones are worth pursuing and which aren’t. Or perhaps the relators’ bar is just taking more cases forward generally, resulting in an overall upward trend.

These numbers should also be a wake-up call for defendants facing qui tam suits, who will no longer be able to assume that a declined case is a slam dunk. Although a declination is still better than an intervention (probably), the value of a declination is reduced. Defendants must re-calibrate their expectations and realize that a declination is just the first hurdle, not the last.

Looking back at the explosive growth of qui tam suits under the False Claims Act in the last decade, perhaps this outcome was inevitable. With twice as many qui tam suits being filed but basically the same number of government lawyers to handle them, the sheer number of declined cases was bound to go up–there are, after all, only so many hours in a day. But a lack of resources to pursue meritorious claims should not–and apparently has not–prevented those claims from going forward. Basically, the relators’ bar is picking up the slack for the DOJ’s inability to devote more resources to the larger pool of claims. The numbers seem to suggest that the arrangement is working out well–except, perhaps, for defendants.