May 19, 2017 - Posts

Can the Government Settle My Whistleblower Case Over My Objection?

Recent court of appeals decision confirms that the answer is usually yes.

Consider this scenario: you’ve gathered evidence that your company has defrauded Medicare by as much as $10 million over the past few years.  You raise the issue internally, but your company ignores you.  So you hire a lawyer and file a sealed whistleblower lawsuit pursuant to the federal False Claims Act.  The Justice Department investigates, and after years of waiting, you finally get the good news.  The government agrees that it has been defrauded and is preparing to intervene in your case and settle with the company.  But only for $1 million—just a fraction of what you believe the case to be worth.  What, if anything, can you do?

Under the False Claims Act, a whistleblower has the right to object to any proposed settlement between the government and a defendant. In that case, the proposed settlement is submitted to the court, and the court decides whether it is “fair, adequate, and reasonable under all the circumstances.”  31 U.S.C. § 3730(c)(2)(B).

Whistleblowers can have compelling reasons to object to a settlement.  Setting aside concerns about basic fairness and justice, it is in the whistleblower’s own best interest to ensure that the government obtains as much money as possible in any settlement.  That is because the whistleblower is paid a percentage of whatever the government recovers—15-25% in an intervened case—so that a bigger recovery for the government means a bigger reward to the whistleblower.

Although the whistleblower has the right to object, these objections are very rarely successful.  In a recent opinion from the Eleventh Circuit court of appeals, the court explained that the United States may have legitimate interests beyond just recovering money, and that courts should therefore “afford some degree of respect to the government’s settlement rationale.”  United States v. Everglades Coll., Inc., No. 16-10849, 2017 WL 1658478, at *5 (11th Cir. May 3, 2017).  This is consistent with the position that district courts across the country have taken in giving the government the benefit of the doubt in approving False Claims Act settlements to which the whistleblower objects.

So does that mean that there is nothing that the whistleblower can do?  Certainly not.  For one thing, any time that there is a concern about the government settling on the cheap, the whistleblower’s lawyers can communicate early and often to the government to make the strongest case possible for a larger settlement.  Second, the whistleblower can try to negotiate a larger share of the recovery.  As noted above, the government—subject to court approval—has discretion to award between 15-25% of any recovery to the whistleblower, and is sometimes willing to offer higher percentages for smaller cases.  Finally, while formal objections to a proposed settlement are rarely successful, they can sometimes be appropriate.

It is precisely this type of scenario that demonstrates why having an experienced whistleblower lawyer is so important. An experienced whistleblower lawyer will know when it is best to negotiate and when it is best to object, and will have enough credibility with the government to advocate effectively.  This is all the more reason why whistleblowers should speak to an experienced lawyer before pursing any legal claim.

To learn more about our Whistleblower & Qui Tam practice click here.  Our firm is located in Nashville, Tennessee, but we represent whistleblowers all around the country.