“How will COVID-19 (or a similar pandemic or natural disaster) affect my False Claims Act case?” We can’t blame you for asking. Like nearly everything else in our society, the COVID-19 pandemic had catastrophic effects on False Claims Act cases. It affected every aspect of qui tam cases: the relators, the government, the judiciary, and the defendants.
Although the following information is based on our experiences with the coronavirus pandemic, it shows us how future catastrophic events, such as disease or war, may alter the course of False Claims Act litigation.
Generally speaking, when more employees are working from home, there is less access to insider information and fewer candid conversations around the water cooler. This prevents potential whistleblowers from gathering the facts and evidence necessary to file a new case. It also inhibits whistleblowers in existing cases from learning new information.
Layoffs are also a problem. Not only are they cutting the insiders off, but creating difficult financial situations. Sometimes they are even offered severances, with release language that warrants consideration.
Whistleblowers do not want to jeopardize their qui tam lawsuits for a pittance, but the sealed lawsuit also prevents them from being able to effectively negotiate for more, and they have to consider how they will survive if they can’t find new work.
The pandemic also created new areas of fraud against the government, as the federal government issued billions of dollars in loans for businesses and stimulus checks for individuals. Fraud in obtaining these monies is likely to fuel False Claims Act litigation, and keep healthcare fraud attorneys and financial fraud attorneys busy, for years to come.
Like everyone else, the attorneys and investigators responsible for investigating sealed qui tam cases are impeded in doing their jobs, sometimes even prohibited from going into their own offices.
In some ways, they are able to respond by relying more on technology. For example, when a False Claims Act case is filed, most U.S. Attorney’s offices interview the relators as an initial step in their investigation. These interviews usually take place in person, or if an interviewee is in another part of the country, they are sometimes permitted to go to their local USAO for a live video stream. During the pandemic, Webex interviews became the norm, with attorneys, agents, and relators all accessing a secure video conferencing platform.
While there is something lost when individuals cannot shake hands and look one another directly in the eye, this method is certainly more convenient to plan and attend.
A more difficult problem is with the investigation itself. In normal times, government agents go where the fraud occurred and meet with witnesses in person, sometimes showing up unannounced at their homes or places of work to secure an interview without advance notice.
During a pandemic, such impromptu visits are impossible. Locating witnesses is made more difficult, as is getting them to participate in a video conference interview, and they are almost always afforded the opportunity to prepare, seek counsel, and perhaps not be as forthcoming as they would have been in a less formal setting.
Moreover, many False Claims Act cases allege fraud in high-risk settings such as hospitals and nursing homes. Not only would it be endangering both the agents and the patients to send investigators into these facilities, but they are actively in the process of caring for at-risk individuals.
The government must weigh the importance of obtaining information versus ensuring that medical providers are available to do everything in their power to prevent the spread of disease.
Similarly, even when the government is actively working with defendants, getting information and access can be more difficult. For example, asking a corporation to conduct a search of its records may require employees to go into the office and dig through the records room for responsive documents. This is a difficult ask during a pandemic, when the corporation has a policy for its employees to work from home and certainly not to cram into a small dusty room together. Allowances must be made.
In sum, government investigations progress, but at a slower pace. The above are just some of the many obstacles they face.
For the most part, litigation during a pandemic is business as usual for the courts. They may offer some flexibility with certain deadlines and may be more understanding of parties’ plights in discovery for the same reasons as discussed above.
However, one major exception is the delay of trials. It is not safe for a judge, jury, courtroom staff, and the parties to all be in a courtroom together. And there are due process arguments to be made with trials being conducted via videoconferencing. And so most courts simply stop having trials until it is safe to perform them in person.
Once trials start again, there is a tremendous backlog, and the first cases to be considered are the criminal matters. They will always take precedence over civil cases. Moreover, False Claims Act cases are extremely complex and can lead to very lengthy trials. This is not likely to please the court, whose priority will be to clear its docket. Thus, it will be a long time before the government or the relator have the opportunity to present their case and there is the possibility of being hamstrung due to time limitations and an impatient judge.
Some of the difficulties that defendants face are discussed above, such as performing record reviews and responding to discovery requests, particularly if those defendants are medical service providers tasked with directly addressing the pandemic.
A more obvious impact COVID-19 is having on False Claims Act cases is the defendant’s ability to pay a settlement. Simply put, if a defendant is insolvent or otherwise cannot pay damages, it is going to alter the result of a False Claims Act case.
This is a common issue during recessions as well. The company may have committed a great deal of fraud while business was booming, but now that times are tough, it cannot pay that money back. Lockdowns are driving companies out of business in droves; in-person health services are hardly able to operate or their patients are afraid to come; hospitals are forgoing more profitable elective surgeries to preserve resources for sick patients. Not only are companies losing revenues, but they are spending enormous amounts of money to keep employees and/or customers safe.
The government does not generally want to drive defendants out of business. Unless the entire business is a scam, there is a presumption that it is providing a valuable service. And if the company closes its doors, not only will it not be able to pay a judgment or settlement, but the government becomes one of a long line of creditors.
And so concessions again have to be made at the expense of the final False Claims Act resolution.
Skilled False Claims Act Counsel Can Help
As experienced False Claims Act attorneys who have litigated cases through pandemics, recessions, government shutdowns, and other difficult times in American history, we understand that the outcome of your case is likely to be affected one way or another by the wheel of fortune and events that are outside of our control.
You can’t control how COVID-19 affects your False Claims Act case, but you can set yourself up to weather the storm a little better. It is vital that you have skilled counsel who can handle the events that are within its control, to offset and mitigate the unpredictable nature of False Claims Act cases.