Mid-Atlantic Health Law TOPICS

Under the False Claims Act (FCA), relators, commonly known as whistleblowers, are individuals with non-public information who bring qui tam claims against companies that fraudulently obtain government funds. Generally, relators are incentivized to bring qui tam claims because they receive a “bounty” reward if the claim is successful.  

However, a recent decision by a federal appellate court held that frivolous qui tam claims can result in the relator having to pay millions of dollars to the target of the claim. 

FCA Fee-Shifting Provision

The FCA allows a target of a qui tam claim to recover reasonable attorneys’ fees, expenses, and other associated costs if the claim was clearly frivolous. A claim is considered frivolous if it lacks a legal basis and is brought for an improper purpose. 

GGNSC

In United States ex rel. Jehl v. GGNSC Southaven, an attorney, on behalf of himself, filed a qui tam suit alleging that GGNSC, which operates a nursing home in Mississippi, was illegally receiving funds for services provided by an unlicensed nurse practitioner (NP).

After a qui tam action is initiated, the United States has the ability to pursue the claim, but if it chooses not to do so, the relator can pursue the claim. In this situation, the United States declined to intervene, but the relator chose to pursue the claim.

“Clearly Frivolous”

The trial court rejected the qui tam claim because a simple search of available websites revealed that the NP held a valid multistate license throughout her employment with the nursing home. As such, the nursing home did not violate the FCA. Nevertheless, the relator appealed that decision, but to no avail. 

Subsequently, the nursing home filed a motion to recover attorney’s fees and additional fees associated with the extensive discovery process the company was required to undergo, and the trial court ordered the relator to pay the nursing home $1.1 Million Dollars, finding that the relator’s claims were “patently and demonstrably frivolous” under the FCA fee-shifting provision. 

The trial court noted several factors that influenced its decision, including (i) that the relator failed to use reasonable diligence in fact-checking his allegations, (ii) the relator filed several common law claims which were determined to have no legal basis, (iii) the relator attempted on several occasions to change the underlying theory and facts of the claim after finding out that the NP maintained a valid license, and (iv) the relator disclosed conditions of a prior settlement which contained a confidentiality provision in an attempt to push his lawsuit. 

Most recently, the applicable federal appellate court affirmed the lower court’s $1.1million dollar award on appeal.

Tamia J. Morris
410-576-4021 • tmorris@gfrlaw.com