Judge Beverly B. Martin, U.S. Court of Appeals for the Eleventh Circuit (Photo: John Disney/ALM)

In a ruling dismissing a qui tam action, the U.S. Court of Appeals for the Eleventh Circuit explained how the whistleblower can still collect.

Judge Beverly Martin gave a tutorial on the workings of the U.S. False Claims Act in a 12-page opinion Wednesday joined by Eleventh Circuit Judge William Pryor and Senior Judge Bobby Baldock of the Tenth Circuit, sitting by designation. And Martin drew a map to collecting a relator's share even when a case is dismissed, as this one was, for lack of jurisdiction. The Eleventh Circuit considered the appeal under “provisional jurisdiction” which then “evaporates” with the opinion.

The whistleblower, or relator, is Lori Carver, who worked at a pain management clinic in Mobile, Alabama, when she discovered doctors submitting fraudulent payment claims to federal health care programs. Carver took that information to the office of the U.S. Attorney for the Southern District of Alabama, where she was encouraged to bring a qui tam action against the clinic and doctors, Martin said.

Carver is represented by a team of lawyers from Burns Cunningham & Mackey in Mobile. Gregory Vaughan of Holston, Vaughan & Rosenthal in Mobile spoke for her at oral arguments. Vaughan said Thursday he could not comment because of the pending litigation.

Christopher Scarborough of the attorney general's office in Washington argued for the federal government. He could not be reached immediately for comment.

“When a private person brings a False Claims Act suit—known as a qui tam action—the government may choose to intervene and take over the action,” Martin said. “It may also choose to pursue 'any alternate remedy available.'”

If the government pursues an “alternate remedy,” the False Claims Act gives the qui tam plaintiff the “same rights” in the “alternate” proceeding as she would have had if the qui tam action “had continued,” Martin said.

“Presented here is the question of whether this statute allows a qui tam plaintiff to intervene in criminal forfeiture proceedings when the government chooses to prosecute fraud rather than to intervene in the qui tam plaintiff's action,” Martin said. “Even if the False Claims Act could be read to allow intervention, the statutes governing criminal forfeiture specifically bar it, with exceptions that do not apply here. We conclude that the criminal forfeiture statutes control, and we agree with the district court's denial of Lori Carver's motion to intervene for that reason.”

But that wasn't the end of Martin's analysis.

“Our circuit precedent does not permit us to affirm, however,” Martin said. “On appeal of denial of a motion to intervene, our precedent provides for 'provisional jurisdiction' to determine whether the district court properly denied intervention,” Martin said. If the denial was correct, “jurisdiction evaporates because the proper denial of leave to intervene is not a final decision.”

So, with their jurisdiction having evaporated, the judges dismissed Carver's appeal for lack thereof.

By way of background, Martin explained that the False Claims Act imposes civil liability on any person who “knowingly presents … a false or fraudulent claim for payment or approval” to the federal government and allows the U.S. attorney general to sue for violations. A private person, called a relator, may bring a False Claims Act action “in the name of the Government,” which is known as a qui tam action. “The government may intervene to take over a qui tam action from the relator … but the relator 'shall have the right to conduct the action' if the government opts not to intervene,” Martin said. “Most of the recovery in a qui tam action goes to the government, to remedy the fraud. … But whether the government intervenes or not, a relator in a successful qui tam action is typically entitled to a share of the recovery. … This incentivizes people to come forward from the private sector with evidence of fraud perpetrated on the government.”

Carver continued to litigate her case alone after the government chose criminal prosecution rather than a civil action. Part of the question her appeal presented is whether the criminal case constitutes an alternate remedy. Martin said much of the government's case of criminal conspiracy against the doctors was built on Carver's disclosures. The U.S. attorney's office also added new charges and new defendants to create a racketeering and drug distribution case. The district court entered a forfeiture order to seize assets for restitution.

“Ms. Carver moved to intervene in the forfeiture proceedings, asserting a right to some of the forfeited assets. She primarily argued the alternate-remedy provision permits her to intervene to claim the share of the assets she would have been entitled to if the government had intervened in her qui tam action,” Martin said. “The government argued Ms. Carver has no right to intervene under the alternate-remedy provision because her qui tam case remains pending—meaning she has not yet established a right to a relator's share. It further asserted the False Claims Act does not permit intervention in criminal cases.”

The last part of the government's argument remains “an open question,” Martin said. The first part will likely be solved by time.

“A final word. Our ruling will not disable Ms. Carver from getting her relator's share. The government assured us in its brief that a ruling against intervention 'will not necessarily prevent a future recovery,'” Martin said.

Martin also quoted from the government's brief saying:

“Where a defendant is found civilly liable for damages in a False Claims Act suit after being found criminally liable for the same fraud, the defendant may deduct restitution paid to the United States in the criminal proceedings as a credit against the False Claims Act damages award. In such circumstances, a qualified relator is entitled to a share of the full amount of the damages award, including restitution previously paid.”

“We understand this to mean a relator is entitled to a share of the forfeited property to the extent the qui tam defendant can deduct any forfeiture from the qui tam award,” Martin said. “We expect the government will honor it.”