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Presented by Hodgson Russ, the Whistleblower Blog is written by a team of lawyers experienced in successfully guiding both whistleblowers and companies accused by whistleblowers of wrongdoing through the False Claims Act process.

Sharing Agreements, Consolidation, and Relators’ Share

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More and more, we are seeing multiple and separate qui tam cases filed across various districts that, in part, contain overlapping claims, allege common sets of facts, or supplement each other in a way that, if combined, results in much stronger complaint. The problem is simple: absent consolidation and a sharing agreement, the government has a mess on its hands when trying to determine who is the “first” relator for purposes of the relators’ share.

As a result, especially in large and complex cases, the government has informally encouraged relators to combine their efforts, enter into a sharing agreement, and transfer their cases to a single district where the allegations can be consolidated in a single amended or omnibus complaint. The advantages to the government (and to the relators) are apparent. First, the complaint is broader, deeper, and more robust, and there is no need to determine who the first relator is—all desirable factors. Second, the government has access to sets of relators with subsets of information that bolster allegations and support claims, and access to relators’ counsel who may have done extensive investigation and who have an excellent handle and understanding of the facts, allegations, and legal nuances at issue.

Moreover, in the case of a parallel criminal investigation, the government has equal access to these witnesses, information, and attorneys. Relators’ counsel are not covered by Federal Rule of Criminal Procedure 6(e), nor are the relators, as witnesses. They are a tremendous source of information for the criminal investigation.

The trend in the government is to advocate a basic 15 percent relators’ share in cases that are substantial and, based upon recent case law, in cases that are even less substantial (less than $100 million gross recovery). Department of Justice lawyers are on record saying that 15 percent should be it, and that the statute “never contemplated” the larger recoveries seen recently.

Well, the statute doesn’t say that, nor does the legislative history, at least when read fairly. Many courts have taken the position (we think correctly) that the 15 percent relators’ share is more of a finder’s fee and is due and owing when a valid FCA complaint is filed and the government intervenes. Typically, however, relators do much more than that. For example, they work with the government lawyers to understand documents. They review documents produced in discovery. They testify at depositions. Some have even worn wires at the government’s request. And, by the way, the last time I checked, the bigger the recovery, the bigger the government’s share, too.

Bottom line: consolidate and share to strengthen your case but make sure the government recognizes the combined contributions and efforts of the relators when recommending an appropriate qui tam share.

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Hodgson Russ is one of only a few major law firms that represents both whistleblowers and companies accused by whistleblowers of wrongdoing. This unusual perspective means we are exceptionally well positioned to advise whistleblowers about potential claims.

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