This transcript has been auto generated
00;00;02;11 - 00;00;25;06
Jonathan Porter
Welcome to another episode of Husch Blackwell's False Claims Act Insights podcast. I'm your host, Jonathan Porter. As I mentioned, at the end of our last episode, the Justice Department released their fiscal year 2024 False Claims Act statistics last month. For those of us who make their careers in this field, these statistics are fascinating. To dip into one top level finding.
00;00;25;16 - 00;00;49;00
Jonathan Porter
There was a record number of qui tams filed in 2024. That's big news because as we discussed in prior episodes, qui tams largely drive DOJ's agenda. Sure, DOJ can open new investigations on their own without a qui tam, but the statistics show that those types of matters are dwarfed by whistleblower led items, with a record number of qui tams on DOJ's plate.
00;00;49;06 - 00;01;14;13
Jonathan Porter
A big question becomes what happens with all of those qui tams? How does DOJ figure out which of those a record setting number of qui tams? There are two major time investments by DOJ attorneys and which do not. What are the steps DOJ takes to vet qui tams? How does DOJ prioritize these investigations? And how can we on the defense side convince DOJ that whatever story they've heard from a whistleblower might not be accurate or credible?
00;01;14;26 - 00;01;37;09
Jonathan Porter
Those are really big questions in our world and for our clients, the answer is they're really critical. Most of our clients who receive a civil investigative demand haven't ever been investigated before, and they look to us for answers. That's where DOJ experience is really helpful because we get to explain to clients not just what is happening, but why it's happening and what's likely to happen next.
00;01;37;26 - 00;02;01;01
Jonathan Porter
To me, facing a DOJ False Claims Act investigation with a lawyer without FCA experience is like going into the Amazon with a guy who's never been to the Amazon before. It's probably not going to end well for you, but that's what I love about practicing at Husch Blackwell. We've got a ton of people with DOJ experience who can help guide clients to great results.
00;02;01;12 - 00;02;24;24
Jonathan Porter
And today we're welcoming to the podcast, the newest member of Husch Blackwell's False Claims Act group, Abe Souza. Abe recently joined the firm's St Louis office from the northern district of Illinois's U.S. Attorney's Office. That's a storied office in DOJ world. That's the office that prosecuted Al Capone, that took the Chicago Seven to trial and prosecuted four Illinois governors.
00;02;25;02 - 00;02;46;29
Jonathan Porter
That's the big leagues for sure. In Chicago, Abe handled False Claims Act cases and other affirmative civil enforcement matters. Abe, one matter that you handled that we should discuss sometime not on the podcast is your work enforcing the Americans with Disabilities Act against the Chicago Cubs? I'm sure disabled Cubs fans are grateful for your work on that front.
00;02;47;18 - 00;03;08;17
Jonathan Porter
But Abe was a college tennis player at the University of Illinois. So while he spent a lot of time in the Illinois State, we brought him home to St Louis to join the firm where Abe was raised. And so, Abe, welcome to the firm. We're thrilled to have another seasoned DOJ FCA attorney in our group, and I'm really excited to talk about FCA enforcement with you on the podcast today.
00;03;08;23 - 00;03;11;02
Abe Souza
Hey Jonathan, thanks so much for having me. I appreciate it.
00;03;11;12 - 00;03;35;14
Jonathan Porter
And as I mentioned in the intro, DOJ saw a record number of qui tams filed last year. It's a 37% increase over 2023’s numbers. That's a large increase. And it's not like DOJ attorneys magically found an extra 37% worth of hours in the workweek to handle these new cases. So what happens is that DOJ attorneys have to prioritize where they invest their time.
00;03;35;26 - 00;03;53;28
Jonathan Porter
Abe, let's start by talking about that basic truth, the finite time and resources at AUSA's disposal. Tell our listeners about how DOJ attorneys manage their time and juggle a bunch of different investigations at once. How would you pick the cases that would dominate your times in AUSA?
00;03;54;13 - 00;04;12;24
Abe Souza
Thanks, Jonathan. Well, first of all, I saw those statistics as well. They came out a little bit early this year, seemingly to get them out before the inauguration, before the change in administration. And you could probably do a whole episode, Jonathan, on those statistics, and maybe you will. But real quick, a couple of things that stood out to me.
00;04;13;06 - 00;04;41;14
Abe Souza
Number one, settlements and judgments were just under 3 billion. Frankly, that's pretty standard, certainly before COVID. But as you said, the number of key items skyrocketed, went through the roof, the highest number ever. And I suspect that that's due to cases related to pandemic fraud, at least in part. And those would include PPE loan fraud cases brought by data miners who aren't true insiders.
00;04;41;14 - 00;05;06;12
Abe Souza
And maybe some of those cases have have less merit than than others. I don't know. But to get to your question, I totally agree that time management is the name of the game at DOJ. And I think there's this misperception out there that DOJ is all knowing all the time that there are agents in the bushes listening to your conversations, and attorneys and agents are totally up to speed on what's going on at any given moment.
00;05;06;23 - 00;05;30;24
Abe Souza
Something along those lines, I think, can be true, particularly in a high profile investigation. Once it gets up and rolling. But for the most part, that's not the case. The reality is that these matters are legally staffed with an attorney or to an AUSA, maybe an attorney at Main Justice, an agent or two, maybe at FBI or Health and Human Services, OIG.
00;05;31;06 - 00;06;01;26
Abe Souza
These are well credentialed, but frankly, young lawyers as well, many of whom are building experience. And we as defense lawyers should absolutely understand those dynamics in defending these investigations in terms of how to prioritize time and how DOJ lawyers do that. One basic way for doing it is money potential recovery. At issue in a key item. You know, that's one way to think about spending a lot of time on a case that has the potential to bring in a big settlement or a big judgment at the end of the day.
00;06;02;02 - 00;06;27;18
Abe Souza
But money really means nothing if you don't have the evidence to get you there. It's one thing to allege in a key complaint that there's a potential sizable recovery out there for a given alleged scheme. But you have to be able to build a case that would ultimately stand up at a trial. And you have to think that way, even if you think the case is going to settle and there's a few things I would look at I think a lot of DOJ lawyers look at in making that calculation.
00;06;27;29 - 00;06;49;05
Abe Souza
One is whether the relator seems to have true insider knowledge that builds on the public record. And even if the reality is not going to serve as a witness for you down the road can at least provide a roadmap for collecting evidence and gathering the proof that you would need. I think DOJ attorneys also look at whether robust evidentiary support is starting to come in fairly quickly.
00;06;50;03 - 00;07;14;17
Abe Souza
And then on the legal side, you want a straightforward or at least a viable and explainable legal theory that, even if it's complex, can be explained to a jury if needed. And if you're not seeing those attributes relatively quickly, you're going to see a uses DOJ trial attorneys certainly do enough to support a declination, but otherwise cut their losses and get out.
00;07;14;24 - 00;07;31;17
Jonathan Porter
Thanks. That's really helpful background. So a bunch of points there that you just said are really interesting and important. You mentioned PvP data mining, so we're going to do a whole episode next month on PGP Idle Cares Act Fraud. So we're coming up on the five year anniversary of the CARES Act, so we're going to a whole episode on that.
00;07;31;17 - 00;07;58;17
Jonathan Porter
I think you're absolutely right. Those cases are the reason that we saw a record number of key items being filed so that there are companies that are filing qui tams from data mining is fascinating to me. So we're going to dig into that. Thanks for the preview of that. Good job. You're already paying off as a guest. But yeah, no, like you said, people seem to have the assumption that DOJ attorneys have this wealth of information and all this stuff at their fingertips.
00;07;58;29 - 00;08;16;19
Jonathan Porter
I can't tell you how many times I've been on a phone with someone. They say, Oh, I'm sure you've seen this letter that I wrote 17 years ago to whatever agency. And I'd say I know almost nothing about you know, I don't have any of those things. But the assumption is the DOJ has this tremendous amount of resources and knows all of the things.
00;08;16;27 - 00;08;39;04
Jonathan Porter
DOJ doesn't know all of the things. Sometimes they do, but most of the time, these tremendous resources that you hear judges and litigants talk about for for DOJ, it's only in rare cases that they exercise all of that power. The vast majority of time. They're dealing with a finite amount of time, a finite amount of resources. So a bit building on the fact that DOJ attorneys have limited resources.
00;08;39;15 - 00;08;56;25
Jonathan Porter
Could you walk our listeners through what happens when a new qui tam gets filed? So how does DOJ receive the qui tam? How does DOJ analyze the qui tam? And what are the first few steps DOJ might take in figuring out whether the qui tam merits serious time at the expense of, say, other investigations?
00;08;57;16 - 00;09;19;19
Abe Souza
As you know, Jonathan, the False Claims Act requires a qui tam complaint to be served on the government and kept under seal for a period of 60 days to allow the government to investigate and decide whether to intervene. And that seal period is almost invariably extended for a significant period of time. It's not uncommon to see the seal period go on for several years.
00;09;19;19 - 00;09;46;20
Abe Souza
That was certainly the case when I was in the USA and I'm sure for you as well. But once a qui tam complaint comes in, one of the first things that happens is the U.S. Attorney's Office in the district in which the qui tam is filed works with main justice. Typically the civil fraud section of the commercial litigation branch in Washington, D.C., and they jointly figure out how the case should be handled, how the investigation should be handled going forward.
00;09;46;20 - 00;10;11;20
Abe Souza
And there's a few different options for that. One is a delegated investigation. That's where the U.S. attorney's office is going to take the lead on the investigation and essentially have discretion as to how to manage the investigation and make an intervention or declination decision. There are certain DOJ policies that would still require conferring with main justice, even in those types of cases.
00;10;11;20 - 00;10;31;05
Abe Souza
But for the most part, the U.S. Attorney's Office is going to drive a delegated investigation. At the other end of the spectrum is a joint investigation. That's where the U.S. attorney's office works collaboratively with main justice. Not unusual to see main justice take the lead there, but there's certainly a lot of collaboration in that in that type of an investigation.
00;10;31;14 - 00;10;57;22
Abe Souza
And then there's an in-between type of investigation, a monitored investigation, and that's where the U.S. attorney's office is going to take the lead typically. But DOJ main justice in D.C. is going to stay apprized more than they would in a delegated investigation and be involved to a little bit of a greater extent. And in figuring out what type of handling is appropriate, there's a few different things that are considered.
00;10;57;28 - 00;11;29;17
Abe Souza
One is potential recovery. I mentioned that at the outset. That's always going to be a driver strength of facts and law as far as can be ascertained from the qui tam complaint. But main justice may also want to be involved if the case involves key policy priorities of the administration. And so those are some of the things that are considered when this handling determination is made, once a determination is made about how the case is going to be handled between the U.S. attorney's Office and main justice, the team is put together fairly quickly.
00;11;29;18 - 00;12;04;18
Abe Souza
Agents may be assigned. The relator is going to be interviewed. That's typically and almost always the first thing that happens. And then from there, the investigation proceeds. It's not unusual to see in terms of staging these investigations for DOJ to first proceed covertly and then proceed overtly. So on the covert side, DOJ lawyers aliases are going to be talking to third parties, former employees, gathering documents from third parties that are not currently employed by or affiliated with the defendant or the target.
00;12;04;27 - 00;12;31;22
Abe Souza
And the goal there is to get as much information as you can before you actually approach the target or the defendant so that you can be as knowledgeable as possible and really focus in on the key issues. Once that process is complete, you'll see a process, approach the defendant, the target and proceed to the overt stage of the investigation, typically through a civil investigative demand or CID, and then moving forward from there into additional steps.
00;12;32;00 - 00;13;01;11
Abe Souza
And again, in terms of deciding how much investigation should go on, you'll see lawyers look at various factors, including is the relator a true insider? Can the relator or relator provide a roadmap for further investigation? How is the proof developing? Is there a straight forward legal theory? What are the potential damages? Just a flag. A few things that often come up at the outset, which is that may actually circumscribe an investigation if there are no federal dollars at issue.
00;13;01;11 - 00;13;36;01
Abe Souza
Sometimes you see this where a relator files a qui tam and they think that the government was defrauded in some way. But actually there aren't any federal dollars or even state dollars if the state's a party at issue. That's a case where you might see the government decline fairly quickly or at least not pursue further investigation. Similarly, on the materiality front, if it's clear from the start that the alleged conduct would not have impacted a payment decision in any way, in other words, if payment would have been made no matter what, even if the allegations in the complaint are true, you may see the government fold up the investigation fairly quickly.
00;13;36;11 - 00;13;55;06
Abe Souza
It's also not uncommon to see the government do a bit of triage in the beginning and decide that certain aspects of the Relator's complaint are viable, worth exploring, and others are not, or at least not a good use of resources. And so the government is going to focus on that. So those are some of the factors that are considered in deciding how to structure an investigation.
00;13;55;22 - 00;14;16;05
Jonathan Porter
Thanks, ABe. That's really helpful. Yet, so you talked about starting covert and then going over it. That's always an interesting bit of art. The goal on DOJ side is to talk to the right people, so many people where you think they won't tip off the target because sometimes you want to be able to interview the target before they have a chance to lawyer up.
00;14;16;16 - 00;14;32;01
Jonathan Porter
But there's a there's an art to they're not long ago, an agent spoke to a witness who ended up being my client and said, hey, they're asking questions about you, too. Then I get to call the agent and say, Hey, I represent this person. The agent didn't like that. The agent said, Well, I'm not ready for that person to represent.
00;14;32;01 - 00;14;48;02
Jonathan Porter
I said, That's too bad, because now they represent, you can't speak to them. But yeah, so that's a bit of an art is to talk to people trying to stay overt without going overt. That's interesting part of it and I'm glad you told our listeners about that. The other thing you mentioned that's interesting. Yeah, you said these things take years.
00;14;48;08 - 00;15;09;17
Jonathan Porter
They absolutely take years. Why in the world the statute says the seal should extend for 60 days is beyond me. I would love to talk to whoever in Congress thought that a federal investigation could be filed and completed within 60 days. No idea. No clue. I don't think anyone understands why that is, but that's the law. So it's interesting.
00;15;09;17 - 00;15;34;14
Jonathan Porter
But yeah, you're right. Judges understand federal investigations can't be done in 60 days and so they give a lot more time. Depend on the judge how much more time they'll give. No one says, yeah, you got to complete investigation within 60 days. So thanks for that, Abe. All right. Now let's talk about our jobs defending FCA investigations. A big part of what we do is not just send DOJ documents in response to CIDs, but we figure out what DOJ thinks happened.
00;15;34;28 - 00;15;53;24
Jonathan Porter
We also think about what actually happened, and then we craft a narrative that we can support with documents that tell our clients story. And we have to figure out how to do that better than the whistleblower did. Because, as you said, the first step DOJ takes us to interview the whistleblower. They they're going into these investigators with a story in their head.
00;15;53;24 - 00;16;05;23
Jonathan Porter
So, Abe, tell our listeners why that's important. What's the goal we're after in this process? From your perspective, what can defense attorneys do better to set up our clients for success on telling our client stories?
00;16;06;04 - 00;16;27;01
Abe Souza
These are all great points, Jonathan I think there are two goals a long term goal and a short term goal. When you're defending an FCA investigation, the long term goal is to obtain a declination from the government that's useful for various reasons. Obviously, not having the government involved intervening in a case, filing a complaint against your client is preferable.
00;16;27;12 - 00;16;58;00
Abe Souza
But also if the government declines intervention, there's a very good chance the case will go away entirely. I don't know what your experience was. I only had a few instances where Relator's opted to proceed with a qui tam after the government declined, and that was certainly the exception, not the rule in the vast majority of cases relator's opt not to proceed and frankly, AUSA has tried to convince them not to proceed because they don't think it's a good use of resources for the relator, the whistleblower or the government.
00;16;58;11 - 00;17;29;01
Abe Souza
So one goal is certainly declination and that's really the big goal. The more immediate term goal. The shorter term goal is to minimize the burden on your client of the investigation. And I think that actually pairs well with the long term goal of declination and you can obtain and achieve these goals in similar ways. One mistake I often see and saw when I was at DOJ from defense lawyers is that they would start the interaction with the AUSA in a very adversarial manner.
00;17;29;01 - 00;17;52;14
Abe Souza
And I don't think being adversarial is helpful, frankly, in any context, but it is something that you see often in civil litigation. And I think defense lawyers import that tone and approach into an FCA investigation context. We should obviously be zealous in representing our clients, but being adversarial with an A, you would say right off the bat is not helpful.
00;17;52;14 - 00;18;11;16
Abe Souza
And it actually may give the impression that there's something there worth investigating when it's not the case. So I think as a threshold matter tone is important in terms of trying to obtain a declination from the government and minimize the burden to your client. I think you do that on two fronts the facts and the law. On the facts.
00;18;11;23 - 00;18;36;18
Abe Souza
You want to be able to tell a story that paints a different picture than the government believes may have transpired, or what the relator is alleging. And the qui tam complaint. Obviously, as a defense lawyer, you often don't know if a qui tam has been filed. Sometimes you do, but you're trying to tell a different story. You're also trying to point out proof problems that may exist and do that in a way that convinces the government not to pursue the case.
00;18;36;25 - 00;18;58;16
Abe Souza
You also want to talk about the law. If there are holes in the legal theory that's at issue, those are things that you want to be transparent with the government about because frankly, it's in their interest to understand those anyway before they decide to seek approval to file a complaint against your client. Overall here, agencies are busy. They have a high caseload.
00;18;58;26 - 00;19;12;10
Abe Souza
It's probably only increasing, as you said, if the number of key items are increasing. So they're juggling a lot. And if you can convince them that your case has less merit than others they're working on, that's a good thing. And it's only going to help your client.
00;19;12;25 - 00;19;32;20
Jonathan Porter
Thanks, Abe. I 100% agree with everything you just said. I was stunned how often defense counsel would call me when I was an AUSA and start with an adversarial approach. I would get these long winded letters talking about how I don't have the authority to do any of this and I bolt. I'm just saying, why are you doing this?
00;19;32;27 - 00;19;50;23
Jonathan Porter
You don't actually believe this. You're just a civil litigator who has not done these before in order to stand. I'm not here telling you you've done something wrong. I'm asking you a question. I'm trying to get an answer. And so the tactic I take on the defense side is to take the same approach. We're asking questions here. What are the answers?
00;19;50;23 - 00;20;11;16
Jonathan Porter
If my clients have done something wrong, I've yet to find a client who said I did something wrong. I don't want to pay the price they're willing. Most clients, especially in the FCA world, if they've done something wrong and they knew they did something wrong, they're willing to own it. And so approaching these investigations as a question to be figured out together, I think it's a fantastic approach to take.
00;20;11;16 - 00;20;33;23
Jonathan Porter
I think essays really do appreciate that. So thanks, Abe, for that background. Another factor that I think about is complexity. So I always think about two things in FCA cases. One, the Supreme Court has repeatedly said that FCA is an anti fraud statute, not a statute to decide mere regulatory disputes. And two, is a jury going to buy that?
00;20;33;23 - 00;20;59;23
Jonathan Porter
Whatever conduct is at issue was knowing fraud or does it seem like a complex issue and someone made a judgment call? It's now being second guessed. I think about those two things a lot. Some FCA investigations are clear cut and easy to understand. You know, for example, just last month, the New Jersey U.S. Attorney's Office announced a settlement where a pharmacy billed for medicine they literally never gave to patients services, not provided medicine, not provided.
00;20;59;23 - 00;21;29;08
Jonathan Porter
That's got jury appeal. But a lot of FCA investigations are super, super complex, very in the weeds on some regulatory issue. There's an FCA case before the Supreme Court right now, Wisconsin bill, that is about as complex as they come in terms of facts and law. So my question to you is, with that long lead in, how do DOJ attorneys think about complexity in their investigations or complex facts or legal theories moving the needle at all for DOJ?
00;21;29;08 - 00;21;38;26
Jonathan Porter
Or do DOJ attorneys just price in some litigation risk and move those just the same straight forward? Facts and theories tell us how DOJ handles complexity.
00;21;39;05 - 00;22;05;03
Abe Souza
As with most things in law. Jonathan It depends. Straightforward facts and law always make for easier, stronger cases, there's no doubt about that. But DOJ does not and should not, frankly, let fraud go just because it's complex. The key, I think, is to figure out why the case is complex. Is it complex because the defendant carried out what is actually a fraudulent but complicated scheme?
00;22;05;11 - 00;22;24;22
Abe Souza
In that case, that's an instance where DOJ should be involved. Or is the case complicated because the facts and the law are murky? And you alluded to that type of case. That's one where ultimately DOJ may want to step back and not be involved there. But one example of a complex and challenging theory for the listeners is up coding.
00;22;24;29 - 00;22;46;23
Abe Souza
That's something we see in health care cases all the time, and that has to do with the code that's billed for a particular health care service and the allegation or the inquiry in those types of cases is whether the defendant inappropriately billed a higher reimbursing code when they should have billed a lower level of code, a lower reimbursing code.
00;22;47;10 - 00;23;19;10
Abe Souza
And the challenge in those cases is that billing involves a degree of subjectivity and judgment, just like medical care does, especially when you're talking about evaluation and management codes, which cover a broad swath of medical services. And you've been leading the charge on this, Jonathan, but we saw how this can crop up in the criminal context with the elephantine acquittal in Maryland, where it's very difficult to prove that someone committed a crime in the criminal context when you're talking about up coding.
00;23;19;15 - 00;23;42;01
Abe Souza
In that case, the judge granted the motion for an acquittal, and it was a very interesting case, even in the civil context, though, in an up coding case. And this can happen in other types of theories, but this is a good example. I think it can be difficult to show falsity. Can you show that a claim submitted to the government is false because a code is one level higher than what the government believes should have been billed?
00;23;42;01 - 00;24;02;07
Abe Souza
It's a pretty difficult sell, especially when you're talking about not just one claim, but hundreds, thousands of claims. Can you show, say, enter? Can you show that the defendant acted with the requisite mental state in choosing the code? Maybe if the code is four levels higher than what should have been used, but one level it's a little bit closer in materiality as well.
00;24;02;08 - 00;24;25;29
Abe Souza
Is this something where the government is just paying these claims, even if there is some degree of dispute about what the appropriate code is for a service? So these are some issues that come up when there's complexity. The up coding is a type of issue, I think that falls more into the the gray area category of cases where it's complex, maybe not because there's a complex fraudulent scheme, but because the area is murky.
00;24;26;09 - 00;24;35;10
Abe Souza
And in that instance, you may see DOJ cut bait and focus on something else. In the key to some complaint, if there's another theory they can look into or decline entirely.
00;24;35;19 - 00;24;54;22
Jonathan Porter
Thanks, Abe. Yeah, so I'm a nut when it comes to complex things being investigated under the False Claims Act. This is an anti fraud statute and to me it's going to be really hard for an AUSA or Relator's counsel to one day stand up for a jury and said, I found the fraud. They build a level four instead of a level three.
00;24;55;00 - 00;25;13;15
Jonathan Porter
When you go to your doctor, if you're a medicare patient, you go to your doctor. Your doctor is going to say what range of complexity this is on a 1 to 5 second guessing that doctor does not sound like fraud to me. I had one case in DOJ where it was an up coding case. The doctor billed everything at a level four, no matter what, 100% level four.
00;25;13;27 - 00;25;32;24
Jonathan Porter
And there I was able to sort of say, look, you're not really putting any sort of thought into this. If you exercised a normal amount of diligence, some things are in five, something were in three or two, and so that's the time. But Medicare intentionally, when they created these codes, they said there's a lot of discretion left to the doctor.
00;25;32;24 - 00;25;50;04
Jonathan Porter
That's why they made these sort of complexity codes. There are other things like psychotherapy. So those are time codes. You just report how much time you spent. Medicare didn't do that for office visits. And so I think it's really hard for people to come back and sort of second guess what coded you select, oh, you selected a different code than I would have.
00;25;50;04 - 00;26;05;13
Jonathan Porter
Well, that must be fraud. I don't think that's how it works. So I'm thrilled to have you on our team so that we can talk about these, you know, up coding things and whether they should be labeled as fraud the way that sometimes they are. All right. So a two more big things that I want to hear your take on.
00;26;05;23 - 00;26;36;06
Jonathan Porter
I want to ask you about grandstand dismissals in a second. But first, in cases where DOJ declines, intervention, DOJ job is not over. DOJ continues to monitor the key terms and sometimes they get back involved. In some cases, DOJ re engages and causes a huge splash. An example there is a case from for my 11th Circuit, the Everglades College case where DOJ jumped in on the eve of a trial to decline qui tam and settle for pennies on the dollar, which the whistleblower did not like.
00;26;36;16 - 00;26;47;12
Jonathan Porter
So Abe, tell our listeners how DOJ monitors declined key terms. What do you look for and what it would take for you to get back involved in the substance of a case post declination?
00;26;47;21 - 00;27;09;06
Abe Souza
Great question, Jonathan. First of all, I think I said this a few minutes ago, but I think it's worth reiterating Relator's usually voluntarily dismiss cases if the government declines. And again, that is usually how these things work out. And it's even more incentive for us as defense lawyers to try and convince the government that that is the right outcome because it may take care of the case altogether.
00;27;09;06 - 00;27;34;07
Abe Souza
And then there is no monitoring by DOJ and there's no more involvement by the defendant. So that's the first thing. But assuming the relator doesn't voluntarily dismiss DOJ remains involved and you're looking for a few things, first off is whether the parties are starting to talk settlement or are talking settlement in earnest, looking to settle the case in the United States, even if it declines, it remains the real party in interest in the case.
00;27;34;16 - 00;28;00;02
Abe Souza
It stands to benefit from the majority of the monetary recovery, if there is one, and there are specific requirements for settlements and settlement agreements in the event a qui tam is settled, usually it depends on the district, but usually the parties will still work out the nuts and bolts of the settlement themselves. But there is going to be what can be a lengthy or involved approval process with DOJ.
00;28;00;03 - 00;28;21;20
Abe Souza
And so DOJ is looking for that to get in front of that and make sure the parties are aware of what's required to streamline things going forward and make sure the resolution will actually stick. In addition to settlement, that the government is looking at the burden of discovery on itself and whether that's commensurate with the strength of the case and the potential recovery.
00;28;21;20 - 00;28;56;02
Abe Souza
So even though the United States is still the real party and interest in these cases, it's a third party for purposes of discovery, which is kind of an odd thing for people to get their heads around. And it can be very burdensome if discovery requests begin to be issued to the government. Often this happens from the defense side because the defense side, in trying to show that materiality is lacking, for example, may look to collect evidence that these types of claims were paid routinely and the government knew about this type of conduct which would kneecap a false claims act theory.
00;28;56;02 - 00;29;22;27
Abe Souza
So the government is certainly looking to monitor discovery. They may be responding to discovery directly and trying to figure out whether the burden of doing that makes sense in light of what's going on in the case and the potential recovery. I think the government also wants to make sure, and this is probably the most critical point that positions taken by the relator and the defense are correct descriptions inconsistent with government policy and programs.
00;29;22;27 - 00;29;42;05
Abe Souza
And you see this come up more so on the relator side, I would say. But it can happen on the defense side too. And if there are arguments made, theories pursued that are not consistent with the Government's own views about its own programs, in a case that is again brought on behalf of the government, the government's going to get the majority of damages.
00;29;42;23 - 00;29;57;00
Abe Souza
That's where you may see the government thinking about getting involved, either through a statement of interest or even in more significant circumstances, contemplating a dismissal consistent with the grants. The memo.
00;29;57;13 - 00;30;19;08
Jonathan Porter
Thanks, Abe. Yeah, people think that once the DOJ declines, it's just on autopilot. It is not. I'm surprised how often DOJ gets involved in declined key terms because as you said, there's a lot going on and DOJ is sitting there as the party in interest saying, well, you know, I don't necessarily agree with these things. I'm sort of stunned in a complex area like Stark.
00;30;19;08 - 00;30;38;04
Jonathan Porter
I'm stunned to see the positions that Relator is will take about what Stark means. And I haven't had this personally. I've had friends defending investigations involving Stark, where those of us who are former would say, no, CMS does not mess around. When it comes to Stark, they have very strong opinions. They will tell AUSA they're very strong opinions.
00;30;38;17 - 00;30;53;16
Jonathan Porter
And I'm sort of stunned. Relator's just sort of get away with a lot by saying, no, this is what Stark means. This is what CMS would or would not have done. And I've seen people beg is in declined he terms could you please help me get the right person and CMS to sort of correct the record here because it's very different when you know to concrete.
00;30;53;20 - 00;31;18;09
Jonathan Porter
So a final question. A few episodes ago, our colleague Cormac Connor referenced the Cranston memo, and I promised to do a whole episode on the issue of asking DOJ to affirmatively dismiss a key term. And I will do that at some point. Cormac, I know you're listening, but I want to ask you about it here because getting DOJ to decline qui tam, it still lets the whistleblower carry forward, but a dismissal ends the case.
00;31;18;23 - 00;31;35;02
Jonathan Porter
So Abe, when you were a DOJ, how would you weigh requests for Cranston? Dismissal closes out by telling our listeners how DOJ thinks about dismissal requests and what we on the defense side can learn about dismissal requests. From your experience.
00;31;35;02 - 00;31;59;05
Abe Souza
This is definitely an area to monitor during the second Trump administration. It may be that DOJ is more bullish about seeking dismissal of qui tams, although you never know. Honestly, there's some interesting political alignment on these issues. Senator Grassley is a big supporter of the SCA. FCA was very involved in retooling it, so to speak, and in the eighties, as you know.
00;31;59;05 - 00;32;23;07
Abe Souza
So we'll have to wait and see. Frankly, the statistics we talked about earlier, the big increase in qui tams without an increase really meaningfully in recoveries, suggests that maybe there should be some more dismissals. Certainly that would be a defense bar position, although, who knows, maybe a lot of those qui tams that have less merit are being voluntarily dismissed once they're declined.
00;32;23;07 - 00;32;39;17
Abe Souza
I just don't know. But in terms of weighing requests for dismissal, I think it's important to keep in mind as a defense lawyer, that defense lawyers asked the government to do this all the time. Sometimes it's easy as a defense lawyer to think, I'm going to get the government to dismiss this case. This is I can do it.
00;32;39;17 - 00;32;59;29
Abe Souza
This is going to be great. Your request will not be the first one. And so you really need to think long and hard about how to do it and make sure you do it in the right way. Overall, I would say it's very difficult to obtain a dismissal. AUSA's and DOJ trial attorneys are very cautious people like a lot of lawyers, appropriately so.
00;33;00;12 - 00;33;27;21
Abe Souza
And I think that they're hesitant to try and go ahead and seek authority to dismiss qui tam for a few reasons. I mean, one is the False Claims Act itself says that the relator can proceed even if the government declines. And so declination alone is really not a valid reason to dismiss qui tam. Plus, the government may have declined, as the Cranston memo acknowledges, government may have declined for reasons unrelated to the merits of the case.
00;33;27;21 - 00;33;50;01
Abe Souza
And if that's the case, the government doesn't want to hamstring or cut off the case entirely for the relator. Plus, the ACA or DOJ trial attorney is going to need the support and approval of their supervisory chain to go ahead and do this. And you really want to make sure you have this buttoned up and that it's an appropriate request before you go ahead and stick your neck out and push for this.
00;33;50;10 - 00;34;09;26
Abe Souza
So with all that in mind, I think it's difficult, but the greatest the memo is out there. I encourage people to read it publicly available, and it lays out factors that DOJ lawyers should consider in pondering whether to seek a dismissal. And I'll give you three that stand out to me. There's a number of factors in the memo, but some that stand out to me and that I look at as an error.
00;34;09;26 - 00;34;35;27
Abe Souza
You would say one is something we've talked a little bit about so far today, and that's where the Relator's theory is inconsistent with government policy, or at least the administration of a government program. And just to give you a real basic example, if you've got a manufacturer who is a government contractor manufacturing goods, providing them to the government, and the theory of the qui tam is that the manufacturer is committing fraud in connection with that contractual relationship.
00;34;36;07 - 00;35;01;05
Abe Souza
But the government is satisfied with the products, the goods and services that are being provided. I was fully aware of the alleged conduct, maybe even looked into it and certainly doesn't want to burden this contractor with a lawsuit that may upset the business relationship the government has with the contractor. That's a circumstance where you might see the government pondering, considering short circuiting that type of a qui tam.
00;35;01;13 - 00;35;29;01
Abe Souza
Another category where there's fertile ground for dismissal is where a qui tam is duplicative, potentially duplicative of an ongoing or even completed government investigation on the similar topic, and it doesn't seem to be adding a lot. So I think we saw some of this with the financial crisis surrounding 2008. Were there a lot of qui tams that were to piggyback on obvious concerns about fraud in connection with financial institutions and the mortgage market and so forth?
00;35;29;14 - 00;35;48;04
Abe Souza
And if you have that kind of a case, can you can make a persuasive argument. I think that not only is this not adding anything, it may be getting in the way of DOJ enforcement priorities and decisions it's already made. And then lastly, this goes back to the discovery point a few minutes ago and the statistics about the increase in qui tams.
00;35;48;04 - 00;36;14;10
Abe Souza
But you may have frivolous or at least weak or flawed cases where discovery is starting to impose a big burden on the government. And I think that it will be interesting to see in the new administration whether that ground starts to be even more persuasive for obtaining dismissals. I think in the past it's something that's been considered. It may be successful at times, but not as persuasive as other grounds for obtaining dismissal.
00;36;14;29 - 00;36;40;05
Abe Souza
But that is a serious concern for DOJ lawyers. You know, agencies, for example, feel really burdened by some of these discovery requests, particularly HHS, where they have vastly different goals in terms of public health than responding to qui tams and discovery. And so, you know, I think agencies may be pushing for this as well on the ground that they don't think it's useful to participate in discovery.
00;36;40;15 - 00;36;56;12
Abe Souza
So those are some factors that I think are worth considering. And when I'm representing clients here at Husch Blackwell, I try to think about whether my ask can fit within one of those categories, because that's going to be the most persuasive way to frame things for the government.
00;36;56;24 - 00;37;20;02
Jonathan Porter
Thanks. Yeah, I totally agree. Mine was largely the same experience. A lot of defense attorneys thought that they could just come out. Oh, well, they declined the qui tam. They must be willing to also dismiss it. No, that's not remotely what happens, because I don't feel like filing an FCA complaint and making this my full time job for the next over many years doesn't mean that I think it should be dismissed.
00;37;20;02 - 00;37;49;13
Jonathan Porter
A lot of them are in that gray area where there's some evidence that says there's some fraud, some that may explain it. And I'm not going to weigh in either side, but it takes a particular one where it merits dismissal. And so I think getting your perspectives on that really, really important and to sort of close out the big picture here is I think having DOJ experience is tremendously helpful in a lot of government investigations, but particularly in the FCA, this statute is to me really, really, really interesting.
00;37;49;13 - 00;38;11;06
Jonathan Porter
It's used in a bunch of different industries for a bunch of different reasons and they're all different. And having the bench strength in our firm sort of know how to handle these is really important and I think our clients benefit a lot from it. So Abe, I'm excited that you're now on our team out of DOJ into Husch Blackwell, thrilled that you're on our team and our clients are going to be thrilled in the years to come.
00;38;11;06 - 00;38;12;29
Jonathan Porter
So thanks for being with us.
00;38;13;08 - 00;38;15;13
Abe Souza
Thanks so much. That was really fun. You know.
00;38;15;22 - 00;38;35;18
Jonathan Porter
Sort of to close on a take away from the new DOJ numbers we talked about at the open. I think the new numbers show a lot of really interesting things. A record number of qui tams. Health care still leads in terms of dollars, but health care qui tams are continuing to drop. You're seeing fewer qui tams being filed in health care, more being filed in new areas.
00;38;35;25 - 00;38;58;20
Jonathan Porter
The CARES Act, like we talked about at the beginning where Abe did the great preview for us. That episode is coming in a couple of episodes and so make sure you stick around. We're going to continue to cover the cutting edge content and the False Claims Act on this podcast and all of our marketing materials here at Husch Blackwell I'm thrilled to practice with this group and I'm excited about what's to come in this enforcement landscape.
00;38;58;20 - 00;39;05;27
Jonathan Porter
So Abe, thanks again for joining the podcast and to our listeners, thanks for listening and we'll see you next time.