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00;00;00;00 - 00;00;28;01
Jonathan Porter
Welcome to another episode of Husch Blackwell's False Claims Act Insights podcast. I'm your host, Jonathan Porter. All right. This is going to be a different kind of episode. One of the most important parts of defending False Claims Act investigations is telling a client's story to DOJ. DOJ attorneys have tremendous, often and discretion. And most FCA investigations start with DOJ hearing a story of fraud from a whistleblower.
00;00;28;04 - 00;00;56;10
Jonathan Porter
And that story of fraud is in their heads as DOJ claims their investigation. And we on the defense side can usually go one of two ways. One way is to just produce all the documents requested, answered the interrogatories on paper, and make people available for testimony and just see how things play out. There are defense attorneys who take that approach, but to me the second option is the better approach, and that is to at some point tell DOJ your own side of the story.
00;00;56;13 - 00;01;28;08
Jonathan Porter
In my experience, effective presentations to DOJ can really move the needle. Putting context around emails or anecdotes in the form of a narrative helps DOJ see a more complete picture of a client. Telling a client's story is, to me, incredibly important. And for my time at DOJ, I cannot tell you how many people fumble the story. They either missed the theory of the investigation, or they adopt the wrong tone, or they just list a bunch of events and legal factors on a slide and then read from the slide.
00;01;28;10 - 00;01;55;12
Jonathan Porter
There's a huge difference between a good story and a bad story. And that's one thing our team here at Blackwell prides ourselves on is telling our client stories in an effective way. So today we're telling stories. And because we're releasing this on the eve of April Fools' Day, we're going to have a little fun with our storytelling. More on that after I introduce my April Fools' storytelling co-conspirator Rebecca Furdek.
00;01;55;14 - 00;02;18;19
Jonathan Porter
Regular listeners will remember Rebecca from our episode last year on civil investigative demands and how to deal with disputes involving kids. We talked about how DOJ and those receiving kids can involve the court, either through enforcement proceedings or set aside petitions. It was a great discussion. And now Rebecca is coming back to help me tell a few good FCA stories.
00;02;18;21 - 00;02;42;22
Jonathan Porter
Rebecca is a partner in Husch Blackwell's Milwaukee office and is a key member of our white collar and FCA groups. And so, Rebecca, thanks for going back on the podcast and doing this unconventional storytelling episode with me. I'm sure this is not what you had in mind when I asked you to come back on the podcast, but I can think of no better person to help me tell a few, you know, good, compelling stories than you, Rebecca.
00;02;42;22 - 00;02;45;28
Jonathan Porter
So thanks for coming on the podcast and tolerating me on on this episode.
00;02;46;01 - 00;03;08;02
Rebecca Furdek
Well, thank you so much for having me back. And for what it's worth, I am far from tolerating this. After all, you know the last time I was on, you mentioned I was a music major. I threw in a terrible pun or two. So worst case were even by you, tolerating that. But it turns out I was an English major, too, so this is right up my alley, and I'm really looking forward to it today.
00;03;08;05 - 00;03;31;11
Jonathan Porter
Fantastic. This is great. All right, so before we start telling some stories, let me explain what we're doing here today. We've invited our firm's head of thought leadership, Steve Renau, to come on the other side of the microphone for today's episode to help us play a little April Fools' stunt. So Steve is the brains behind so much of what the firm does publicly articles, webinars, podcasts, Steve’s the guy.
00;03;31;11 - 00;03;48;29
Jonathan Porter
And with this podcast, he's the guy, which is now a year old. So we wouldn't be here with a lot of hard work by Steve and so many others. And so today we're bringing Steve on to hear some of our FCA stories. First of all, Steve, thanks for coming on the podcast to help us out with this, and thanks for what you do for the podcast in general.
00;03;48;29 - 00;03;50;08
Jonathan Porter
Steve, thank you.
00;03;50;08 - 00;03;56;01
Steve Renau
Thank you for having me. I look forward to a lot of fun on this show today and look forward to it.
00;03;56;03 - 00;04;16;17
Jonathan Porter
All right. So here's how this is going to work, Steve. So Rebecca and I are going to tell you three stories about the FCA. We picked three stories that I think are really interesting and they're all FCA related. So Steve, when you've heard all three stories since this is our April Fools' episode, I wish you to then guess which one of the three we've made up.
00;04;16;17 - 00;04;29;09
Jonathan Porter
That's your challenge. Pick the one you think we've invented. Got it.
Steve Renau
Very good.
Jonathan Porter
All right. Rebecca is going to tell the first story. I'll tell the second, and then Rebecca will tell the third. And then Steve will want to hear your guess on which one is false.
00;04;29;11 - 00;04;49;02
Rebecca Furdek
All right, well, launching right into our first story, I will call this one The Tale of Two Hospitals. And this is a story about the hospital's top lawyer who was sued for abusing the False Claims Act. So just to further my Dickens reference, I will start it out as such, it was the best of times, it was the worst of times.
00;04;49;05 - 00;05;15;14
Rebecca Furdek
And there were two hospitals located on the Ohio River, and they were very close to one another. They were separated by just 14 miles. And as you can imagine, they were very fierce competitors. The two hospitals would compete for physicians and other providers to work there for referrals and for patients. And one day, a key item complaint was filed against one of the hospitals, and DOJ investigated, and they found nothing.
00;05;15;21 - 00;05;43;11
Rebecca Furdek
And they ultimately declined to intervene. But as many loyal listeners here will know from other episodes or perhaps their own familiarity with the FCA just responding to an FCA investigation, pulling together those documents, responding to interrogatory, potentially providing testimony that can be a very expensive process. Not to mention that it takes up a lot of time and can cause a lot of uncertainty and stress for everyone involved.
00;05;43;13 - 00;06;04;05
Rebecca Furdek
And in the hospital. While the hospital was going through that process, they dug in and they found something very interesting. They found out that the whistleblower themselves had connections to the rival hospital on the other side of the river, and they ultimately got pretty creative and sued for malicious prosecution. Under state law, as well as some other state law theories.
00;06;04;07 - 00;06;25;22
Rebecca Furdek
And this is notable because proving malice in particular is a very high bar. And here's where the plot really heats up, because in the course of discovery and the case, they found out that the qui tam was actually dreamed up by the general counsel of that rival hospital. It turns out he developed, he planned, he strategized the whole time with the whistleblowers.
00;06;25;25 - 00;06;56;21
Rebecca Furdek
But wait, there's more. After generating the whole complaint, allegedly, he then used the fact that the hospital was under federal investigation to just smear the hospital even further. According to the court documents, he went around to the physicians and talked them out of their relationship with the investigated hospital. Because of that investigation and the hospital in question found evidence that the general counsel had a secret deal to take a share of whatever profits the whistleblowers would ultimately get in the case anyway.
00;06;56;22 - 00;07;13;18
Rebecca Furdek
So the hospital added the rival hospital's general counsel to their prosecution complaint. They got past big motions. So in other words, they met that high bar to establish malice and ultimately want a big settlement. So I guess our first story has a happy ending.
00;07;13;20 - 00;07;28;14
Jonathan Porter
David, thanks for that first Dickensian story. Rebecca, you really were an English major. That's great. So, Steve, that sounds pretty far fetched to me. I can't imagine a lawyer would do any of those things. What do you think, Steve? Could this one be fake?
00;07;28;17 - 00;07;46;18
Steve Renau
I'm gonna say that's real. Now, I will admit that this does sound very familiar to me. There might have been a case in the Mid-Atlantic region where such a thing happened, but I think that is well within the realm of possibility. So I'm going to say, no, that is not fake. Okay.
00;07;46;24 - 00;08;01;13
Jonathan Porter
All right. That's what let's see. Let's see. It seems like Steve may have read an article I wrote like two years ago. So I may have spoiled this. That's that's why he's the head of the leadership. He knows all the things. So, yeah, I thought for sure you would not read that article. Nuts. All right, so I'll tell the next story.
00;08;01;13 - 00;08;28;04
Jonathan Porter
And then, after that, Rebecca will tell our third one. So our second story involves two whistleblowers who went from the precipice of being crazy rich to getting nearly nothing in very quick succession. So a college in Florida had a bunch of students getting federal benefits through the Department of Education and the VA. Now, those federal programs, they've got a bunch of regulations, as federal programs do.
00;08;28;04 - 00;08;49;03
Jonathan Porter
And one of those regulations says that colleges participating in these programs, you can't pay commissions to recruiters. So college recruiters go around to campuses. You can't pay them commissions based on how many people they sign up to go to school. You can have admissions staff that goes around and recruit students, but colleges, they have to pay those staffers a fixed amount.
00;08;49;03 - 00;09;18;21
Jonathan Porter
You can't base compensation on how many students you enroll. That's the that's the general gist of those regulations. Well, an admissions director and an admissions counselor at this Florida college, they come forward. May they say that their employer is violating these regulations and they're doing so knowingly. They file a claim alleging over $750 million in payments from federal programs that were the result of this illegal commission recruitment system.
00;09;18;23 - 00;09;37;28
Jonathan Porter
So the way the FCA works, if these whistleblowers are successful, the damages that they get trebled. Then you get to add in a penalty for every false claim for payment. And it's these penalties that often drives the real damage. You know, for example, there's an FDA trial here in Georgia two years ago where a doctor cost $1.1 million in false claims.
00;09;38;00 - 00;10;02;05
Jonathan Porter
But after trebling in penalties, the judgment against him reached $27 million. That's how that's how this works. So in this case, with the college, it's not crazy to think that a $750 million improper payment amount could balloon to many billions of dollars, and that the whistleblowers could be in line for, you know, hundreds of millions of dollars if they get to trial, which isn't easy.
00;10;02;08 - 00;10;22;13
Jonathan Porter
But here, the whistleblowers, they actually got to a trial, they go to a bench trial to make their arguments. And the judge found false claims, but not nearly as many as the whistleblowers hoped. So the judge found that the college made two false claims, only two, and that those two false claims resulted in zero actual damage to the government.
00;10;22;16 - 00;10;46;18
Jonathan Porter
It's perhaps the worst technical way to win any, you know, false claims that case ever. And the relator's, just didn't like this. So the court they awarded the the judge awards the minimum penalty for both false claims and her judgment against the college for $11,000. The whistleblowers, they appealed, hoping they could get a new trial. Another shot at, you know, billion dollar plus verdict.
00;10;46;20 - 00;11;13;23
Jonathan Porter
But as the appeal was pending, the Justice Department, they sweep in, they settle the case over the relator's objection, not for billions of dollars or even millions. DOJ settled over the Relator's objection for $300,000. Totally cut the relator's off Relator's complaint at the district court level. They lost the complainant, the appellate court level, and they lost. So they ended up with a very small share of $300,000 plus attorney's fees.
00;11;13;25 - 00;11;37;11
Jonathan Porter
And while they incurred over $1 million in attorney's fees, the courts, they reduced that to a whopping $60,000 for attorney's fees. So just an awful turn of events going from, you know, Scrooge McDuck money to, I don't know, value menu at McDonald's money in a very short period of time. But that's how key teams go. Some end up being bonanzas for the whistleblowers, and some are duds, and this one ended up being a dud.
00;11;37;11 - 00;11;41;22
Jonathan Porter
So Steve, what do you think of this second story? Is this one fake news?
00;11;41;24 - 00;11;58;28
Steve Renau
This one seems very truthy to me. I do think that this one has legs. This this one could be could be the truth. I'm going to, hold off on declaring whether this one is fake or real until I hear number three, but this one sounds like it.
00;11;58;28 - 00;12;07;13
Jonathan Porter
Could very well be the truth. Excellent. Thanks, Steve. All right, so Rebecca's got a whopper for the third one. So, Rebecca, why don't you tell Steve our third story?
00;12;07;16 - 00;12;32;14
Rebecca Furdek
All right, well, to watching the number three. So this final one reads a bit sort of like a quintessential spy novel. There's briefcases of secrets and physical disguises. So here we go to set the stage. There's an attorney who worked for the civil fraud section and DOJ, including working on qui tam actions. Now, the civil fraud section is the DOJ branch that gets these qui tam within DOJ.
00;12;32;16 - 00;12;56;19
Rebecca Furdek
And from there, they plan out the investigation. They coordinate all the qui tam complaints, which importantly here are filed under seal by the whistleblower in court. So in other words, these are not publicly available filings when their first filed with the court, even including to the company or individual name is the defendant. So one of these attorneys who worked for civil fraud worked on a number of these actions.
00;12;56;21 - 00;13;25;04
Rebecca Furdek
And he saw an opportunity, and he concocted a pretty crazy get rich quick scheme. So during his final months working there before transitioning to a law firm, he began secretly collecting and reviewing these sealed qui tam complaints that weren't even assigned to him at DOJ. And once he was no longer working at DOJ, use that information to start contacting the companies that were the name defendants in these filings that were under seal.
00;13;25;06 - 00;13;52;04
Rebecca Furdek
In fact, you've been talked one company into hiring him once at his new law firm to defend them. And other instances, he tried to sell the defendants information about their respective complaints, which is very valuable to a defendant because it helps them prepare and strategize on the front end. Does he actually tell one company that he would sell them the entire under seal complaint for $310,000?
00;13;52;06 - 00;14;22;27
Rebecca Furdek
Well, it turns out the company he was negotiating with realized just how illegal this all was. And they called the FBI to report this attorney. So the FBI staged this operation where the former DOJ attorney is supposedly going to meet with a company representative at a hotel lobby in San Francisco. The company was going to hand the attorney a duffel bag with $310,000 in cash, and the former attorney was going to hand them this filing, this qui tam complaint.
00;14;22;29 - 00;14;50;16
Rebecca Furdek
But unfortunately for the DOJ attorney, and I think as anyone listening right now may expect, a corporate person did not show up, but instead an undercover FBI agent. And just to make the scene even a little more sensational, this former DOJ attorney showed up in a wig and sunglasses to just further disguise himself. None of this worked, and the FBI arrested him while he was holding this under seal complaint.
00;14;50;18 - 00;15;26;01
Rebecca Furdek
And even after all of that, it didn't stop. The former DOJ attorney tried to still cover things up. He put some of these under seal key tabs in a Fedex envelope, and try to make it appear as though a DOJ employee had accidentally mailed him all of these key tabs, but it didn't work either. And while we don't know ultimately what benefit the company that turned him into the FBI got out of all of this, the former DOJ attorney ended up pleading guilty to obstruction of justice, interstate transportation of stolen goods, and was ultimately sentenced to 30 months in prison.
00;15;26;04 - 00;15;27;14
Rebecca Furdek
The end.
00;15;27;16 - 00;15;35;23
Jonathan Porter
All right. Thanks, Rebecca. All right, Steve, you've heard all three. Now it's time for you to do your magic. Which of these three are fake? What do you think?
00;15;35;25 - 00;15;45;13
Steve Renau
I have a hard time believing that anyone at DOJ could be so stupid as to do something like that. It's got to be number three. That's fake.
00;15;45;15 - 00;16;04;10
Jonathan Porter
All right, Steve, so this is where the April Fools thing comes in. They're actually all three true. So that third one, believe it or not, including the sunglasses and fake mustache, that's a true story that happened about eight years ago. The guy's name is Jeffrey Wertkin. Shouldn't have done it. He did his time. I think he's out being like a consultant or something now.
00;16;04;10 - 00;16;22;02
Jonathan Porter
So he appears to have turned his life around. Obviously he did something awful. Shouldn't have done it. Hard to believe that DOJ did it. Someone from DOJ did it. He had such a bright future ahead of him, but he did it. And that's a wild story. But it's 100% true. All right. So Steve, thanks for being our guinea pig here.
00;16;22;02 - 00;16;28;00
Jonathan Porter
They actually all three are true. So there's your April Fools prank. So thanks for being our test subject on this episode, Steve.
00;16;28;01 - 00;16;33;22
Steve Renau
You bet. That was a lot of fun and I look forward to the next time. Do I get a consolation gift at least?
00;16;33;23 - 00;16;50;23
Jonathan Porter
No. You know, you can. You have to listen to Rebecca. Rebecca and I are about to talk about sort of takeaways from this. So you get to listen to that if you want. There we go. Good. So Rebecca, let's first talk about takeaways from these three crazy stories. And then we can close by talking about the importance of telling our client story.
00;16;50;23 - 00;16;56;04
Jonathan Porter
So Rebecca is there anything that we can learn from these three cases that our listeners may benefit from?
00;16;56;09 - 00;17;18;21
Rebecca Furdek
Well, first, I would say that all three reveal something pretty fundamental that we know about human nature. And the FCA, the the FCA was designed to award well-meaning whistleblowers who are reporting serious fraud. But like any rule, any institution there are going to be people with poor intentions that are going to take advantage of whatever system is in place.
00;17;18;24 - 00;17;57;04
Rebecca Furdek
And I think there are people who generally see some whistleblowers in a pretty skeptical light, people just trying to make a few bucks by finding any opportunity to share. And part of these proceeds. And as your second story revealed, sometimes, you know, the amount of those proceeds can go awry or be very volatile. But ultimately, I think today's stories reveal the sensational means that some go, and seeing the process more broadly is broken just because of these few examples would be unfortunate for the good whistleblowers who come forward to report the very type of fraud the FCA is designed to root out.
00;17;57;06 - 00;18;25;02
Rebecca Furdek
And related to that, this is an obvious point, probably as well. But taking advantage of this law for it to be that tempting or appealing, especially if we think about that third story, it just shows how powerful and lucrative the FCA really is as a statutory scheme. I mean, in the third story, the fact that the lawyer found it even plausible that somebody was going to show up with $300,000 or 3 or $10,000 in a duffel bag of cash, kind of speaks for itself.
00;18;25;05 - 00;18;51;00
Rebecca Furdek
And, you know, he was new to a big firm. Perhaps the pressure of wanting to secure some of these cases or big clients upon entering private practice was a motivator. Of course, I don't know. Either way. And in the case of the hospitals engaging in that risky of a scheme to weaponize the FCA against a competitor is also very telling, because just being under investigation can be damaging to a business reputation, cost, etc..
00;18;51;02 - 00;19;09;15
Jonathan Porter
Thanks, Rebecca. Those are excellent takeaways. Yeah, I have the same roughly the same takeaways as you. I think this just shows how powerful the key term tool is. You know, the fact that someone from civil frauds thought that these were so valuable that his business plan, leaving the justice Department was to sell them, shows just how powerful these are.
00;19;09;15 - 00;19;29;26
Jonathan Porter
So key times are really serious things. And, you know, our second story helps tell that the fact that there was a jury actually was a bench trial, who was a judge who was between a potential billions of dollars verdict or a $11,000 verdict. It's a big deal. These are really important cases. And I think that's one of the takeaways from these three cases.
00;19;29;29 - 00;19;40;20
Jonathan Porter
The other takeaway being, if you're a DOJ attorney, don't steal key terms and secretly try to sell them. And if you're going to do don't show up in a wig and sunglasses or mustache, whatever the disguise was that the the guy had.
00;19;40;22 - 00;19;42;24
Rebecca Furdek
Yeah. Go big or go home. Be yourself.
00;19;42;26 - 00;20;01;13
Jonathan Porter
Now. Yeah, absolutely. But you know, the other thing is going back to your first order, back up, figuring out why DOJ is investigating your client. I think it's really important when there's someone who is disgruntled that you think has filed a claim, telling that story at the right time and in the right way to me is really important.
00;20;01;13 - 00;20;19;12
Jonathan Porter
Because like we talked about the Justice Department, the first thing they do is to interview the whistleblower and see what the whistleblower has to say. And that's the story they have in their head when they're setting their investigation plan. So it's really important to sort of figure out, does this person have an ax to grind? Is this someone who has a reason for not telling the truth?
00;20;19;19 - 00;20;39;06
Jonathan Porter
Has this person not told the truth in the past? So those things are all really important. I think that's one takeaway from our little story today. So, Rebecca, finally, you know, we've had some fun with these stories, but again, a critical part of defending FCA investigations and really any government investigation where your client is the target is the ability to tell a story that is backed up by the evidence.
00;20;39;08 - 00;20;47;23
Jonathan Porter
Rebecca closes out by telling our listeners why it's important to develop the narrative of our clients, of our defense.
00;20;47;25 - 00;21;14;04
Rebecca Furdek
Exactly. A compelling narrative, a compelling story is really everything, starting from day one and an investigation in the case, in the first story with the malicious prosecution claim. You know, I mentioned earlier that proving malice is a very high bar. So if you're all going to convince a jury or motivate the other side to settle in the case, you need to have a clear, cohesive story that's really backed up by the evidence at all steps.
00;21;14;07 - 00;21;37;12
Rebecca Furdek
But as you know, the majority of FCA investigations never go to trial. So this all starts on day one, presenting a clear, compelling narrative is important from the very first day of the government comes knocking when they're asking for those documents, when they present interrogatories, when they're asking for testimony, because that right there is your first opportunity to frame the narrative, to tell the story.
00;21;37;15 - 00;21;56;23
Rebecca Furdek
And if you do it in a compelling way, as you mentioned earlier, it can really alter the course or perhaps shut down an investigation before it even gets to litigation. But at any stage, whether in an investigation or in litigation, telling a good story is such a huge part of what we do in terms of client advocacy.
00;21;56;25 - 00;22;17;02
Jonathan Porter
Yeah, Rebecca, I 100% agree that's the great point. And that's why I enjoy practicing with English majors like yourself and so many others at our firm who understand that DOJ, they've got a tremendous amount of power, autonomy, responsibility, and they're making decisions that impact our clients and making sure that we're framing things in the right way, I think is critical.
00;22;17;02 - 00;22;43;02
Jonathan Porter
I think you've absolutely got to do it. I was surprised how often at DOJ, defense counsel would just sort of give documents and provide witnesses and then really not do anything else with it, and then we would just draw our own conclusions. I just don't think that's the right way to do it. I was always impressed by the people who were able to present all of this stuff in a really compelling way and explain, okay, here's a text message that you might think is problematic, but here's why it's not.
00;22;43;02 - 00;23;03;02
Jonathan Porter
And here's all the things that we've done. Yes, we have this compliance issues that came up, but that's only because we have a really robust compliance program and just sort of tell the story that way. And so, Rebecca, I think this episode is important because we don't talk a lot about telling stories. We just tell the stories, but we don't acknowledge that it's a critical part of what we do.
00;23;03;05 - 00;23;18;27
Jonathan Porter
And that's what I wanted to do. This episode was to have fun with Steve and see if he can guess, but also Rebecca, so that we could talk about how important telling the stories are, because that's really what it is that we do because again, DOJ, they've got the power. They can intervene in your case and make your life really, really bad.
00;23;18;29 - 00;23;32;03
Jonathan Porter
Or they can not just decline but dismiss your case. They can make the key to them go away and that's why telling the story is the right thing. And that's why I want to do this episode. So Rebecca, thanks for coming on the episode and telling stories, having a little fun with us.
00;23;32;08 - 00;23;34;15
Rebecca Furdek
Thanks again for having me on. It was a lot of fun.
00;23;34;18 - 00;23;54;24
Jonathan Porter
So to close, we're going to continue to bring you big developments. I think the two weeks ago, we brought you the episode that brought everyone up to speed on all the big developments that are happening in the FCA world. It's coming to no one surprise that these developments are continuing to happen. And so we're going to continue to bring you, current stuff on this podcast and our writings, everything that we do.
00;23;54;24 - 00;24;17;20
Jonathan Porter
But I just want to say thank you. You know, like I said, we're we're about at the year mark on this podcast. It's been a lot of fun to do this. So thanks to our team here that spend so much time making this a success. And thanks for our listeners for listening to us over the last year. It's been a lot of fun, so continue to listen to us and thanks for listening to today's episode where we're telling stories and have a little April Fools fun.
00;24;17;20 - 00;24;27;00
Jonathan Porter
So thanks for listening today, and we'll see you next time.