Chief Judge Janet Hall has implemented a new system in the U.S. District Court in Connecticut that addresses the ‘aging’ process in False Claims litigation.
False Claims (called qui tam) cases are unique – there’s nothing like them in civil jurisprudence. A complaint that exposes fraud upon the United States is filed by a citizen standing in the shoes of the Government, but the lawsuit is brought, not on behalf of that citizen, but on behalf of the United States. What makes this type of claim like no other is this: When the complaint is filed in the Federal court, it is filed “under seal” and “in camera” and it is not served on the defendant that is being sued. This means that a sheriff or marshall or process server does not arrive at the company and present it with papers that say a lawsuit has been filed against it. And so the defendant company does not know that it has been sued – not yet.
Why this procedure? Because the case has been brought by a civilian in the name of the Government, the Government therefore needs time to investigate the claim so that it can decide whether it wants to intervene and take over the case. As a result, while the Government’s investigation is taking place, the papers are still sitting in the District Court under seal, and the defendant company – the company that is accused of committing the fraud – doesn’t know that it has been sued or that it is being investigated.
Administratively, in the office of the Court Clerk, the case it is given a date stamp with the month and year that the complaint is filed. The first thing one notices in the caption on the very first line of the face sheet is the year and the month that the complaint is filed. Thus, alongside the names of the parties, is the following notation: “CIVIL NO. 2:11 CV 12345.” The first number – the ‘2:11’ in the caption – is the date the case was filed – February of 2011.
After the False Claims case is filed under seal, the Government then begins its investigation of the claim in order to decide whether it will intervene. It always
asks the Court for an extension of time, usually for a six month period, and the extension is routinely granted by the Court. In most instances, the first six months are not enough; it often takes several years for the Government to complete its investigation.
Let’s assume that, after investigating for three and a half years (and through seven six month extensions) the Government decides that it is not going to intervene in the case.
At this point, the Relator and his lawyer are faced with a decision: Do they drop the case, or do they decide to proceed on their own, still on behalf of the United States, but without the United States’ help and without the U.S. Attorney and the investigators getting involved in taking over as lawyers for the Government?
Assume that the decision is ‘yes’ – the Relator decides to go ahead without the Government’s involvement. The seal is then removed from the case, and at this point, three and a half years after the complaint was filed in the courthouse and after it was given the date stamp and file number, it now is served on the defendant company. And so, after all these months and years, the defendant company now, finally, discovers that it has been investigated and that a lawsuit was filed against it – three and a half years ago!
The company goes out and hires a law firm and the first thing its lawyers do is file a Rule 9(b) motion to dismiss. The motion to dismiss says nothing at all about the time that has passed while the Government was conducting its investigation; instead, the motion says something like “The complaint doesn’t allege what the bills were,” or “The complaint doesn’t state what specific contract the company was violating,” or “The complaint doesn’t say who specifically was doing the cheating.”
Judge Hall’s new administrative procedure has nothing at all to do with any of the legal arguments that are made by defense lawyers in their motions to dismiss, but it does address a temptation Judges might be exposed to when a motion to dismiss is filed.
A central fact and a way of life for Federal Judges is that they all are underconstant pressure and scrutiny by court administrators to move cases – by this we mean to dispose of old cases and to try to keep fairly current in addressing the backlog in their dockets. And when a Federal Judge is called upon to decide a motion to dismiss, the first thing he or she can’t help but notice, right there on the face sheet, is the fact that the case was filed way back in February of 2011. Three and a half years have gone by while the Government was completing its investigation, making this a relatively old cases in the judge’s docket.
Now the ‘perfect storm’: The motion to dismiss will be decided by a Federal Judge who has been under a lot of scrutiny and a lot of pressure to do something about the backlog of old cases that has been building up in his court.
When he decides the motion to dismiss, the Judge of course will never say anything about this issue in his decision, but, as the plaintiff’s attorney arguing against the motion to dismiss, it’s very difficult to be convinced that the age of this three and a half year old case will not have have any bearing whatsoever on how the Judge decides the motion to dismiss – that the Court might not engage in a silent form of age discrimination.
And the older the case, the easier it is to believe that you, as the Relator/Plaintiff and his lawyer arguing that the case should be preserved, are faced with a heavier burden and an uphill battle because of how old the case is. It’s a phantom argument of course – the elephant in the room – because there is no way that you, on behalf of the Relator/Plaintiff, can even address the age of the case and the role you thinks it might play in the Court’s decision.
Recently, in the D.C. Circuit Court of Appeals, three justices heard arguments in U.S. ex rel Oliver v. Philip Morris USA, a case that was dismissed by the lower district court. The judge ruled that Mr. Oliver was not the “original source” because of a complaint by a customer in Keflavik Iceland in 2002 about how the prices of Marlboros were lower in the civilian market off base than they were inside the post exchange at the Naval Air Station. The reason the case is mentioned here is as follows: the date stamp on the face sheet of U.S. ex rel Oliver was 2008, and when it was dismissed by the District Court in 2013, it was difficult for me, as Relator’s counsel, to believe that the five year old age of the case at the time of its dismissal had no bearing whatsoever on the Court’s decision.
This case is mentioned as an example of where, through no fault of the Relator or the qui tam Plaintiff, the age of the case presented the Relator’s attorneys with the sense that they were playing on a rather uneven playing field. To mix another metaphor – how was the Relator supposed to deal with the ‘elephant in the room’ that was not supposed to exist? Saying it more graphically: How can a Relator/ Plaintiff’s lawyer address a problem he cannot acknowledge with an argument he cannot even make?
This brings us to Judge Janet Hall’s innovative procedure. Because it focuses exclusively on every False Claims action that is filed, it provides a welcome effort to address this challenge.
Under the new procedure, the U.S. Attorney’s office is authorized to submit what is called an Ex Parte Application for an Order Staying and Administratively Terminating the Action, and Extending the Seal Period whenever a False Claims lawsuit is filed. What this innovative administrative process does is two things:
1. It relieves the US. Attorney’s office from the burden of returning to the Court every six months with a new motion for an extension of time, and
2. It removes the temptation of a District Court judge to exercise a form of legal euthanasia that is based on how old the case is.
What will take place now, routinely following Judge Hall’s order, is unique to False Claims matters: With the ‘administrative termination’ the case will be ‘terminated.’ It is unclear whether the date stamp and Civil No. that reflects the month and year of the filing will also be gone, but the fact is this: With the Administrative Termination, the date the complaint was filed no longer will carry the same signal of the case’s age. What is made quite clear with Judge Hall’s order is the fact that when qui tam cases in Connecticut are designated as cases that have been Administratively Terminated – in the future, the date stamp on the face sheet will no longer have the same date-of-birth meaning – and the process that starts the clock ticking on the road to growing old is no longer a factor.
My hope is that, after the investigation by the Government is complete and the decision is made on whether or not to intervene, and after the complaint is “unsealed,” and after it then is served on the defendant company, the case will be given a brand new Civil No. So that, now, after the Court enters its order administratively terminating the action, the case will lose its date stamped file number that formerly might have meant that in the distant future this number might form the (unacknowledged) basis for a dismissal. In its place, there will be something similar to a brand new date stamped file number – in effect a new birth date – that reflects the date the complaint was served upon the defendant company, removing the temptation for the Court to even remotely consider dismissing the case based on a form of age discrimination.
It must be mentioned that there’s a little bit of be-careful-what-you-wish-for to this innovative process. Under the old procedure, every six months the U.S. Attorney’s office was faced with a decision on what it was going to do about intervening. With the “administrative termination” it’s quite possible that the Government will no longer find itself under the same sort of pressure from the Court to at least create the illusion of activity as the six month extension is about to expire. Under Judge Hall’s new procedure it doesn’t look like the US Attorney’s office will be faced with the threat of a judge saying at the end of several six month extensions, “Counselor, you’ve had three years – this is the last one.” Under the new system, the Court will not be monitoring the progress of the Government’s investigation as it formerly did.
While we’ll have to see how all of this plays out, we nonetheless rejoice at Judge Hall’s recognizing and dealing with a subject that arises not through some fault of either party to the qui tam lawsuit, or through any written law or regulation. The new procedure recognizes, and removes, the faintest possibility that a decision to dismiss might, however remotely, be somehow influenced by the age of the claim.