The False Claims Act is well known for the rewards that successful whistleblowers may receive pursuant to 31 U.S.C. § 3730(d)(1). Much less attention, however, is directed to § 3730(d)(2) of the FCA, which provides for the award of reasonable expenses and attorney’s fees in cases where a relator prevails and the Government has not intervened. A recent decision in United States ex rel. Feldman v. Van Gorp, et al., (Feb. 9, 2011 S.D.N.Y.) demonstrates why the availability of attorney’s fees is an important consideration that FCA defendants should keep in mind.
In Van Gorp, a whistleblower filed a qui tam action against Dr. Wilfred Van Gorp and Cornell University Medical College, alleging that the defendants submitted false claims for the purpose of obtaining grants of federal research funds from the National Institute of Health. The relator alleged false claims with respect to the defendants' original grant application and four yearly renewal applications and progress reports. Relator alleged that defendants’ representations in the applications were false because they differed materially from the implementation of the grant. Relator sought $1,359,000 in damages. After an eight-day jury trial, a verdict was returned in favor of the relator on three of the five claims. The court awarded damages of $887,714.
Relator’s attorneys moved pursuant to § 3730(d)(2) for an award of attorney's fees in the amount of $726,711.25, costs of $37,917.87 and reimbursement for $3,121.47 for expenses incurred as a result of the litigation. After evaluating the time, expenses, and other factors relevant to the determination of reasonable attorney’s fees and expenses, the court granted the motion in part and denied it in part, awarding $602,898.63 in attorney’s fees, $25,862.15 in costs, and $3,121.47 for reasonable expenses. Thus, the total attorney’s fees and expenses awarded to the Relator – $631,882.25 -- far exceeded the maximum award of 30% of damages that was available under § 3730(d)(1) and was more than two-thirds of the damages award.