Agape, and the decisions of the Fifth Circuit, Sixth Circuit and other courts, illustrates the importance of the government's role in settlement of FCA claims.
It should come as no surprise to any practicing attorney that most cases settle. In the context of the False Claims Act (FCA), the Department of Justice (DOJ) reported hundreds of millions of dollars in settlements in the health care arena in 2015 alone. In considering those settlements, or in considering a possible settlement with a qui tam relator bringing an FCA case, one must understand the role that the federal government plays in any FCA settlement.
Perhaps because FCA claims are brought on behalf of the government, 31 U.S.C. § 3730(b)(1) provides that an "action may be dismissed only if the court and the Attorney General give written consent to the dismissal and their reasons for consenting." Given this language, the U.S. Courts of Appeals for the Fifth and Sixth Circuits, as well as the District Court for the District of Columbia, have held that the government may block settlements even where the government chooses not to intervene. [See, e.g., United States v. Health Possibilities, P.S.C., 207 F.3d 335, 344 (6th Cir. 2000).]
In contrast, the Court of Appeals for the Ninth Circuit has held that "the consent provision contained in § 3730(b)(1) applies only during the initial sixty-day (or extended) period" after a relator files the action, unless the government chooses to intervene. [U.S. ex rel. Killingsworth v. Northrop Corp., 25 F.3d 715, 722 (9th Cir. 1994).]
This issue is playing a critical role in a current appeal pending before the Fourth Circuit. [See U.S. ex rel. Michaels v. Agape Senior Cmty., Inc., No. CA 0:12-3466-JFA, 2015 WL 3903675, at *1 (D.S.C. June 25, 2015), order corrected, No. CA 0:12-3466-JFA, 2015 WL 4128919 (D.S.C. July 6, 2015).] In Agape, the plaintiffs-relators filed a qui tam action in 2012, alleging that the defendants violated the FCA, the Anti-Kickback Statute and the Health Care Fraud Statute by submitting false claims to Medicare, Medicaid and Tricare for nursing home-related services, hospice-related care and general inpatient services. On March 5, 2013 the government declined to intervene.
In November 2014 and January 2015, the parties mediated the case. At the first mediation, the government participated. At the second mediation, the government was not invited and did not participate.
After the second mediation, the parties informed the District Court that they had reached a settlement. As a result, the case was stayed and the trial was canceled. The government, however, promptly objected to the settlement, arguing that it had the right to prevent a settlement even in a case in which it did not intervene.