In United States ex rel. Thomas v. Duke University, Duke University and its co-defendants persuaded the United States District Court for the Western District of Virginia that a qui tam action pending against it should instead unfold in Greensboro, North Carolina, 50 miles from Duke’s Durham campus. Issued on March 28, 2017, the decision highlights how relators try to take advantage of the False Claims Act’s (FCA) venue provision and how defendants can and should push back and call upon the discretion that federal district court judges can exercise in transferring FCA actions.
In Thomas, the relator alleges Duke University, Duke University Healthy Systems, Inc. and several doctors (collectively, the Duke defendants) knowingly falsified medical research data to obtain millions of dollars in federal grants from various federal agencies, including the Environmental Protection Agency and National Institutes of Health. The relator, Joseph Thomas, worked as a laboratory research analyst at the Duke University Medical Center. Thomas claims individuals conducting medical research on Duke’s behalf deliberately failed to run certain experiments and fabricated data to support others. Thomas alleges this practice was systemic and was carried out to obtain and maintain highly-competitive medical research grants. Thomas filed his whistleblower action in the Western District of Virginia on May 17, 2013. The U.S. Attorney’s Office for that district declined to intervene.
Even though none of the alleged events occurred within the Western District of Virginia, the FCA’s broad venue provision technically permitted Thomas’s filing there. Under 31 U.S.C. § 3732(a), a relator may bring his or her qui tam action in “any judicial district in which . . . any one defendant can be found, resides, [or] transacts business.” Thomas was allowed to bring the action in Virginia because, among other things, “Duke University solicited and enrolled students from the District, advertised in the District, participated in academic activities in the District, and participated in athletic activities in the District.” Although this reasoning would expose any university with a national athletics program to FCA jurisdiction in nearly any federal district, neither the court nor the Duke defendants disagreed.
Just because an FCA action can be brought in a forum does not mean that forum is appropriate. The Duke defendants argued that the United States District Court for the Middle District of North Carolina—where Duke is located—would be a more appropriate forum to resolve Thomas’s allegations. Accordingly, they moved to transfer the action under 28 U.S.C. § 1404(a), which states, “For the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought.” While the decision to transfer is “committed to the discretion of the transferring judge,” courts typically weigh four factors: 1) the weight accorded to plaintiff’s choice of venue; 2) witness convenience and access; 3) convenience of the parties; and 4) the interest of justice. The Duke defendants emphasized the absence of a single connection between Thomas’s allegations and Virginia and cited the court’s previous declaration, “There are strong interests of justice in having local disputes resolved before a local court.”
After exploring the four factors, the court agreed transfer was appropriate under the circumstances. First, it noted the relator’s choice of forum was entitled minimal deference because none of the relevant events took place in Virginia. Second, the court found that witnesses for both parties would be equally inconvenienced by either location because many would have to travel from other states. Third, although Thomas’s attorney is based out of Roanoke, Virginia, the court found the convenience-of-the-parties factor favored transfer because defendant Dr. Pott-Kant’s attorney was not licensed to practice in Virginia. Finally, the court acknowledged North Carolina had a considerable interest the case because “Duke is a huge employer and market force in Durham[, North Carolina],” and “[t]he city is inextricably tied to Duke.” Whether Duke has defrauded the United States “to the tune of over 100 million dollars,” it concluded, “is an issue of tremendous local importance.” The court consequently transferred the matter to the Middle District of North Carolina in Greensboro, North Carolina on March 28th, where the parties will soon present oral argument on the Duke defendants’ pending motion to dismiss Thomas’s claims.