"Because of its unlimited power, the government, of all litigants, should pursue actions carefully and without passion or prejudice." So opined a judge of the U.S. District Court for the Northern District of Texas in a December 2006 ruling that ordered the United States to pay damages under the "bad faith" exception to the net worth limitations of the Equal Access to Justice Act (EAJA). United States v. Medica-Rents Co., Nos. 4:00-CV-483-Y, 4:01-CV-198-Y (N.D. Tex.) (Means, J.). Medica-Rents Co. was a prevailing party in a False Claims Act (FCA) qui tam suit in which the Department of Justice (DoJ) had intervened, but was not qualified for standard EAJA recovery because of its net worth. Nevertheless, the Court awarded "bad faith" EAJA damages, using its inherent power under 28 U.S.C. § 2412(b), because of multiple instances of government misconduct of which the Court's opinion highlighted only the "most glaring examples." The Court found that DoJ had intervened in the suit on "shaky evidence," despite knowing that the relators lacked personal knowledge of the material facts underlying alleged false claims, were unreliable, and were motivated primarily by animus against Medica-Rents. The DoJ compounded its error by actively withholding crucial evidence and flatly refusing to consider any settlement offer that was less than the amount sought in the government's complaint. The Court concluded that the case "reveals the dangers of a government litigant set loose with no guidance or restrictions." Admittedly, the facts in Medica-Rents were egregious, but nevertheless the ruling demonstrates that DoJ must exercise some due diligence before putting its weight behind allegations raised by qui tam relators.
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