by Ben Vernia | February 25th, 2014
On February 14, the Court of Appeals for the Fifth Circuit, in U.S. ex rel. Babalola v. Sharma, ruled that relators who filed a qui tam suit under the FCA after the defendants had been criminally prosecuted could not claim a share of the criminal restitution ordered as an alternate remedy under the False Claims Act. The relators, two doctors, had anonymously blown the whistle on the physicians who employed them, and their tip ultimately led to the defendants’ conviction and an award of restitution of nearly $38 million. The whistleblowers filed their case while the defendants’ appeal of their convictions was pending.
The Fifth Circuit, interpreting the FCA’s alternate remedy provision, first noted that it was assuming without deciding that a criminal case could, if brought after a qui tam’s filing, constitute an alternate remedy. But the Court concluded that the logical reading of the FCA barred the relators from recovering. “Alternate,” the Court reasoned, meant a choice between two or among more than two options, and this interpretation was implicit in other courts’ interpretation of the section – even though none of those cases were on point regarding the timing of the qui tam case. The Court also rejected the relators’ argument that the government’s proposed reading would create an incentive for the U.S. to race the relators to the courthouse, concluding that relators’ post-filing disclosure and the 60-day seal period under the Act permit relators to disclose information to the government after the case has been filed under seal.
