February 07, 2020

DOJ Considers Requiring Whistleblowers of False Claims Act to Disclose Litigation Funding

On January 28, Deputy Associate Attorney General Stephen Cox indicated that the DOJ may require whistleblowers to share information related to agreements they’ve made with people or entities funding their litigation.  The consideration is in response to the growing concern that litigation financiers may be promoting unwarranted or unnecessary False Claims Act (FCA) suits. Before making a final decision, DOJ is awaiting a decision from the U.S. Court of Appeals for the Eleventh Circuit in the Ruckh v. Salus Rehabilitation. In Ruckh, a whistleblower is appealing a summary judgement ruling that eliminated a $115 million dollar jury verdict.  The Defendant’s appellate counsel alleges the appeal should be dismissed because after the verdict, but before post-trial motions, the whistleblower agreed to share a percentage of profits with a newly-formed limited liability company. The Defendant’s response states that whistleblowers only have standing to pursue FCA suits because the government has assigned the whistleblower an interest pursuant to the statute, and this interest is not assignable to a third party. The Defendant further contends the whistleblower lost their standing when they formed an agreement to share the profits. The DOJ is awaiting a decision before additional comments on the disclosure requirements.