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Partial Unsealing/Settlement Discussions/Intervention

If the government’s investigation uncovers additional evidence that helps prove your allegations, and if the government is satisfied that the damages are large enough, the government attorney (with your consent) may ask the judge to “partially unseal” the case.

Depending on how much of the case the government asks be unsealed, this gives the government the ability to tell the defendant about the existence of a qui tam case and what the allegations are.  This does not necessarily mean that the whistleblower’s identity will be revealed. In some cases, the government attorney simply describes the allegations to defense counsel without providing a copy of the complaint; in other cases the qui tam attorney will prepare a “redacted” version of the complaint, with the relator’s name and any identifying information blacked out, for the government to turn over to defense counsel.

After defense counsel has reviewed the allegations and/or complaint, the government frequently will invite them to a meeting (usually without relator’s counsel present) where the government attorneys will present their evidence and ask for a response.  This often leads to follow up meetings where defense counsel presents any defenses or explanations for the alleged fraudulent conduct.  Defense counsel may also argue that damages are less significant than what the relator or government alleged.  If relator’s counsel has not been part of these meetings, the government usually will tell them what defenses have been raised, and give the relator and qui tam counsel an opportunity to rebut them.

If after considering defense counsel’s arguments, the government remains unconvinced, the government attorneys may make a settlement demand based on their analysis (often helped by relator’s expert) of damages.  The government attorneys may also indicate their intention to recommend to their supervisors that the government intervene, or formally take over the case.  This often leads to settlement, particularly because the federal and most state false claims acts provide for “treble damages” – that is, if the case goes to court and the defendant loses, they have to pay the government back three times the amount of the fraud.  In many cases, those potential damages can be so high that the company decides to avoid the risk of losing and settle instead.

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