Whistle-blower’s Deal with Litigation Funder Doesn’t Doom False Claims Case
A whistle-blower who had arranged a monetary deal with a third-party litigation funder still enjoys the authority to pursue fraud claims in the interest of the United States under the federal False Claims Act, a federal appeals court ruled.
The U.S. Court of Appeals for the Eleventh Circuit’s ruling in Ruckh v. Salus had been eagerly awaited by the Department of Justice and lawyers in the government contracts and health care space. The whistle-blower, Angela Ruckh, a registered nurse who alleged various skilled nursing facilities in Florida had bilked the U.S. government’s Medicare program, had agreed to give a litigation funder, ARUS, less than 4% of her share of the potential recovery.
The role of litigation funding in FCA cases, which can yield damages in the millions, or more, had generated some discussion within the DOJ in recent months. The DOJ filed a brief in the appeal backing the whistle-blower, but the government’s papers did not take any stance on the role of outside financing under the FCA. The rise of litigation finance agreements has given courts myriad novel issues to confront and resolve, including disputes over fees and transparency. The defendants in Ruckh’s case learned about the financing arrangement in a “certificate of interested persons” filing in the Eleventh Circuit.
The ruling which confronted “materiality” provisions of the FCA, reinstated a jury verdict and an award of damages totaling $85.1 Million. After trebling and statutory penalties, the resulting judgment is more than $255 Million.
Ruckh had alleged the nursing centers misrepresented various services they provided to Medicare beneficiaries.
Despite the litigation funding arrangement, the appeals court said, “these facts remain essentially unchanged: the relator retains sufficient interest to meet the ‘irreducible constitutional minimum’ of standing under Article III” of the U.S. Constitution.
Topics: Whistle-Blower | Third-Party Litigation | Department of Justice | Article III
Work Cited: Mike Scarcella | Law.com | June 26, 2020
