False Claims Act Settlements: The Number Is Only Part of the Deal

The False Claims Act settlement process resolves fraud allegations through an agreement about payment and the claims being settled, with government consent and court approval governing how a whistleblower case ends. If you know the billing, the sales incentives or the payments behind a case, the settlement’s description of that conduct matters as much as its headline number. Biogen’s deal, for example, traced payments to prescribers through to the Medicare and Medicaid claims they allegedly generated.

Who Has to Consent to a False Claims Act Settlement?

The court and the Attorney General must give written consent, with their reasons, to dismissal under the False Claims Act’s consent requirement. A whistleblower brings a qui tam case in the government’s name. That is why a private agreement between the company and the whistleblower can still require the government’s approval to close the case.

When the government joins, it takes primary responsibility for the case, and the whistleblower, known as the relator, remains a party.

That continuing role has deep roots. In Qui Tam: The False Claims Act and Related Federal Statutes, the Congressional Research Service’s 2009 account of the original law explains that the 1863 statute let private citizens sue in the United States’ name, but required court and federal-prosecutor consent to settle.

Can I Proceed After Declination?

Yes, a whistleblower can continue a case after the government declines to take it over. We assess that decision with you and whistleblower counsel who know the alleged scheme. Biogen’s settlement shows how government consent can remain part of the deal: neither the United States nor the states had joined the case, yet the settlement provided for their written consent to dismissal after payment.

What If the Whistleblower Objects to the Settlement?

We work through settlement objections with you and your whistleblower counsel, including the court’s review of whether the government’s proposed terms are fair, adequate and reasonable.

An agreement can also record the whistleblower’s acceptance. In the Quorum Health Group settlement, the whistleblower agreed that the terms were fair, adequate and reasonable and agreed not to object.

What a Settlement Agreement Actually Resolves

The agreement’s definition of covered conduct identifies the allegations being resolved. It can specify the products, payment programs, business practices and period involved. Those details connect the settlement to the work an insider recognizes.

Biogen’s filed agreement set a $900 million civil settlement in 2022 to resolve allegations about payments to prescribers from 2009 to 2014. The whistleblower alleged that the company used speaker honoraria, speaker training fees, consulting fees and meals to induce health care professionals to prescribe Avonex, Tysabri and Tecfidera, causing false claims to Medicare and Medicaid.

The terms also covered prescription claims submitted for one year following each alleged kickback violation. For someone who worked with the speaker programs, the connection runs from the payment to the prescriber to the prescription claim.

The dates do real work. The agreement describes both when the alleged inducements occurred and which later prescription claims they allegedly generated. A person familiar with the sales program can recognize the practice. Someone familiar with reimbursement can recognize the resulting claims. The settlement brings those parts of the allegation together.

Biogen insisted it had acted appropriately. We find that hard to square with a payment of that size.

How the Government Payment Becomes a Whistleblower Share

The settlement amount, the money collected and the whistleblower’s share describe different parts of the payment. The agreement identifies the recipients and payment obligations. The share terms identify the recovery in which the whistleblower participates.

In Biogen, the settlement allocated $843,805,187 to the United States and $56,194,813 to the states. The terms called for federal payment under Justice Department instructions and payment to a separate state settlement account under the state negotiating team’s instructions.

The agreement expressly said Biogen would not pay the whistleblower directly from the settlement amount. Separate agreements with the federal and state governments would address the whistleblower’s share. This is what the headline leaves out: the company pays government recipients, and the whistleblower’s entitlement is addressed with those recipients.

What Share Is Possible?

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. The Justice Department’s explanation of its award figures says shares are calculated on the portion attributable to the whistleblower’s claims and paid based on the amount collected.

Quorum’s settlement agreement makes that connection concrete. It required the government to make an initial share payment within 21 days after receiving the company’s settlement payment, while leaving remaining share issues for agreement or the court.

Where Do Whistleblower Attorneys’ Fees Fit?

Under the False Claims Act, the defendant pays court-awarded whistleblower attorneys’ fees and expenses separately from the reward. A private fee agreement with whistleblower counsel is a separate arrangement.

Biogen’s deal left the share and fees open for separate resolution, with the court available to decide disputes about them. Settling the company’s payment did not settle every question about who would receive it.

What the Release Leaves Open

A release identifies the claims the government or whistleblower agrees to give up. Its scope depends on the conduct, parties and conditions the agreement names.

Quorum’s agreement addressed healthcare billing allegations about hospital cost-reporting practices. It tied the government’s civil release to payment in full and to the covered conduct defined through the complaints. It left other matters open, including tax claims, conduct outside the settlement and obligations created by the agreement itself. Resolving the billing allegations did not give every other claim the same treatment.

The agreement also addressed the cost of the settlement itself. Quorum could not charge government contracts, Medicare, Medicaid or TRICARE for specified investigation and defense costs, settlement payments, or the whistleblower’s fee payment. It had to account for those costs separately and correct earlier reimbursement requests that included them.

We think a company should bear the cost of settling allegations that it overcharged taxpayers. The public programs should not finance the settlement, too. That is why the accounting terms belong beside the release terms: they keep the cost from returning through another reimbursement request.

When Ability to Pay Shapes the Settlement

A company’s ability to pay can influence the settlement amount. In its October 2016 Life Care announcement, the Justice Department expressly said the settlement was based on the company’s ability to pay.

Life Care Centers of America and its owner agreed to pay $145 million. The government alleged that the company pushed skilled nursing facilities to place patients in the highest therapy reimbursement category regardless of clinical need and to continue therapy after treating therapists thought it should stop. The alleged incentive was visible in the business’s tracking of therapy minutes and days.

Former employees started the whistleblower cases, and the government joined. The department identified a $29 million whistleblower share of the recovery. The resolution also included a separate case against the owner alleging that he benefited from the company’s alleged scheme.

Life Care was also required to enter a five-year corporate integrity agreement with the Department of Health and Human Services Office of Inspector General. The department described its purpose as ensuring that future therapy followed patients’ needs. The financial settlement and the agreement governing future care addressed different parts of the problem.

Payment Terms Set the Order

The agreement can make payment the condition for consent and release, or provide for different kinds of payment. Biogen’s terms put payment first, then government consent and dismissal. The whistleblower’s release also depended on timely payment in full.

Bank of America’s 2012 mortgage settlement announcement shows a different arrangement. It described a $1 billion resolution of claims concerning Countrywide’s mortgage practices: $500 million payable immediately and another $500 million deferred to fund qualifying loan modifications. Any balance unused after three years was to be paid to the United States.

The immediate payment was intended to address harm to the Federal Housing Administration, and the deferred portion to fund relief for eligible borrowers with underwater mortgages. The settlement’s purpose and payment terms explain why the announced total included both an immediate government payment and a separate obligation to provide homeowner relief.

The Settlement Should Reflect the Case You Know

If you hold billing records, sales records or payment records that reveal fraud against the government, speak to one of our Whistleblower Experts about what you know. We build your strongest False Claims Act case with you and bring in False Claims Act whistleblower lawyers who know the business behind the allegations and the settlement negotiations ahead. We stay beside you from the evidence through the settlement decisions, keeping your interests at the center.