Due to the infrequency in which the situation arises, the FCA’s “alternate remedy” provision is infrequently invoked or discussed. In short, this provision states that when the relator presents information about a potential FCA claim for the Government to investigate, the Government has the option to pursue this claim through “any alternate remedy available to the Government.” The provision goes on to explain that if the Government pursues an “alternate remedy,” the relator has the same rights as though the action was still being pursued under the FCA (i.e., the relator will still be able to recover a bounty).
The alternate remedy provision’s scope and application to criminal forfeiture statutes was recently addressed by the Eleventh Circuit in United States v. Couch, No. 17-13402, —F.3d—-, 2018 WL 5019480 (11th Cir. Oct. 17, 2018). In Couch, a former employee filed a qui tam action against the pain management clinic she worked for, as well as a couple of physicians who ran the clinic. The Government declined intervention and the qui tam case remains pending.
The Government, however, investigated the physicians and ended up charging them (and others) for racketeering, violations of the AKS, wire fraud, and illegal drug distribution. The criminal charges included forfeiture counts. The charges partially overlapped with the qui tam complaint. The physicians were found guilty on several of the charges, and the court entered a preliminary forfeiture order. Thereafter, the relator moved to intervene claiming that she had a right in the assets at issue pursuant to, amongst other statutes, the alternate remedies provision.
The trial court denied the relator’s motion to intervene and the 11th Circuit affirmed. The Circuit Court first noted that whether a criminal fraud prosecution constitutes an “alternate remedy” is an issue about which courts are divided. The 11th Circuit did directly weigh in on this dispute, however, as it found that the forfeiture statutes at issue here each specifically precluded – absent certain circumstances – a third party from intervening. Because the forfeiture statutes specifically addressed this issue, they controlled over the more general “alternate remedy” provision.
Notably, however, the government did indicate that where a defendant is found liable under the FCA after being found criminally liable for the same conduct, the defendant is entitled to deduct the criminal restitution paid as a credit against the FCA damage, and the relator would be entitled to a share from this offset amount.