July 20, 2015
The United States Court of Appeals for the Ninth Circuit prevented a False Claims Act (“FCA”) relator from receiving a share of a $19 million settlement stemming from the defendant’s alleged false billing on a nuclear cleanup project. In a published decision, a three-judge panel ruled that relator Carl Schroeder (“Schroeder”) was properly dismissed from the FCA suit against defendant CH2M Hill, finding that the whistleblower substantively participated in the fraud giving rise to FCA liability.

Posed with the question “[d]oes ... the False Claims Act require the dismissal of a qui tam relator convicted of the conduct giving rise to the fraud, even if he or she only played a minor role?” the Ninth Circuit held that “the statute does require such a relator to be dismissed.” The court’s decision rests on a provision in the FCA requiring a qui tam relator who is convicted of a crime for his role in the fraud that forms the basis of the FCA suit to be dismissed and excluded from participating in any subsequent settlement.

Before the filing of the FCA lawsuit, Schroeder admitted his role in the fraud to the Government and later pled guilty to felony conspiracy. As a result, the Government moved to bar Schroeder from profiting from his own criminal behavior. Schroeder stood to collect between $2.85 million and $4.75 million for his role in bringing the lawsuit had the Government not succeeded in having him dismissed.

A copy of the Ninth Circuit’s decision can be found here.