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ANALYSIS: Is Covid-19 Temporarily Holding Down Qui Tam Actions?

Aug. 10, 2020, 8:33 AM

While you can try to predict what types of legal actions the crisis should cause to increase or decrease, it’s hard to be sure any such trend can be attributed solely to the coronavirus, or whether there is another hidden driver.

As a case in point, federal qui tam actions filed under the False Claims Act during 2020 are down, compared to the same period in 2019. The interesting question is why.

Focusing on qui tams makes sense because federal money has flooded into the economy to alleviate the crisis. Such an influx often leads to misuse of some of those funds and, consequently, qui tam actions. While you may expect to see those actions increase after federal stimulus funds were first deployed, that hasn’t happened yet.

It’s hard to be certain, but qui tams seem susceptible to Covid-19 disruptions due to the specialized procedure involved. Qui tams are first filed under seal with the court, with a copy of all of the underlying evidence sent to the government for 60 days of review (to which extensions are regularly granted).

Many courts were initially closed and have continued working remotely, which makes the physical filing under seal more difficult to manage. With government agencies working remotely, and many private facilities closed or operating remotely, it’s challenging to conduct the initial investigation into the case that the False Claims Act requires.

It makes sense, therefore, that the Covid crisis would hold up qui tams that have been filed since January, but haven’t yet been evaluated and made public. It’s possible that an increase in claims might come once whistleblowers have time to see what’s happening with stimulus funds. But any increase in claims could initially make a procedural backlog even worse.

—With assistance from Jacquelyn Palmer

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