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Financial Services Law Insights and Observations

Ninth Circuit Bars Qui Tam Relator's Whistleblower Recovery in False Claims Act Suit Over Conviction

False Claims Act / FIRREA


On July 16, the U.S. Court of Appeals for the Ninth Circuit affirmed a district court’s dismissal of a qui tam relator from a False Claims Act suit, holding that the False Claims Act requires dismissal of a relator convicted of any conduct giving rise to the fraud at issue, however minor, and prevents the relator from collecting any share of a whistleblower award.  United States ex rel. Schroeder v. CH2M Hill, No. 13-35479 (9th Cir. July 16, 2015).  The relator submitted false time cards while working for a contractor who engaged in fraudulent billing practices.  The Ninth Circuit held that the False Claims Act permits reducing relator awards for planners and initiators of the subject fraud, but dismisses and does not permit collection by all “relators convicted of criminal conduct arising from the fraudulent conduct at issue in the qui tam suit,” even those that did not plan or initiate the fraud.  Congress’s hierarchy for relator awards, reasoned the court, “may satisfy other values, such as the deterrent effect of preventing criminally culpable individuals from gaining from their conduct, and the investigatory benefits of actions brought by planners and initiators who often have greater knowledge about co-conspirators and the scope of a fraudulent scheme.”  The court rejected the idea that the statute “contain[s] an exception for minor participants” who were nonetheless convicted of the subject criminal conduct.


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