Home Health & Hospice Week

Ruling ups the stakes for qui tam relators to support their claims.

Bogus whistleblower suits that drain providers’ time, energy, and finances may become less common, thanks to a recent federal court decision.

In U.S. ex rel. Sorenson v. Wadsworth Bros. Construction Comp., Inc., a worker tried to sue his employer in August 2016. The federal government declined to join the case and in June 2019, the court dismissed the worker’s fraud-related claims. Then in December 2020, the court ruled against the worker’s remaining claim of retaliation. The employer then asked the court to award it the fees and costs it incurred in defending the case, as allowed by the False Claims Act.

Note: Section 3730(d)(4) of the FCA says “If the Government does not proceed with the action and the person bringing the action conducts the action, the court may award to the defendant its reasonable attorneys’ fees and expenses if the defendant prevails in the action and the court finds that the claim of the person bringing the action was clearly frivolous, clearly vexatious, or brought primarily for purposes of harassment,” points out attorney Samuel Audley with law firm Dorsey & Whitney.

“After reviewing the entire course of this action, the court finds that Plaintiff ’s claims were clearly frivolous,” concludes the Feb. 3 decision handed down by Judge Clark Waddoups. The fraud claims were “unsupported, and/or baseless,” Waddoups added. Thus, he awarded the fees and expenses to the construction company employer.

Healthcare providers “that successfully defend against frivolous FCA actions may oftentimes recover fees and expenses incurred as part of their defense,” allow attorneys David Honig and Matthew Schappa with Hall Render. But “the United States District Court for the District of Utah broadly connected this ‘frivolous’ standard with Rule 9(b)’s pleading requirements — a decision that may stave off whistleblowers who have not put in the legwork before filing their complaint,” Honig and Schappa say in online analysis.

In other words: “Those claims that fail because they do not state with particularity the who, what, when, where and how of the fraud may be considered frivolous,” Honig and Schappa offer. “And though this decision may not be taken up by the Tenth Circuit or other district courts, it cements into caselaw an argument that defendants in FCA actions may incorporate into their own requests for fees” under the FCA.

“This decision illustrates that if the claim does not fit within the specific parameters established under the FCA, a court will not hesitate to dismiss the action as insufficient and unsupported,” Audley notes in legal analysis. “And if the relator has clearly failed to fulfill basic requirements for an allegation of fraud under the FCA, the relator runs the risk of paying defense fees if the Court finds the claims to be either frivolous or harassing. As made clear in Sorenson, the consequences can be expensive.”

Note: Read the decision at https://casetext.com/case/united-states-ex-rel-sorenson-v-wadsworth-bros-constr-co-2.