Qui Tam Relator Cannot Intervene in Criminal Forfeiture Case

By Sarah Q. Wirskye - On

In United States v. Couch, No. 17-13402 (11thCir. Oct. 17, 2018), the court addressed whether the False Claims Act (FCA) allows a Relator to intervene in a criminal forfeiture proceeding when the government prosecutes the fraud criminally rather than intervene in the FCA case. The court held that even if the FCA could be read to allow intervention, the statutes governing criminal forfeiture specifically bar it.  Therefore, the Eleventh Circuit upheld the district court’s denial of the motion to intervene.

The FCA (31 U.S.C. §§3729-3733) imposes liability on persons and companies who defraud the government.  The whistleblower provisions of the FCA allows individuals, called “relators” to file actions on behalf of the government.

Lori Carver, a former employee of Physicians Pain Specialists of Alabama, did exactly that. She believed that the two doctors who ran the clinic, Couch and Ruan, had submitted fraudulent claims for payment to federal health care programs.  She took this information to the United States Attorney’s Office, who encouraged her to file a FCA case. That case is still pending.

The government declined to intervene in the FCA case, however, and instead pursued criminal charges against Couch and Ruan, for conspiracy to distribute controlled substances and conspiracy to commit health care fraud.  Some of the criminal allegations overlapped with Carver’s FCA case. These two doctors and others were ultimately convicted.  Consequently, the court issued a forfeiture order.

Carver attempted to intervene in the forfeiture proceeding, seeking a share of the forfeited assets, based primarily on the FCA’s alternate-remedy provision. The government argued that the FCA alternate-remedy provision did not apply because her case was still pending and that the FCA does not permit intervention in criminal cases. The district court agreed and held that that the alternate-remedy provision did not permit intervention.

The Eleventh Circuit rejected the government’s jurisdictional arguments regarding Carver’s legal standing to intervene in the criminal forfeiture proceedings under the alternate-remedy provision.  It also held that the fact that a court has not yet ruled on whether she was entitled to a relator’s share of proceeds was enough to deny jurisdiction because it was too “speculative.” Finally, it held that the general principle that private parties lack standing to intervene in criminal cases also did not apply in this situation.

But although Carver may have had jurisdiction to attempt to intervene, the court found that the three criminal forfeiture statutes in her case all expressly barred third parties from intervening in forfeiture proceedings to claim an interest in the forfeited property.  In closing, the court noted that its ruling will not disable Carver from getting her relator’s share and “expect the government will honor it.” Therefore, the court dismissed the appeal for lack of jurisdiction.

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