U.S. ex rel. Babalola v. Sharma (Summary)

“ALTERNATE REMEDY” – FALSE CLAIMS ACT

U.S. ex rel. Babalola v. Sharma, No. 13-20182 (5^th Cir. Feb. 14, 2014)

The United States Court of Appeals for the Fifth Circuit affirmed the district court’s grant of partial summary judgment in favor of the United States, finding that a valid qui tam action must be filed at the time of government proceedings in order for the relator to recover any form of alternate remedy under the False Claims Act (“FCA”).

The United States criminally prosecuted two physicians for fraud and obtained a multi-million dollar award of restitution.  During the criminal investigation of the physicians, medical assistants working for the physicians provided information to the government regarding the fraud.  While the physicians’ appeal of their restitution amount was pending, the medical assistants, as relators, filed an FCA suit against the physicians.  As a part of their suit, the relators sought a share of the criminal forfeiture previously obtained by the United States from the physicians under the alternate remedy provisions of the FCA.  The district court granted the United States partial motion for summary judgment, concluding “that because the relators filed their qui tam action after the Government had begun to criminally prosecute the [physicians], the criminal proceeding was not an ‘alternate remedy’ in which the relators could exercise their rights to recovery.”  The Fifth Circuit affirmed the district court’s decision, holding that “the [relators’] qui tam proceeding must have been in existence at the time of the Government’s election of the alternate remedy.”