The U.S. Justice Department is sitting on the sidelines in a whistleblower's suit against Verizon Wireless, having earlier declined not to get tangled up in the suit.
But DOJ wants the presiding federal judge in Washington to know that the government has an interest in the case. The government doesn't want to see a ruling against the whistleblower, Stephen Shea, that could jeopardize the ability to bring a case later on.
Prosecutors on Thursday filed a "statement of interest" in the case in U.S. District Court for the District of Columbia that said any dismissal should not be with done with prejudice—a position that goes against the request of Verizon's lawyers at Wilmer Cutler Pickering Hale and Dorr. Verizon's lawyers want the action thrown out—for good.
An assistant U.S. attorney, Doris Coles-Huff, said in the court papers that a defendant who wins dismissal could try to block any filing of a complaint by the government down the road under the False Claims Act, or FCA. "This would not be in accord with the purpose of the FCA qui tam provisions; rather than assist the United States in pursuing fraud, it would hinder it," Coles-Huff said.
Prosecutors said the government should not be forced to intervene in a False Claims Act suit just merely to protect the ability to pursue claims against a defendant in the future.
Such a scenario would provide whistleblowers incentive to file paper-thin complaints with the belief the government will jump in and provide substance, prosecutors said, citing a decision in the U.S. Court of Appeals for the Fifth Circuit.
The position of the government, Coles-Huff said, should remain untouched in the event Shea's suit is dismissed on procedural grounds. The government, she said, has played no role in the filing of court papers in Shea's case.
Prosecutors said last November that the government's investigation was ongoing. DOJ at that time, faced with a court-ordered deadline, did not intervene in Shea's suit.
Verizon's attorneys, including Wilmer partners Jennifer O'Connor and Randolph Moss, argue that Shea's suit should not be allowed to proceed because it is substantially the same as an earlier case he pursued against Verizon.
The False Claims Act includes a "first-to-file" provision that blocks tag-along cases. The first whistleblower in the courthouse door potentially stands to reap any award in the event of a successful case.
Verizon last year settled with Shea and the government for more than $93 million. Shea's suit alleged Verizon bilked the government in seeking payment for certain charges and taxes. Verizon didn't admit liability in the case, which named the General Services Administration as a victim.
Verizon's lawyers argue that Shea's second complaint is a carbon-copy of the first. Shea's lawyers at Washington's London & Mead contend the suit is distinct from the earlier one because the new case names additional victims.
False Claims Act provisions only block someone other than Shea from filing a related action, his attorneys argued in recent court papers. The second complaint alleges Verizon committed fraud on 20 contracts that were not identified in the earlier suit.