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From Health Law Daily, October 18, 2018

Relator may not intervene in criminal forfeiture proceedings to claim forfeited property

By David Yucht, J.D.

The federal Eleventh Circuit Court of Appeals found that a former doctors’ office employee who brought a False Claim Act (FCA) suit against her ex-employers, could not intervene in the government’s related criminal forfeiture proceeding based on the federal statute authorizing forfeiture proceedings. Accordingly, the Eleventh Circuit affirmed the lower court’s ruling denying her motion to intervene (U.S. v. Couch, October 17, 2018, Martin, B.).

Background. The former employee worked for physicians at a pain management clinic in Alabama and discovered that the physicians submitted fraudulent claims for payment to federal healthcare programs. She took this information to the U.S. Attorney’s office, and thereafter brought an FCA action against the doctors, which remains pending. The government began investigating the doctors and almost two years after the ex-employee filed her FCA case, the government charged them with criminal offenses. The ensuing indictments partially overlapped with the allegations in the employee’s FCA case. The indictments included forfeiture counts. The doctors were convicted by a jury and the district court entered a preliminary forfeiture order. The former employee asserted a right to some of the forfeited assets and filed a motion to intervene in the forfeiture proceedings. The district court denied her motion and she appealed.

Intervention. Although the Eleventh Circuit found that jurisdictionally, the ex-employee had standing to assert that the FCA gave her a right to intervene in criminal forfeiture proceedings, it determined that the district court properly denied the former employee’s motion to intervene in the government’s case. The employee could not intervene in criminal forfeiture proceedings when the government chose to pursue a fraud action. A private person, may bring an FCA action in the name of the government. The government may intervene to take over an FCA case, but the person initiating the matter, referred to as the "relator," has the right to conduct the action if the government opts not to intervene. Most of the FCA recovery goes to the government. But whether the government intervenes or not, the person initiating the matter is typically entitled to a share of the recovery.

The FCA expressly allows the government to pursue remedies besides an FCA action: It may choose to pursue its claim through any alternate available remedy, including administrative proceedings to determine a civil penalty. If the government opts for an "alternate remedy," the FCA gives the relator the same rights as he or she would have had if the action had continued as an FCA case. However, in this particular matter, the government chose to prosecute fraud rather than to intervene in an FCA civil action. With few exceptions, the statutes governing criminal forfeiture specifically bar private intervention. Here, the three criminal statutes that applied expressly barred third parties from intervening in forfeiture proceedings to claim an interest in property subject to forfeiture. Consequently, the former employee could not intervene in the criminal forfeiture proceedings.

The case is No. 17-13402.

Attorneys: Christopher John Bodnar, U.S. Attorney's Office, for the United States. Jeffrey Paul Doss (Lightfoot Franklin & White, LLC) for John Patrick Couch.

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