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Does the Government Care About Fraud?


One of the unfortunate realities in a False Claims practice is that, on occasion, a whistleblower will bring forward a case that, though clearly meritorious, the government simply doesn’t seem to care about it.

By saying the “government” doesn’t seem to care about fraud, I’m not implying that it is necessarily the Department of Justice that doesn’t care about the case. It appears superficial and the stated reasons for non-intervention in the case don’t always make sense.

The Department of Justice has a mixed bag in terms of its responsibilities. First, the DOJ clearly is concerned about law breaking in the Unites States, and as a general rule is tasked with protecting the country from things like fraud. And the DOJ has many priorities, including fighting international terrorism (through its sub-agencies including the FBI), international crime, massive Ponzi schemes, illegal narcotics smuggling, and a host of other urgent things.

In addition,the DOJ unfortunately has a “divided loyalty” with respect to False Claims and fraud against the government. The fraud always involves government agencies of some type, and the DOJ sees one of its roles as being “outside counsel” to that agency. Thus it represents the interests and desires of the agency with respect to going forward with a False Claims case.

Agencies, on the other hand, are unfortunately sometimes “captured” by those with whom they regularly do business — or those whom they are supposed to monitor and regulate. It’s a phenomenon in political science or public administration called “Regulatory capture”, and it’s been studied for many decades. Simply put, an agency may tell the DOJ a variety of reasons it does not want a False Claims case to go forward, but behind it the agency does not want to “make waves” for their friend in industry.

Agencies also make mistakes, and a False Claims case may threaten to embarrass the agency or expose its own sloppiness or malfeasance.

These cases present particular, difficult, and often frustrating work for False Claims attorneys. In some respect you are also litigating against the government’s own agency and its desire to have things “swept under the rug”. Well-meaning and highly competent DOJ attorneys are sometimes caught between the whistleblower and the agency; they know the whistleblower has good case and it should be brought forward — but the agency is telling them they don’t want the case to see the light of day.

Usually the agency’s reaction and position on a case can’t be accurately determined in advance by a False Claims attorney. It only become evident when the relator and their attorney want to litigate the case even if the government declines it. At that point, the agency’s agenda can become a significant road block. And at the end of the day, both the whistleblower’s attorney and the whistleblower must live with themselves, for trying to do that right thing, even if it is not ultimately successful.

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