DOJ Will Clear Out Weak Qui Tam Cases

In a surprise announcement, the U.S. Justice Department says it will start moving to dismiss weak whistleblower cases brought under the False Claims Act rather than let them run their course. The announcement was made at a recent conference by the Director of Commercial Litigation for the Fraud Section of the Department’s Civil Division. I wasn’t at the conference, but this gentleman was, and he sheds light on the new policy.

Up to this point, the government has let whistleblowers litigate cases on their own even when it didn’t think they were any good. The government always get a first look at these cases, as we’ve explained before. If it likes what it sees, it will take over the case and throw its weight behind it. If it doesn’t, it will decline to intervene but allow the case to proceed if the whistleblower (and his or her lawyers) is willing to do the work. Often, the government’s decision not to intervene will prompt whistleblowers to dismiss the case themselves. But now, it seems, the government will sometimes make that decision for them.

Don’t Keep The Change, Doc

Meaning, don’t just pocket the difference when the government overpays you for healthcare goods or services.

Recently, a medical group agreed to pay $450,000 to settle allegations that it refused to return $175,000 in overpayments that it received from federal healthcare programs like Medicare and Medicaid. Here’s the government’s press release.

The overpayments at issue tend to happen in medical practices when two insurers share responsibility for a payment, and one pays too much.

But the thing is, you have to return the surplus, whether it’s big or small; you can’t keep it, and you can’t dawdle, either. If you do, you may incur significant liability under the False Claims Act, as we’ve explained before.

The rule is that you have sixty days to return the money once you know (or should know) about the overpayment. For more on the 60-day rule, see here.

In this case, the government alleged that the medical group failed to return the money despite repeated warnings, until it learned the Justice Department was investigating. Apparently, it didn’t know that one of its employees had filed a whistleblower lawsuit, which the government joined and took over. (For more on that process, see here.) The former employee will receive $90,000 of the settlement proceeds, or twenty percent.

This isn’t the first time the feds have moved to enforce the 60-day rule, and it sure won’t be the last. They’re just getting started.

California’s New Law of Fair Shakes

Whether you’re an employer or an employee, take note.

Earlier this month, California enacted the Fair Chance Act.

This means that, beginning next year, many employers can no longer ask about or look into criminal convictions until they’ve decided a person is right for the job. That means they can’t ask about convictions anymore on a job application. It also means they can’t run a background check until they’ve made a conditional offer of employment.

Also, once employers make a conditional offer and run someone’s record, they can’t deny the job based on a conviction unless they first analyze the relationship between the job and conviction. What kind of job is it, after all? Does it have anything to do with the conviction? How long ago was that, anyway? There must be a “direct and adverse” relationship between the two to justify the decision.

Employers don’t have to share their analysis with applicants, but they must advise of their decision in writing. When they do, they must identify the relevant conviction, attach a copy of the report they ran on the person, and explain that he or she has at least five business days to show why the report isn’t accurate or why they should still get the job based on rehabilitation or mitigating circumstances. Employers must consider any evidence they submit. If they still decide to deny the job, they must let the person know in writing, refer him or her to any existing procedure they have for challenging it, and give them notice of the right to file a complaint with the Department of Fair Employment and Housing.

What hasn’t changed? Employers still can’t consider arrests that didn’t lead to conviction, unless charges are still pending or the arrest was for certain drug or sex offenses and the job is in a healthcare facility that requires access to drugs or patients. Nor can employers consider convictions that have been sealed, dismissed, or otherwise expunged.

The law will apply to employers with five or more employees. It exempts those who must conduct background checks by law. For more on the new law and its passage, see here and here. For the text itself, see here.

Commemorating a Courtroom Legend

One of the great professional experiences of my life was the year I spent working for a federal trial judge in Los Angeles. Fresh out of law school in 2005, I served as a law clerk to the Honorable Manuel Real, who was appointed by President Johnson in 1966 and has presided there in the district court since. He’s a walking, living legend of the law.

Judicial clerkships are sought-after jobs for good reason. You learn more about litigation in that year than you ever could by practicing law in any other capacity. It’s because you read and analyze a lot of briefs, and you watch and listen to a lot of lawyers. You see it all from good to run-of-the-mill to bad, and it’s not always what, or whom, you’d expect.

Last year, I was asked to write a piece to commemorate Judge Real’s fiftieth year on the bench, and recently, it was published in the newsletter of the Federal Bar Association in Orange County. Here’s a link to the newsletter if you’re interested, and you’ll find my profile of Judge Real on page ten. Or you can just keep reading below. You’ll hear about bank robberies, business litigation, and even a little gardening.


What do you say when someone celebrates fifty years on the bench?

Plenty in Judge Real’s case if you ask me, and since someone did, here’s my piece.

Who am I? Well, I was the Judge’s 62nd law clerk: one of two during the 2005-06 term, and one of 82 now overall. A lot of those clerks feel the way about him that I do, so I’m delighted to help commemorate this very special jubilee; it’s a deep and sentimental honor for me.

The Judge hired me when I was 26 years old, and he made a big impression on me from the beginning.

For one thing, he seemed like the strongest 82 year old in the world. I remember we flew to Arizona once to sit by designation, and at the airport, I found myself scampering ten or fifteen feet behind him because he was tearing along at a brisk pace with all of his luggage in tow. It was the gait of a man who knew where he was going. A lot of folks have marveled at his vitality over the years, and the Judge will often attribute it to his gardening, but I’m not sure you’d grasp what he means by that if you haven’t seen some of the gardening he’s done.

Here’s a story for you. A few years ago, I went to visit him at home, and when I got there, he was all by himself; no Mrs. Real, no family. He asked me to give him a hand with something, so we headed back toward the garden, and I saw that he was already in the middle of some heavy-duty project. Before I knew it, he brought over a ladder and power saw, and he said we were going to clear out some tree branches and foliage. That sounded good to me in the abstract, but then I found myself at the foot of a very tall ladder, staring up at my 86-year-old former boss, who happened to be a federal judge, perched on the penultimate rung. And above him, the tree branches loomed large and thick. It would’ve been a tough job for someone half his age.

Suddenly, I was pretty worried. And I didn’t like my options. I couldn’t ask him to come down from there any more than I could’ve told him not to go up in the first place. Not to someone like Judge Real, and not in his own house, anyway. But my mind was running and my adrenaline pumping. All I could think about — in addition to his falling and hurting himself — was how in the world I would account for that afterward to his family, or the world.

So I held onto that ladder as best I could and braced myself to break his fall or do whatever else.

But you know what? I didn’t need to worry. The Judge climbed that ladder to the top, stood firmly at its crest, and starting mowing down branches like nobody’s business. Before I knew it, I was getting covered down there with leaves and branches. At some point, he came down to take a break, and I offered to go a round. He didn’t go up again after that, and that was the end of it. But boy, what a moment that was.

And I have to tell you, I was astonished by that. I really couldn’t believe he did something like that at his age, and there was never a moment while he was up there that he seemed unsteady or precarious. The whole thing just blew me away.

But then the Judge is impressive in a lot of ways.

I remember a patent case we had that went to trial. It was a difficult, esoteric case, and the jurors had a hard time following along or even trying to. I found my own thoughts wandering, and I was supposed to be the apprentice law clerk. The Judge, however, actively presided over the trial and lobbed incisive questions from the bench. In the fog of a dry witness examination, he would get the testimony moving again with a series of short, focused questions. The longer I practice, the more I’m impressed by that case and how the Judge exerted the same energy and attention that one might summon in, say, a bank robbery.

Speaking of bank robberies, I remember one of those went to trial, too. The defendant was a middle-aged man who’d walked into a bank and passed a note. It was, like many bank robberies, a nonviolent act of turmoil and desperation. The guy had lost his job, his wife had left him, and his life was falling apart. So he went and robbed a bank. No gun or other alarming facts, just a guy with a note. It was sad and pitiable. He got caught, and now he was looking at a serious term of imprisonment under the federal sentencing guidelines.

There was no jury this time, and the case was tried to the court. I do recall the evidence was sufficient to convict the man, but then I wasn’t the trier of fact, though I’m not sure I would’ve come out differently if I was.

Well, the Judge acquitted him. I’m not saying the evidence was overwhelming, but there was plenty of room to convict if he wanted to. Although I’ve never asked the Judge about it, I believe it was a pure, unsung display of mercy and judgment by a judge whom no one would characterize as easy or soft. Mind you, the law of federal sentencing was in a state of upheaval at the time. The Supreme Court had just declared the guidelines to be advisory, not mandatory, but there was a lot of commotion about it, and the dust hadn’t settled like it has since.

Sometimes, the Judge disagreed with me, and those were the best lessons. One time, we got a motion for attorney’s fees after a disabled-access case had settled. The plaintiff’s lawyer was asking for $103,000, and the defendant, a restaurant, said it should be $13,000. I split the baby and recommended an award of $65,000. I argued that the lawyer’s hourly rate was reasonable and that the award, even if generous, would compensate him for the risk he took in bringing the case and his success in obtaining defendant’s compliance with the law. Or so I thought.

After the Judge reviewed my bench memo, he posed just one question: Could I research the court dockets for cases involving this plaintiff and lawyer? Sure thing, Judge. And so I did, and what I found was quite interesting. In the past three years, the plaintiff had filed at least 21 of these lawsuits in the California federal courts alone. In each case, his complaint made the same boilerplate claim that he’d fallen in a toilet at some restaurant. In two of these cases, he even alleged that it happened on the same day in two different restaurants — on opposite ends of the state. His lawyer in every case? You can take a wild guess.

The two had quite a racket going. They would file a lawsuit based on their boilerplate claims; bring in a consultant to identify every technical violation of disabled-access laws, few of which had anything to do with the plaintiff’s personal claim; settle the case for next to nothing but the defendant’s promise to bring itself into compliance; declare victory; and move for attorneys’ fees, which I suspect the two probably shared to some extent. But this wasn’t the Judge’s first rodeo, and needless to say, they didn’t get what they asked for.

There are a lot of things that you learn in a textbook, but when you learn by doing, and you peel back an onion that way, it tends to stay with you.

In that case, rather than acceding to the parties’ settlement, the Judge pursued a more just result, and he got it.

But that’s how he approaches work every day in my estimation. He’s a prototypical trial judge. During my clerkship, he would often remind us that, as a matter of fact, “we decide these cases.” He knows that it’s his job to decide them, and he understands that, while the court of appeals is there to review them, appellate review isn’t always an adequate remedy for injustice. He knows that, in nearly every case, the most important contest in the lives of those involved is the one decided in his court. And he knows that not everything that happens in a case or courtroom transfers to an appellate record, anyway. He wants to do justice.

Even generations of defendants whom he’s supervised on probation write to him, still — decades after he’s sentenced them or terminated their probation — to thank him for taking the time to judge them in a way that improved the balance of their lives.

That kind of stuff makes an impression on you, too.

In the end, everyone will have his or her critics — we all do — and fifty years of judging will earn you a few.

But I’ve learned that Judge Real cares only to do the best he can every day in law and in life. May we all do it so well.

His style may hark back to the brand of judge he used to appear before in his day, but his instincts are sound, his philosophy just, and his heart tucked securely in the right place. He is a good man in a preternatural sense, one of the very best I know, and I’m proud to call him a friend and mentor. Happy anniversary, Judge, and here’s to many more.

Impaneling a Jury of Your Peers

Do you have a civil or criminal case that’s heading to trial?

Starting next year, California will have new rules for picking a jury in both types of cases.

First, the rules for criminal cases. This is Assembly Bill 1541. It brings jury selection in criminal trials more in line with the procedure for civil trials.

The process will still begin like before. The court will question the jury pool to see if anyone knows the parties or witnesses or otherwise holds a bias that will keep them from being fair and impartial. The court may also agree to ask additional questions that the lawyers have submitted in advance. Then the lawyers will get their crack at it, though the court can set reasonable limits on their questions.

The new emphasis, however, will be on giving lawyers more time and room to question the pool and follow up on the answers. The court can still set limits, but they can’t be arbitrary, inflexible, or unreasonable. In setting those limits, moreover, the court must consider the complexity of the case and even the amount of time the lawyers want. It should allow them to follow up on the court’s questions as well as their own, and it shouldn’t screen their questions beforehand unless they’re really trying to indoctrinate the jury.

Next, the rules for civil cases. This is Senate Bill 658. It makes fewer changes to existing procedure but also puts greater emphasis on letting the lawyers conduct voir dire.

How will the courts apply these rules in practice?

That’s where the rubber meets the road.

Expunging Juvenile Records in California

If you spent time in juvie, and you don’t qualify to seal your records, you can still petition to expunge your case.

If the court grants your petition, it will set aside the finding of guilt, dismiss the case, and release you from all penalties resulting from it. That’s what the statute says, anyway.

In reality, an expungement doesn’t erase the past or wipe the slate clean. It won’t seal your records and destroy them. It can’t spare you from registering as a sex offender. And if you pick up another case, the prior can be used against you as a strike or other enhancement.

But it’s still worth it because it reflects your rehabilitation and efforts toward it. Your rap sheet will no longer show a conviction as the last line item for the case. Instead, it will show the case as being dismissed. In most situations, you can legally answer that you don’t have a conviction at all. In all situations, you can at least say that the conviction was dismissed, because it was. That can improve your odds of getting that job, loan, housing, or license.

So it gives you a fresh start.

Sealing Juvenile Records in California

In the case we wrote about last week, a California court held that it wasn’t cruel and unusual punishment to require a minor to register as a sex offender for life.

The court noted, however, that a kid could be relieved of this requirement if he got his juvenile records sealed.

So how do you get your juvenile records sealed? Here are the basics in California.

If you are put on some form of probation or supervision, and you complete it satisfactorily, your records should be sealed automatically. That’s new under a law that went into effect in 2015. You can find more information about it here.

Otherwise, you have to petition the court to seal your records. To do that, you must be at least 18 years old or it must be at least five years since the end of your juvenile case. You can’t have a civil lawsuit pending against you because of the case, and you can’t have any adult criminal convictions except for certain misdemeanors. You must apply through the court’s probation department, and you can check this website to see whom to contact in your county. The court may hold a hearing, and it will grant your petition if it finds that you’ve been rehabilitated. That can happen even if you still owe fines, fees, or restitution. If the court denies your petition, you can try again later.

Generally, you’re not eligible at all if you committed an especially serious or violent offense when you were at least 14 years old. You can read more about that here and here.

But you may have a shot if you can persuade the court to dismiss your case based on a special motion that looks at your rehabilitation, your well-being, and the interests of justice. You may bring this motion no matter how long it’s been since your juvenile case ended, so talk to your lawyer. If you win the dismissal then you can petition to seal your records.

Once the court seals your records, your case no longer exists as a public record, and the proceedings are deemed never to have occurred. That means you can legally and truthfully say that you don’t have a juvenile record. Generally, the underlying records aren’t destroyed until you turn 38 years old, and they won’t ever be destroyed in the serious or violent cases. But they may be looked at only in limited situations, such as if you apply to work in the military, law enforcement, or the federal government.

 

The CURES For What Ails You

Speaking of prescription drugs, almost every state now has a prescription-drug monitoring program (or PDMP). The goal is to curb prescription-drug abuse by discouraging pill-pushing and doctor-shopping. So whether you’re a patient or provider, you should pay attention because law enforcement and licensing boards are watching.

In California, for example, the program is called CURES: the Controlled Substance Utilization Review and Evaluation System. By law, pharmacies must report to CURES every prescription for a Schedule II, III, or IV drug within seven days of dispensing it. And pretty soon, under a law passed last year, doctors will be required to check CURES before prescribing such drugs to a patient for the first time and every four months after that during treatment.

Last week, the California Supreme Court ruled that the California Medical Board could freely access CURES at any time. It didn’t need to get a warrant or show good cause beforehand. The doctor who was being investigated argued that this violated the privacy of his patients. But the Court held that, on balance, the Board’s access was justified by the need to protect the public from drug abuse and protect patients from impaired or negligent doctors.

Even if your state’s law is different, remember that federal law remains supreme. Last month, a federal court decided a case in which the Drug Enforcement Administration (DEA) subpoenaed data from Oregon’s PDMP. Unlike California’s program, Oregon required all agencies—even federal ones—to get a court order before it would respond to a subpoena. It sued to compel the DEA to comply with its law, but it lost. Federal law authorizes the DEA to issue subpoenas on its own, so Oregon couldn’t force it to follow state law.

Hidden Bias and Fair Trials

You may serve on a jury one day, and if you do, your thought process will mean a lot to the people involved.

Those people, and the system as a whole, will rely on you to give them a fair trial.

To that end, one court has created a video to help potential jurors understand their hidden biases. These are the mental shortcuts we use to make decisions about people or things. We all have them, and they help us make sense of the world around us. We all have them because we’re all human, and we often don’t even realize it.

The thing is, they’re often wrong. For example, one study looked at scientists who were hiring a laboratory manager. The experiment was that all of them were given the exact same resume to review except some copies bore a man’s name and others a woman’s name. Well, guess what? Both male and female scientists scored the male candidate as more competent and worthy of the job even though the resumes were exactly the same. Without realizing it, these scientists harbored a hidden bias about gender, and it clouded their judgment.

The video is shown during jury selection in the U.S. District Court for the Western District of Washington. It features three people: the top federal prosecutor for the district, a senior trial judge there, and a prominent defense lawyer. The lawyer explains the value of talking about hidden bias this way:

“You have two choices: either talk about it or don’t talk about it, and haven’t we seen what happens when we don’t talk about it?”

The upside is that by taking the time to really think about things, and by taking in more information, we all make better decisions.

White-Collar to Blue-Collar in One Day

Last week, the U.S. Supreme Court issued two notable decisions on the same day.

One was a civil white-collar case, the other a criminal drug-trafficking case, and in both cases, the Court reversed the lower-court ruling on appeal.

In the civil case, the Court imposed a five-year statute of limitations on SEC cases that seek to disgorge profits. That’s the same period that applies in cases to enforce a fine, penalty, or forfeiture. Although disgorgement of profits is traditionally a form of restitution that’s measured by a defendant’s wrongful gain, the Court ruled that it’s a penalty in SEC cases for a couple reasons. First, the agency uses it to deter and punish defendants as much as to compensate victims. Sometimes, the money goes to Uncle Sam, and sometimes, the only victim is the public at large. Second, the agency often disgorges more than defendants have gained, leaving them worse off than before they broke the law. That may be the point, but that makes it a penalty.

In a footnote, the Court even seemed to call into question whether courts could order disgorgement at all. That’s something they’ve been doing since the 1970s, so it’s a big deal. For more in-depth analysis of this decision, see here.

In the criminal case, the Court reined in the government’s forfeiture power. Forfeiture allows the government to seize money or property that’s derived from a crime. But the law limits this to what someone actually and personally receives or obtains. That means you can’t be responsible for amounts obtained by someone else. So the hypothetical college student who gets $500 per month to drop off a few packages isn’t on the hook for the whole multimillion-dollar drug enterprise.

Here, two brothers worked in a hardware store together. One of them owned the store, and the other was a salaried employee. The two were charged with selling large amounts of a product they knew or had reason to know was being used to make meth. In three years, the store grossed about $400,000 from selling the stuff and netted $270,000.

The government wanted the $270,000 in profits. The owner agreed to forfeit $200,000 of it when he pleaded guilty, but the employee went to trial. He was acquitted of three counts, convicted of eleven, and sentenced to sixty months in prison. Then the government went after him for the remaining $70,000.

Although the government agreed that the employee had no ownership interest in the store and didn’t personally benefit from the illicit sales, it argued that, in a conspiracy, everyone is responsible for the full proceeds of the conspiracy. And it won that argument on appeal.

But the Supreme Court rejected that and reversed.

 

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