One of the most tricky questions to surface – routinely – in the representation of False Claims Act whistleblowers is the extent to which the whistleblower or “relator” may make use of company documents, including confidential or even privileged documents. We are often asked this question and wish that there were a simple answer. There is not. There are some general guidelines based on the case law and the positions the United States Department of Justice has taken in cases, but this is one of those questions where the lawyer’s response should not include the words “always” or “never.”
Let’s take the paradigm case. Employee starts with a company and as part of the orientation process typically gets a number of packages to review and/or sign. Here’s the 401(k) plan, here’s the health insurance list of choices, here’s the key to the men’s room, here’s the phone directory, and oh yes, here’s our confidentiality agreement which you should review and sign and get back to us… Let us know if you have any questions.
Of course it’s a bit of a buzzkill to start your first day at this great new job saying “Ah, excuse me, but this document is a bit one-sided and I don’t think I’m comfortable with it.” So employees routinely sign these employer-drafted confidentiality agreements, with about as much review as you would give the fine print on the back of a ski ticket.
It’s usually only later, if a problem ensues, that the employee actually takes a hard look at what he’s agreed to. Usually, these agreements state explicitly that all documents, in whatever form, are the property of the company and are not to be removed from the premises except with permission, and may not be retained for any purpose after the employee leaves employment at the company. Many such agreements go on to say that the employee understands he may be sued if he retains any such documentation, and that he agrees to all sorts of draconian relief if he misbehaves: flogging, defenestration, stockades, and – worst of all – fee shifting provisions saying the employee must pay the exorbitant legal fees of its counsel in bringing all this pressure to bear.
Most qui tam whistleblowers go through an evolutionary process before deciding to sue their employer or former employer. Usually, these people had no plan whatsoever to cause trouble for their company; usually, they are just normal people trying to do their jobs. But somewhere things went awry and the employee started to notice a problem that might be fraud-related, and all too often, the company doesn’t like the message he is delivering. We don’t hear about the cases where companies do this right (we’re sure they’re out there), but often companies punish the messenger rather than correcting the problem. Even then, often these employees are still undecided about what they should do, even when they know that they’re “on the bubble.”
Coming back to the question of documents, the reality is that the employee has access all through this period of employment and devolution of the relationship to massive amounts of data (email, company memos, and the like) the company would consider confidential, and all of which can fit on a thumb drive. The worried employee usually starts to make a mental inventory or a more specific inventory of problematic documents as he sorts through his options. Ultimately, if the employee decides to become a False Claims Act whistleblower, he has a statutory obligation to turn over to the government (the real party in interest) everything he knows about the fraud. So he copies the key documents onto a thumb drive and turns it over to the feds, right?
Probably. But there are some important caveats.
Caveat One: You can’t bring a qui tam suit without an attorney, and one of the first things you’d better do is go over with your attorney what you have in your possession that a) you think is relevant to the fraud and b) documents the company would think are its property. Some sorting needs to be done, and should not be done without the counsel of an attorney.
Caveat Two: It’s best to limit your copying to things that were fair game for you to have access to during the course of your employment. Courts tend to react very differently to fact patterns where the employee has gone on a widespread search throughout the company than to fact patterns where the employee simply made copies of things coming through his inbox. Compare U.S. ex rel. Cafasso v. General Dynamics in which the court allowed the defendants’ counterclaims to proceed, condemning the relator’s “wholesale” collection of documents, and U.S. ex rel. Grandeau v. Cancer Treatment Centers of America, in which the government robustly defended the relator’s right to bring to its attention all the evidence of fraud she had come across. So while there’s no problem thinking “how broad might this problem be?” or even talking to other people about that question, there may be a risk in searching for files beyond your scope of employment. (And note: companies can and routinely check the computers of departing employees to determine forensically what documents have been forwarded or copied to thumb drives.)
Caveat Three: Understand that attorney-client privileged documents, or trade secret documents, or patient privacy (HIPAA) implicating documents represent special situations – even if they are directly relevant to fraud. Some documents, quite appropriately, deserve the utmost care. The last thing the government or your attorney wants is to taint the government team or cause unintended consequences to a third party that could have been avoided. So before turning anything over to the government, your legal team has to go through the documents with care, flagging these categories of documents, withholding some, redacting others. It’s painstaking work, but the government will greatly appreciate your team’s careful approach, and you will have saved yourself from major headaches down the line.
Caveat Four: If you are an attorney and thinking of being a relator against your client or your former client (e.g., former in-house counsel), understand that courts can’t stand this fact pattern. Judges typically view your exalted status as an attorney as carrying with it certain key obligations of secrecy, confidentiality and privilege, and they will in most instance find a way to bar you from trading on the client’s confidences. See, e.g., U.S. ex rel. Fair Laboratory Practices Associates v. Quest Diagnostics and Unilab Corp.
To sum it all up, generally the statutory obligation to produce relevant information to law enforcement trumps the company’s interest in not having the information shared with any third party including law enforcement. See e.g., Town of Newton v. Rumery, 480 U.S. 3.86, 392, 207 S. Ct. 1187, 1191 (1987) (a promise is unenforceable if the interest in its enforcement is outweighed in the circumstances by a public policy harmed by enforcement of the agreement.) See also XCorp. v. John Doe, 805 F. Supp. 1298, 1310 n.24 (E.D.Va. 1992) (observing in an FCA case brought by defendant’s attorney that confidentiality agreements that prevent an individual from disclosing evidence of fraud to the government are void as against public policy). So you’re on o.k. ground to start off.
The tricky part comes if the government declines the case and you decide to go forward anyway. As surely as night follows day, counterclaims will come, asserting breach of contract, conversion, misappropriation, and the like. In discovery, it will come out what was turned over to the government, and anything else that was taken from the premises. See e.g., U.S. ex rel. Wildhirt v. AARS Forever, Inc., et al, 2013 WL 5304092 (N.D. Ill. 2012)(sorting through counterclaims and categories of documents, and determining which were relevant to an FCA prosecution and which were not and therefore unprotected).
When the government wins the case, these issues almost always go away. The case is settled, and defendants usually don’t want to look retaliatory by suing the relator after the settlement for doing something the law says is protected.
But if there’s no settlement and the employee goes forward anyway, the gloves will come off. And it’s best to have anticipated this reality, by:
• Copying only what you reasonably had access to
• Taking only copies, not originals, of documents
• Reviewing with your attorney prior to disclosure all of the issues shown in the documents
• Staying away from privileged and trade secret documents, or segregating them
• Redacting, as necessary, patient information protected by privacy laws
With these basic guidelines in place, the employee stands a much better chance of defending the fact that company documents were turned over to the government.