The district court denied the plaintiffs’ motion to recover a portion of a criminal settlement against a co-plaintiff, to pay attorneys’ fees in a separate qui tam case. The plaintiffs entered into a settlement agreement with one defendant, but the portion of recovery allocated to one plaintiff was seized by the government in a separate criminal matter. The plaintiffs’ counsel sought one-third of that seized amount from the government, arguing that the debt was owed by the plaintiff based on their contingency agreement. The court denied the request, finding the FCA provided no course of action for a plaintiff to recover any monies from the government in a qui tam case. However, the court noted the plaintiffs could attempt to recover the fees from the original defendant in the FCA complaint.
The plaintiffs in a qui tam case filed a motion for attorneys’ fees. The defendants did not respond to the motion, but the government opposed.
The plaintiffs sued Boykin Contracting, alleging the defendants had created several companies which they fraudulently claimed were eligible for contracts under certain federal programs. Defendant Jerry Eddins settled with the plaintiffs to resolve his liability in the instant action.
In a separate criminal matter, the court entered an order for forfeiture against co-plaintiff Amanda Sauls for $2.6 million. Afterwards, Sauls received $56,661 in proceeds from the FCA settlement with defendant Eddins. However, because of the order of forfeiture, the court seized Sauls’ portion of the settlement.
In this action, the plaintiffs argue that their counsel was entitled to one-third the share of Sauls’ recovery, despite its seizure by the court. Counsel sought $18,887 from the government. In response, the government argued that Sauls and her counsel are barred by statute from seeking expenses from the government, but could file a request against defendant Eddins.
The court sided with the government, finding the statutory language of the FCA prohibits a relator or their counsel from recovering fees and expenses from the government. The agreement between Sauls and her counsel had no effect to bind the government. Further, the court noted that counsel signed the contingency fee agreement in 2014, and therefore should have been cognizant of Sauls’ forfeiture judgment, which was rendered in 2017.
The plaintiffs pointed to United States ex rel. Rafter H Constr., LLC v. Big-D Constr. Corp., but the court found this reference misplaced. In Rafter, the court awarded FCA attorneys’ fees to the plaintiff-relators’ counsel after initially using all of the FCA settlement proceeds as an off-set of pre-existing debt obligations between the parties. However, that scenario involved a debt obligation between the parties, and did not implicate the government. The court found no basis in the FCA to prevent the plaintiffs from pursuing fees from the defendant. The court therefore granted the government’s motion for voluntary dismissal and denied the request for fees.
