Fairness Hearing Required Prior To Dismissal Of Settled FCA Case Over A Relator's Objection

Author:Ms Marcia Madsen and Luke Levasseur
Profession:Mayer Brown
 
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Originally published on April 26, 2012

Keywords: fairness hearing, False Claims Act, FCA, GSA, schedule contracts, relator

The US Court of Appeals for the District of Columbia has issued an opinion involving False Claims Act (FCA) allegations related to General Services Administration (GSA) schedule contracts. In United States ex rel. Schweizer v. Océ N.V., No. 11-7030 (Reissued April 20, 2012), the court held that when the government and a defendant settle False Claims Act allegations and want to dismiss the lawsuit, an objecting relator has a right to a substantive hearing prior to dismissal. Although counsel for government contractors and the Department of Justice (DOJ) should be able to satisfy the "fairness" requirement in cases they settle, this ruling could provide additional leverage for relators' counsel in the context of settlement.

Background

Océ North America, Inc., sells copying and printing products under two supply contracts with GSA. In December 2004, the company hired Ms. Schweizer to serve as the "GSA contracts manager" responsible for monitoring compliance with the contracts. Ms. Schweizer came to believe that Océ was violating two provisions of its GSA contracts—the Price Reduction Clause and the certification provisions regarding the Trade Agreements Act—and reported her concerns to her immediate superior. He allegedly forbade her from investigating the matters further and stated that "management would 'destroy' her if she disobeyed."

Ms. Schweizer went over her immediate superior's head, addressing her concerns to the next higher-level supervisor. She was then referred to (and discussed her concerns with) Océ's human resources director, in-house counsel, and outside counsel for government contracting issues. Ms. Schweizer repeatedly "reiterated her claim that Océ was violating the False Claims Act," but the company's personnel and counsel did not agree. Finally, Ms. Schweizer made an "emotional plea" during a meeting with the next-higher-level supervisor regarding the alleged problems. He rejected her allegations; shortly thereafter, she was suspended then terminated.

Claims and Decision

Ms. Schweizer filed a qui tam lawsuit against Océ under the FCA. After an "extensive investigation," DOJ declined to intervene in the case, though the government continued to participate in settlement discussions. Eventually, DOJ, Océ, and a co-plaintiff who had been added to the lawsuit reached a settlement. But Ms. Schweizer...

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