Lawyer Urges Whistleblower Case Discovery Stay

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Attorney Stephen Wood (Chuhak & Tecson) says a stay of discovery should be mandatory to weed out frivolous False Claims Act cases before defendants have to bear the cost of discovery. Writing in a Washington Legal Foundation Legal Backgrounder, Wood says that the small percentage of whistleblower cases that succeed if the government declines to intervene suggests that perhaps 70% or more lacked merit from the outset. “These numbers strongly suggest that the promise of a windfall leads relators to bring many unmeritorious claims,” he says. Wood speculates that the cost of frivolous false claims cases runs into the hundreds of millions of dollars annually, adding significantly to a company’s cost of doing business with the federal government.

Congress is unlikely to address the problem, he writes, since in recent years lawmakers have increased incentives and lowered procedural hurdles for whistleblowers. But the lack of congressional action wouldn’t prevent the courts from policing the law’s abuses and removing baseless claims from their dockets, he maintains.

Automatically staying discovery until after disposition of any motions challenging the sufficiency of a whistleblower suit under the federal rules of civil procedure would (1) reduce expenditures in many cases that evidence reveals are unlikely to survive the pleadings stage and (2) promote the False Claims Act’s objective of encouraging insiders to come forward with proof of fraud that can inform the government’s intervention decision, Wood says. Also, he concludes, discovery is not necessary to safeguard the government’s interests in non-intervened cases because existing law provides the government with ample tools to protect its own interests without the need for assistance from the court.

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