Eleventh Circuit Holds Criminal Forfeiture Statutes Bar Qui Tam Relators From Intervening in Criminal Forfeiture Proceedings
Under the “alternate remedy” provision of the False Claims Act (FCA), rather than intervene in a qui tam action, the government may elect to pursue claims “through any alternate remedy” available to determine a civil penalty. 31 U.S.C. § 3730(c)(5). The provision gives qui tam relators the same rights in the alternate proceeding they would have had if the action continued under the FCA. But what if the government elects to prosecute the fraud criminally instead of pursuing civil claims under the FCA? Does the alternate remedy provision allow qui tam relators to intervene in criminal forfeiture proceedings to assert an interest in forfeited assets?
In United States v. Couch, No. 17-13402 (11th Cir. Oct. 17, 2018), the U.S. Court of Appeals for the Eleventh Circuit held that qui tam relators are generally barred from intervening in criminal forfeiture proceedings because, with limited exceptions, the criminal forfeiture statutes expressly prohibit third-party intervention.
Lori Carver worked at a pain management clinic in Mobile, Alabama that was run by Dr. John Patrick Couch and Dr. Xiulu Ruan. Slip Op. at 4. After discovering that Couch and Ruan were submitting fraudulent healthcare claims to the government, Carver filed a qui tam action under the FCA against both doctors at the suggestion of the United States Attorney’s Office. Id. at 4-5. Thereafter, the government declined to intervene. Id. at 5. Nearly two years after Carver filed her suit, however, the government filed criminal charges against Couch and Ruan. Those charges were based upon the allegations set forth in Carver’s FCA suit. Indeed, the allegations in the indictment and superseding indictments “partially overlapped” with the allegations in Carver’s suit. Id. at 5-6. Each indictment, moreover, included forfeiture counts. Id. at 6.
At the conclusion of their criminal jury trials, Couch and Ruan were convicted. Id. After the district court entered a preliminary forfeiture order, Carver moved to intervene, “asserting a right to some of the forfeited assets,” under the alternate remedy provision of the FCA. Id. The district court denied Carver’s motion, ruling that the provision “does not permit intervention in criminal cases.” Id. at 7. At the time, Carver’s civil FCA case was still pending.
The Eleventh Circuit’s Decision
The Eleventh Circuit rejected the government’s argument that Carver lacked standing to intervene, creating a split with the Ninth Circuit’s recent holding to the contrary. See United States v. Van Dyck, 866 F.3d 1130, 1133-34 (9th Cir. 2017) (holding qui tam plaintiff lacked standing to intervene in criminal forfeiture proceedings). Slip Op. at 7. The Eleventh Circuit held that Carver had “standing to assert that the alternate-remedy provision [gave] her a [statutory procedural] right to intervene” and “have her relator’s share decided in the criminal forfeiture proceeding.” Id. The court explained that Carver’s asserted interest in the doctors’ assets was not so “speculative” as to deprive the court of jurisdiction, even though no court had yet resolved whether she was entitled to a relator’s share in her FCA suit. Id. at 8. Otherwise, if that “were enough to deprive [the court] of jurisdiction, no person claiming a property interest would ever get into” the federal courts, which “routinely” resolve property interests. Id. The Eleventh Circuit further concluded that the general principle that private parties lack standing to intervene in criminal proceedings had no application to Carver’s motion because the motion was “materially different” from other attempts at intervening in criminal proceedings, such as to compel criminal prosecution or alteration of a sentence. Id. at 9.
Carver did not do as well on the merits, however. The Eleventh Circuit considered three criminal forfeiture statutes (18 U.S.C. §§ 982(b)(i) and 1963(i), as well as 21 U.S.C. § 853(k)) which “expressly bar third parties from intervening in forfeiture proceedings to claim an interest in property subject to forfeiture.” Id. at 11. Although those statutes included limited exceptions, none applied to Carver’s case. Because the alternate remedy provision in the FCA does not expressly provide a right of intervention in an “alternate proceeding” or define “alternate remedy” to include criminal fraud prosecutions, the court concluded that the express bar to intervention in the criminal forfeiture statutes controlled the interpretation of the alternate remedy provision’s “general terms.” Id. at 11-12. Accordingly, Carver could not intervene in the criminal forfeiture proceedings due to her status as a qui tam relator in her FCA suit.
Importantly, although the Eleventh Circuit’s decision deprived Carver of the ability to have her relator’s share determined in the criminal forfeiture proceeding, this did not leave her without a remedy. Carver may still recover a relator’s share once the still pending FCA suit is resolved. In fact, the government assured the Eleventh Circuit (as it had assured the Ninth Circuit in Van Dyck, 866 F.3d at 1135 n.3) that if Carver prevails in the civil FCA case, she would be entitled to a share of the full amount of the damages award, including restitution paid by the doctors. Slip Op. at 12. Stated differently, Carver is “entitled to a share of the [doctors’] forfeited property to the extent the [doctors, as qui tam defendants,] c[ould] deduct any forfeiture from the qui tam award.” Id. Nonetheless, the Eleventh Circuit’s decision now makes clear, as a matter of first impression, that the FCA’s alternate remedy provision does not permit relators’ intervention in criminal forfeiture proceedings.