On Monday, the U.S. Supreme declined to hear a False Claims Act case in which the Fourth Circuit had ruled that a release contained in an employment separation agreement barred a former sales manager for Purdue Pharmaceuticals from bringing a qui tam action against the company. U.S. ex rel. Radcliffe v. Purdue Pharma LP, No. 10-254 (U.S. October 12, 2010) (denying certiorari). In this case, the Fourth Circuit, reversing a lower court decision, and held that a pre-filing release of a qui tam action is enforceable when the government has knowledge of the relator’s allegations of fraud independent of the filing of the qui tam action. At the time of the qui tam filing, the government had been investigating the Purdue Pharma’s fraudulent activities for nearly three years.

The relator filed a cert petition with the US Supreme Court, arguing that, if left intact, the decision would undermine Congress’s intent that relators pursue claims that the government is aware of but, for one reason or another, decides not to pursue. The relator also highlighted that FCA defendants, especially pharmaceutical companies, frequently include broad release language in their severance agreements. The Supreme Court was not swayed.

Some have trumpeted these decisions as an endorsement that pre-filing releases bar qui tam actions. However, these decisions only come into play in the rare instance where the government was fully aware of the relator’s specific fraud allegations involving a specific wrongdoer.

In order to wade through these legal waters, potential whistleblowers should retain experienced qui tam attorneys who are familiar with the nuances of the False Claims Act and government investigations.      

For more information about qui tam law and pharmaceutical fraud, contact Nolan and Auerbach, PA.