If, as the saying goes, power corrupts and absolute power corrupts absolutely, what then to make of the government’s absolute veto power over False Claims Act settlements? In United States ex rel. Michaels v. Agape Senior Community Inc., the Fourth Circuit recently confirmed that even when the government declines to intervene in a False Claims Act case, it still has wide latitude to affect the direction of the litigation by vetoing an agreed-upon settlement. Though the Fourth Circuit is just the latest court to rule that the government has such absolute veto power, its opinion is a reminder that the government’s nonintervention in an FCA case should not be mistaken for government disinterest.

The FCA is the government’s primary civil enforcement tool for fighting alleged fraud perpetrated on the government. The act authorizes private individuals (called relators) to pursue civil actions in the name of the government. At the outset of a claim, the relator’s complaint must be served on the government and remain under seal for at least 60 days to allow the government time to investigate the relator’s allegations. The government may choose to intervene in the litigation and assume “primary responsibility” for the case. Or the government may decline to intervene, in which case the relator is free to carry on with the action. Even after declining to intervene, the government may request that it be kept abreast of the matter and, for example, receive copies of pleadings and deposition transcripts.

Originally published in Law360 on April 26, 2017.