Successful False Claims Act Defendants Were Denied Attorney Fees    

    Successful defendants of a False Claims Act qui tam action were denied attorneys' fees and expenses by the District Court for the Eastern District of Pennsylvania, because the relator's claims were not clearly frivolous, clearly vexatious, or brought primarily for purposes of harassment. After the relator's claims were dismissed for lack of subject matter jurisdiction (51 CCF ¶78,692), the defendants moved to recover attorneys' fees and expenses pursuant to 31 USC 3730(d)(4), which allows attorneys' fees if the FCA action was not pursued by the government, the defendant prevailed, the claim was clearly frivolous, vexatious, or for the purpose of harassment, and the requested fees are reasonable. The dismissal of the relator's qui tam action for lack of jurisdiction was sufficient to confer the defendants with prevailing party status, because it barred the relator's claims and thereby altered the legal relationship between the parties.

However, the relator's claims were not clearly frivolous, vexatious, or primarily for the purpose of harassment. The relator's conspiracy claim was ultimately dismissed for lack of jurisdiction when the Court of Appeals for the Third Circuit, considering the issue to be one of first impression, disagreed with the district court's finding the relator qualified as an original source of information under the FCA. The fact the Third Circuit's opinion was the first legal ruling on the issue indicated the claim was not clearly frivolous. Moreover, the claim was sufficiently supported in the relator's complaint, the decisive facts did not emerge until after discovery, the claim had enough potential for the government to give close consideration to intervening, and the relator was sufficiently convinced of the claim's merits to spend approximately $500,000 of his personal wealth in pursuit of the action. Other related claims were also found not frivolous, vexatious, or primarily to harass, based on the technical review needed to dispose of the claims and the legal and factual complexity of the case. (U.S. ex rel. Paul E. Atkinson v. Pennsylvania Shipbuilding Co., et al., DC ED PA, 52 CCF ¶78,862)

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