Recovering $Millions with the False Claims Act - Josh Russ

A former Assistant United States Attorney, Josh Russ is a principled and relentless advocate.

In 2013, after practicing healthcare regulation and litigation at a large corporate law firm, Josh joined the firm of Reese Marketos. During his time as an associate there, Josh tried a jury trial on behalf of a plaintiff financial firm involving debt owed to his client under multiple loan instruments. The case was settled just before closing arguments for more than $2 million. In addition, Josh represented two entrepreneurs in a commercial fraud and breach of contract matter that resulted in a favorable judgment for more than $5 million. The Fifth Court of Appeals in Dallas affirmed the judgment in 2016.

In 2015, the United States Attorney’s Office for the Eastern District of Texas offered Josh the opportunity to serve the American public as the Eastern District’s Affirmative Civil Enforcement (ACE) Coordinator. In that role, Josh oversaw and directed most of the Eastern District’s False Claims Act and civil Controlled Substances Act investigations and litigation. In less than five years, Josh’s work contributed to the recovery of more than $85 million in settlements, suspensions, and judgments on behalf of American taxpayers, most of which involved enforcement of the Anti-Kickback Statute and the False Claims Act. Josh was also named the Eastern District’s Civil Healthcare Fraud Coordinator, where he worked to develop the district’s parallel proceedings practices in accordance with Department of Justice policy.

For his work, Josh was awarded the Executive Office of United States Attorneys Director’s Award for Superior Performance as a Civil Assistant US Attorney. Josh frequently lectured internally for the Department of Justice regarding the False Claims Act, the Controlled Substances Act, and parallel proceedings.

In 2018, at the age of 33, Josh was promoted to serve as the Eastern District’s Civil Chief. In that position, Josh supervised all civil litigation across the Eastern District’s six divisions: Sherman, Texarkana, Marshall, Tyler, Lufkin, and Beaumont. In addition to managing the Eastern District’s affirmative False Claims Act and civil Controlled Substances Act dockets, Josh supervised the district’s Financial Litigation Unit as well as defensive litigation against the United States, its agencies, and its personnel.

Josh’s highest priority as Civil Chief became fighting the nation’s devastating opioid crisis. He served as the co-chair of a national Prescription Interdiction and Litigation (PIL) Task Force working group.

In November 2019, Josh rejoined Reese Marketos as a partner, where he leads the firm’s Eastern District office and the firm’s False Claims Act practice.

Transcript

Dina Rasor: 0:10

My name is Dina razor and I'm the Executive Director of climate money watchdog. And this we are doing a I'm here with Greg Williams, who is the Chief Operating Officer. And I wanted today we are going to be talking with Josh Russ, who is a hotshot new young attorney, going into the law that I worked in, I've worked on about 20 years in my career, and it's called, it's called the key tam False Claims Act. And we will, and we will talk about it today. It is how it can be used as a tool for whistleblowers having in especially now with the climate money being pushed through so fast and companies, you know, starting up or big companies, and it's a way for average activist employee, or, you know, anybody who can meet the criteria can bring a lawsuit on behalf of the US government, and then get a percentage. But anyway, I'd like to let Josh go ahead and introduce himself and then I'll talk a little bit about what I did what I've done in my query, Tim,

Josh Russ: 1:23

thank you, Dina and Greg for having me. I think hotshot might be a little bit of a stretch. I'm a partner at the firm of Rhys Mark Kato's in Dallas, Texas. Prior to being a partner at Rhys Arcadis, I was an a USA and Assistant United States Attorney for the Eastern District of Texas, where I also became the civil chief of the division. The Civil Division primarily overseeing False Claims Act prosecutions, enforcement actions, in private practice as a partner at Rhys Marquitos, I do almost entirely relate or side False Claims Act and whistleblower actions on behalf of whistleblowers under federal law.

Greg Williams: 2:04

So the False Claims Act has an interesting history can Can one of you provide a quick sound?

Dina Rasor: 2:10

Yeah, I was gonna go ahead and do that. Because I'm old enough to have been there in the beginning. In the room, as they would say. It's a it's a civil war law that Abraham Lincoln decided to institute because you know, you were getting bad buckshot and toothless mules for the for the Civil War. So, but what what it is, and it got kind of bastardized over the years, I mean, there was pressure to because it's so successful, there's pressure to mess it up. So back in 1986, when I was in Washington, DC, and going after defense contractors, there was a effort to put it back the way Abraham Lincoln wanted it and use it to try to control government spending and have whistleblowers have a place to go. And so several people claim that they're the father of it, but Senator Grassley from Iowa, was one of the big people and then Howard Berman, down in, in Los Angeles, a congressman. So I worked on it. And one thing that I was really proud that we did on it is that it is, well, we'll explain the actual law, but written into it, is some of the best whistleblower protections, way beyond and almost anything else in the federal government. And you, even if you're cooperating with the case, and you're not even connected to the employer, that it's being sued, or, you know, or whatever, if you're harassed, even if you're just helping, and you're harassed, you can get go to court and get a judgment. But if you're actually the, what they call the relator, they don't call them plaintiffs, they call them or later, so we'll explain that but later, you can actually and they and your harass you, you lose your job and everything, you could actually lose the lawsuit, but when the whistleblower suit. So what we're trying to do now is that it's very strong is something I want to introduce to the climate advocacy world. I worked on qui tam suits for about 1520 years, everything from Department of Defense Department of Health, Medicare, nursing homes, phone companies that were defrauding the government. And if you add it all up, in my, I guess it's about 15 years or so doing it, we returned about 200 million to the federal government. And so I look back now and see that's probably two weeks of toilet paper budget and the Pentagon but you know, every little bit helps. And it's also a great deterrent. So anyway, I would like Josh as a lawyer to explain the law and the importance of law and What you have to do to become a relator? Because this podcast is as much as an education into this law, and then we will later talk about what you can do with climate with contracting federal contracting climate.

Greg Williams: 5:13

Yeah, maybe before we get to the law, I want to make sure that we explain the term whistleblower, whistleblower, for anyone who's not familiar with the term is somebody who finds themselves in the middle of a bad behavior, and decides that instead of just going along to get along, they will blow the whistle, so to speak on that bad behavior. And maybe two of the most famous examples of whistleblowers were frank Serpico, who complained about corruption in the York City Police Department, Karen Silkwood who complained about safety violations in the manufacture of nuclear fuel. And then maybe more recently. And now of course, I'm gonna blank on their names. But that helped me out the the two people who are famous for having blown the whistle on our activities in the Warren in Iraq.

Josh Russ: 6:17

So Eric snowed? Yeah. And there's certainly whistleblower recently that testified to Congress, from Facebook. So whistleblowers can take all sorts of forms. And they can be blowing the whistle on different activity, right. Some of those whistle blowers you just described were blowing the whistle from inside the government about government misconduct. And a lot of those whistle blowers you just named and examples you gave you gave were from private industry. The False Claims Act is primarily aimed at private industry, you can't blow the whistle under the False Claims Act on government actors. But you can blow the whistle on private industry that is obtaining government money. So the key hook to the False Claims Act is that there's some outlay of federal funds. Most states also have a an equivalent or similar statute to the Federal False Claims Act, which ties the liability to the outlay of state funds. But the federal funds are really the hook. So you can imagine, as Dean has said, you know, this is a statute that originally was called the Lincoln Law was tied to shoddy goods and services that were being sold and proper to the Union army. When defense procurement was originally the focus of the statute over the last 2030 years, health care, key TM actions and health care fraud, with the enormous budget and outlay of money that the federal funds are used for the Medicare trust fund, for instance. And those have been the focus of 80 to 85 plus percent of the recoveries and actions that are brought under the False Claims Act. So it is near and dear to my heart. It is a statute that is, as had a lot of judicial opinions written about it every year or two, the US Supreme Court takes up an opinion about the interpretation of a particular element or a particular application of the statute. In fact, I believe the US Supreme Court has granted cert currently to address a potential circuit split. So it is it is a very important law. I think the Department of Justice calls it its most important fraud fighting civil fraud fighting tool that it has in its arsenal. The US Department of Justice can bring those actions on its own. But the key tam the it comes from a Latin phrase, which really empowers a private person, a private attorney general, so to speak, and a whistleblower who knows about fraud, waste abuse, false claims, whether the goods weren't provided correctly or services weren't provided are certain regulations weren't being complied with when the government was paying for goods or services. That relator as Dina said, they're not they're not called whistleblowers under the False Claims Act. They're called relators. can't hire an attorney and file a civil action in federal court, just like any other civil action, except it's filed under seal. So relators, generally speaking, come from private industry, they're usually employees. They don't have to be employees. There's no requirement that they be current or former employees of an entity, or they learn about fraud. But they are typically former employees or current employees who come to us it whistleblower firm, and say I've found out about some claims or some information about some things that this company is doing that they shouldn't be doing and they're receiving federal grants, federal payments, federal funds, health care funds. Is this the type of thing that is actually under the False Claims Act? They the cases are filed under seal the government has time to investigate under seal oftentimes, the defendant has no idea that had been sued, and the government starts its investigation and is obligated to investigate or relators contentions. There are certain bars to bringing these these cases successfully. as Tina mentioned, there is a first to file bar, which is really meant to prevent parasitic actions where somebody might learn about conduct that's already the subject of a key term action, they bring another one. So there's a congressionally imposed first file bar, there are public disclosure bars that I'd

Dina Rasor: 10:24

like to I'd like to add in on that is that you can't go find some fraud, you read in the newspaper, and go to the lawyer and file case. That's another that was another very common thing, you have to be an original source, you have to have original knowledge of it.

Greg Williams: 10:37

Yeah. And I think there's there's an important element that that we haven't emphasized yet, which is that, as a private citizen, you are bringing suit on behalf of the government, the government may take up that suit and prosecuted on their own or you may wind up pursuing it on behalf of the government. Either way, you're entitled to a certain percentage of whatever funds are recovered. And so especially in the in these high value suits, there can be an enormous financial incentive for the relator. To file. And so I think the government didn't want people motivated purely by that financial incentive, you know, jumping onto these cases, as you say, after they've read about the newspaper.

Josh Russ: 11:24

Absolutely, there is an award, and it's a sliding scale, depending on the circumstances of the case, if the government takes the case and settles it, or goes forward on its own, it's called intervening, then the relator could potentially be entitled to between 15 and 25% of the recovery. And if the government declines, one of the unique aspects of this this statute is that the private whistleblower, the relator, can go forward with his or her law firm without the government's involvement on behalf of the United States still, and then the share of potential recovery goes up to 25 to 30%.

Greg Williams: 11:59

And in some cases, the damage is maybe up to three times the amount of the fraud. And so if the realtor continues with the suit on their own, they're potentially recovering something close to the full value of the initial fraud.

Josh Russ: 12:15

Yeah, actually, it's it's mandatory traveling under the statute. So if it's a 10, say it's a $10 million contract that relators is able to establish, never should have been awarded to a contractor. And that $10 million is established to be damages. Once that, before that judgments enter the court, there's mandatory treble. And then there's also a per claim penalty for every claim that was submitted for payment. That is now up to a maximum of I think it just went up to close to$25,000 per false claim.

Dina Rasor: 12:52

And I'd like to point out too, is that when the relator gets to know and the contract will keep in mind when when you're qui tam, okay, that's part of a Latin phrase, but false claims. And false claims can cover a lot of things. It can cover the, you know, they said in their contract that this bolt would have some, you know, be a certain size and weight and fit on a certain thing, and they didn't do it or else they substituted in cheaper material. Another false claim can be that they it's anytime they've told the government, yes, we did this, this is what the contract said. And they we certify that we did it. And anybody who's ever seen any kind of legal forms have seen where you say, I certify that this above is true. And under penalty of perjury. Well, every time the federal government, you want to get the federal government to pay you you send in various forms, it depends on which part of the government it is that says, I verify that every everything that I've said, this cost or everything is done or every clause in a contract I'm supposed to do I've done this. And so that's, that's, I think one of the more common ones, isn't that right, Josh? has certified to the government,

Josh Russ: 14:14

right, those are called Express certification cases. And yes, those are a very common type of false claim where the government requires a form be filled out certifying that certain things have been done or certain steps have been taken in certain requirements have been complied with before payment will will issue you know, that's that's very standard for defense contracting and for health care fraud. There's another type of fraud that is sort of cutting edge, it's nothing that I you know, that I I certainly didn't invent it. It's been around in various forms for some time, but it's being used more by both the government and relators attorneys and that's called promissory fraud. promissory fraud is a type of false claim action, which is premised on the idea that both For you get a contract with the government, you are promising in that contract that you're going to do certain things or comply with certain regulations. And if you can establish that the that the signer, the contractor did not intend to comply, and in fact, a lot of times was not complying at the time they signed the contract that can then implicate all payments under that contract.

Dina Rasor: 15:24

Yeah, okay. And then explain how the cases are filed under seal and how long it realistically takes the government to decide whether to intervene on in the lawsuit.

Josh Russ: 15:35

Sure. So cases, like I mentioned, are filed under seal by statute and that, what that means, so there, these are lawsuits that are drafted just like any other lawsuit in federal court, they look like lawsuits attorneys draft film. They say complaint on on they have a case number they have a court caption. They are filed under seal in every federal court has a sealing protocol when a case can be sealed. And most federal courts are familiar with the fact that False Claims Act cases when they're originally filed have to be sealed. So the attorney navigates that process of getting the case filed into which just means that the public can't see it. It's not available on online searches. It's not available on the courts docket, you won't see a case number and the defendant doesn't know that it's been sued. That lawsuit is then served upon the Attorney General the United States and the US Attorney for the District in which the case is filed. So the relators relators Council in the US Attorney's Office in the Department of Justice, in the Department of Justice says agencies that it is working with to investigate the case, know that the case has been filed, but it is under seal to protect the integrity of the investigation. And and

Dina Rasor: 16:49

then forming the original law. That was one of the things that was greatly debated. But the government said we have to have enough time to be able to look at the case without the person the company filed against knowing it because they'll destroy records and everything else. And so we they filed under seal and I don't know what I don't even know what the official seal is anymore, because it meant that they never make it is it? Was it three months or six months? Or what is it 60 days, 60 days? Well, that Yeah. And so let's, I can also say this, but tell them how long it usually takes for the government to either decline or or accept.

Josh Russ: 17:31

So I have maybe one case in 60 days that the government can look at and determine that it's lacking in merit. And that's usually within 60 days, the only thing that the government could potentially do is looking to see that it is not a cognizable claim, or there's some sort of standing or jurisdictional issue. These cases are complex. They they involve usually years and years of misconduct and activity going back sometimes 10 years or more. It is not unusual for the US Attorney's Office and the Department of Justice to spend at least and I would say it's it's almost a minimum of two years investigating complex fraud cases.

Dina Rasor: 18:10

And you as the as the relator and your attorney are expected to put in a I'm blanking on the name of it says late afternoon, folks, we're all we're all tired. The disclosure statement, a written disclosure statement where you put down every single fact and every single piece of paper you know about it. So when you do since I've been an investigator on case and I'm not attorney, it's a different, different thing. But what you do then is you you'll go they'll send some whether it be defense, criminal defense, fraud people or the FBI or somebody, they'll send somebody to sit down with you and go through all the evidence and they'll have somebody from the US Attorney's office there and you sit there and go through and then sometimes people just think Well, that's it now they're gonna go off in two years. But what you really have to do to be realistic, this is not in the law, you have to know a Jim Milan because they got a lot of cases. And if it's not obvious to them, or it looks like it's harder to do if you go out and do some of the investigation and give it to them, you've got a much better chance. That's why lawyers hired me.

Josh Russ: 19:25

I agree it can be a daunting and time consuming process. Obviously our clients are great people that come forward to expose wrongdoing. There's a financial incentive there for a reason. Otherwise, you know, why would you potentially up into your life if there if there weren't, but I will tell you most of our clients, if not all of them are not primarily driven by the financial incentive. I don't know that. That sounds idealistic, but it's true. They are. They're animated by seeing wrongdoing and knowing that they can do something about it which really makes it a fulfilling job for me. Do you know?

Dina Rasor: 20:01

Yeah, I used to have to do intake, you know, anybody comes in the door and the ones, the ones that would come in the door and say this is bigger than Watergate. Okay, well, and I'm outraged, and I'm just will not allow this to happen to our country, send me insane. And I always tell them to send me a two page summary. Then there's other people come in and say, My boss has been screwing me over. And he's been doing this, but I know he does bad things, but I want you to get him in trouble. Sour grapes, that's very hard to get people who have sour grapes about something do not have the Florida tude to go through this. But if you are idealistic, and you say, you know, I've had so many whistleblowers say to me, or potential relators, it is not the money. It's the fact that this is happening. And you know, then you know, you've got that that person is the person saying, because that I've never had anybody who saw our grants fill out a two page summary, that was always my thing. But it's important to know that, that facts and investigation and inside knowledge is really important in these cases, because especially if you're an employee, when you come in, you know, the workings inside, and you don't have to, you don't have because it's filed under seal for so long, they don't have any idea that you're you can stay inside the job, and keep working and keep collecting evidence. And if they try to fire you, once they find out it's you, then they're going to be in trouble anyway. But I find that in a lot of these companies is I always say best investigations like a bank robbery. So it's better if it's an inside job. And so you either are been pushed out, but you have people still in there who can bring you in as feed you stuff. And so the most important part of it is the proof. And the kind of proof that in I have found that the federal government loves accounting cases. I worked on nursing homes, and we saw all kinds of terrible conditions. But it was hard because it was medical. But when we found out they were cheating on the nursing hours, which is required, so many nursing hours, that became an accounting case, and that went very fast. So these are just kind of the things that you've you got to think about. And then the other thing is I wanted to ask is explain about the problem of government acquiescence and key tam cases? Whether it's ignorance or ignorance or corruption, what how does that make the case harder to proceed and kind of give us an idea about government equity acquiescence?

Josh Russ: 22:49

Sure, before I go to that, I just want to add a caveat to something you just described units it any of your listeners that are advising other people are considering ever blowing the whistle. And sometimes, you know, you're not considering it, but you know, circumstances find their way that you you see something that you you don't know what your next steps are. My advice is to is to get in touch with an attorney. Right? Because there's some Oh, yeah. restrictions? Yes. Yes, there's some restrictions on what you can and can't gather there. So you want to make sure that you have the right protections in place for yourself. And an attorney is, you know, the best position to help guide you through that process.

Greg Williams: 23:32

Yeah, just to emphasize that that point. I think most people understand and get the idea that you can become unpopular really quickly, if you complain about something that your employer is doing. But I think I don't know about you. But Dina and I have encountered people who have lost their jobs, lost their careers, lost their families, their homes, in many cases, their health and safety, and in a few cases, their lives. And so it is deadly serious. And the sooner you get expert advice, the safer you're going to be.

Josh Russ: 24:05

Yeah, I agree with that. It is it is very serious. It is it is very difficult. You want advice you want guidance, inexperienced counsel and experience professionals can certainly set you on the right track that that's what they do for a living and they can guide you through how not to mess up your case and how not to mess up hopefully your life.

Dina Rasor: 24:30

And it's a unique law that a lot of lawyers don't really know a lot about, okay, it's it's very much different than the average kinds of laws so don't don't go to your you know, your uncle's, your uncle's friend, who you know, oh, here I know attorney go there. They don't understand how you file the suit, how you work with the government, how you do the investigations, how you do the protection. That's all very outside I had a normal kind of loss. So you need to call somebody like Josh, who has knows exactly. And I can't tell you how many times somebody's gone to a relative. And they file a case, and it's just a nightmare. And they show up my door and say, Can you fix this? And so it's Clean up on aisle five, you know, you have to go back and read, fix all the stuff and that makes it harder. The you know, this from being in a USA, they can smell a an unsophisticated attorney a mile away. Yeah, these people think they there's going to file throw spaghetti on the wall, see what sticks. I will say

Josh Russ: 25:36

it's nice of you to say me, but there are plenty of relators attorneys out there tonight, organizations like Texas against fraud, whistleblower attorneys that that's all they do for a living. And so they're out there. But it is a very specialized and unique area to pick up on your question that you were asking me, Dina, that one of the issues that does come up in these cases, and usually not healthcare cases, usually in defense, contracting or grants is what I want in the government. It's usually a contracting officer, or an office that has, you know, gotten close with a particular contractor not not necessarily nefarious, that they work closely together, because maybe working on the same project. It's hard for some of these government employees sometimes to say, yes, they were doing this under my watch. That goes to the issue that's been hotly debated and was recently the subject of a Supreme Court opinion called Escobar to materiality. This has been something that has been on the radar, especially in the last six years front and center, with key tam litigation, how much does the government know the government have knowledge? Was the government auditing the the defendant or the entity? Did the government actually know how high up as the knowledge have to go? In order for it to be an actual defense? These are the types of things that do come up in cases, I would say that it most of the cases I've dealt with, it's not because of government corruption. It's not because of malfeasance on the part of a government or a government contractor. Now, it might be laziness, or it might be under resource overworked. But most of the time, the defendant after the fact is trying to point and say, Well, look, I mean, they knew generally the types of things that we were doing. And they never told us that we were liable under the False Claims Act, that misses the point, most of the case law establishes, that's not far enough. Only the Department of Justice can enforce the False Claims Act, the agencies cannot. Oftentimes, if it's a lower level employee who miss for the government who missed certain conduct, there's case law out there, that that makes clear that that's not a defense or a bar to being sued under the False Claims Act.

Dina Rasor: 27:51

And there's also happens mostly, mostly in the department of fence, but there's a lot there's a revolving door, a lot of these guys who are overseeing these contracts will retire from the government in the next day go to work. And you know, just almost the same desk, just flip the nameplate. And so that is a form of corruption because they let things go. But the the key on this that I always try to tell potential relators in is when you're talking to you know about the fraud, you're trying to investigate it and trying to figure out the company is doing the wrongdoing, has somebody in the government said, Oh, it's okay to do this. And that that is a double edged sword. Because sometimes you have to in order in order to get obligate the government, you have to have a warrant to do it. You have to be the person has the warrant to make changes in the contract or change money or change that and change this. And so lower level people I have found just don't have the warrant to do it. But they say okay, yeah, you can, you can go ahead and do this way. I looked at it. It's all right. So right now, there's very cool cozy relationship there. But that's one of the cases when we had two cases, we've with a guy who just acquiesced and we thought we're gonna lose the case. We finally just nailed him on Okay, did you have the warrant to do this? And the government employee guy said, Well, no, but I know I have the power and I have the knowledge and I said, Do you have the warrant? I didn't say the lawyers. And no, and then finally the lawyer said, Okay, well look then if you don't have the warrant to do this, and you obligated the government against the rule regulation of the government, let's put you on the lawsuit. How do you spell your name but you on the side of the people are defrauding the government because you're a government employee, and that that really sobers them up, you know, the government plays that try to help their buddies and and you can't, you know, as if at a federal employee, you cannot bring a qui tam suit. You cannot you have to be if you're if it's part of your job to make sure this doesn't happen. You can't let it happen. Then goes have the company sued. So it's used, like he said, is usually private contractors. So that's something to think about when you do this, because a lot of people call me up and say, this company is bad. But the government's even worse, and they're so stupid. I said, we can't sue for government stupidity. The false claim does, so. Okay, well, I'll explain your recent lawsuit where you're able to win a jury trial. We mean, I mean, you guys took it through the courts yourself, right? We did. This was a, it was a $36 million case. So that was, you know, great. So explain to him what it's like to take if you're related to take it really all the way through the trial, because the government decides they don't want to.

Josh Russ: 30:44

So we had to relators this case, at a time it came to us was about nine or 10 years old, it was filed back in approximately 2012 2013 time period. These were relators that worked for a helicopter manufacturing company, they were entering into army contracts with US Army. Notwithstanding the fact that I just told you, in most of my cases, it's not government malfeasance. In that case, actually, the filing of the case led to the conviction and prosecution of multiple army officials, including a colonel for conflict of interest, among other things. And so the case really revolved around as I talked about earlier, promissory fraud or this fraud in the inducement theory, there are multiple contracts that our clients alleged and then we prove to the jury, the defense contractor had promised that it would would report credible evidence of criminal conduct, including conflicts of interest to ities bribes. And we allege that, in were supported by the evidence of the fact that the Kirtle actually pled guilty to a conflict of interest, that the company was aware of that existing conflict of interest and had offered the colonel job, while was while the company is being awarded these contracts and during the performance of these contracts. That is the type of of regulatory requirement that you can't tie$1 amount to you can't say the government was paying X million dollars for compliance with that, you know, regulation that's required by law. The courts have said, if you can prove that that's material terms of the contract. And of course, it's a requirement in the government and the contracting officer told us they can't enter into the contract without it. So it is materials required, then you can recover all the payments under so we we tried a case for almost two weeks in the Northern District of Alabama, it was declined. As I mentioned, the government federal government was not there. With us at counsel table, the department justice did not prosecute that case with with us, they certainly supported us and the army was very supportive to get us witnesses on the stand. So I don't want to give the impression that it's not a team effort. This is a large part of what I do is working hand in hand with the federal government, the Department of Justice primarily in the the jury returned a $36 million verdict in just a little over an hour. And we were very happy for and our clients were thrilled, and it's working its way through the process still. But that was a that was a fun experience. And a lot of use cases don't get tried because of the magnitude of the over the dollar amounts in the in the treble damages really puts an entity's existence a lot of times at issue.

Dina Rasor: 33:35

So to kind of, you know, he's you were talking about, you know, when you think of a normal key tam suit, you are thinking about, okay, they have a contract, they were supposed to put use this kind of steel, or they're supposed to do this kind of thing. And they didn't do that part of the contract, and everything. But what was different on this and where I think there's a hook for climate advocacy, is that this was that they didn't they did not comply with, it's not necessarily just the procurement, but it was the standard clauses. Everybody knows what standard clauses are, every time you get an insurance policy or something. There's standard clauses you put in that you promise when you sign. And what I've never seen a case like this, but it gets it's been around but it really got my brain going is that every single company that's going to be getting federal money for climate act activity, I mean, from the federal government, you know, whether it's, you know, contracting, whatever, it's hard to, especially in climate with every everything is a lot of stuff is new, and a lot of stuff is experimental. And so then they just get their engineers go up. And so well, it's the learning curve, and we made a few mistakes and everything else but meanwhile they are you know, they're skimming and it's harder to find that but I was thinking that every federal gun My contract has contract clauses for the environment, you know, you're not allowed to dump this stuff off in this stream, you know, you have to have the these EPA rules and these rules and these rules and these rules. And climate activists actually familiar with that, because you know, they're there, they're actually watching the the company do stuff. And if you're a local, an activist and and in pollution, you're saying that they're polluting, and if you can get evidence of that, that they're not doing the standard environmental clauses, and then I'll have just tell me where I'm wrong here. But my understanding of it is, is that you but he just do what he just did, you didn't have to show that they were making this carbon capture machine and they didn't, and then they use bad stuff, or it didn't work or they're lying or hiding, because that's that's hard to do. Because all it right now we're all in the experimental stuff on climate. But if they meanwhile, they were doing it, we're dumping stuff in the river and not are not doing stuff that they were supposed to do environmentally according their contract, you can get the whole contract sent, sent back, you can have you know, you can win and have them have to pay for the good portion of the contract money back, just as you said that you don't really put a price on don't dump something in the stream. But this new approach makes it so you don't have to prove the actual flaw in the technology or something they're doing shortcutting on the technology, and they'll bring in 10 scientists to say it's fine. Now, did I did I do that? Right? Josh?

Josh Russ: 36:41

Let me put a finer point on that. So look with that with the tremendous outlay of money from this administration, and no doubt future administration's to me, it's a, you know, a subjective value judgment, I think it's a good thing that we're attacking, you know, climate crisis that we're all in. But whenever there's an outlay of money like that, there's that doesn't necessarily mean that everybody is receiving that money, has the best intentions. Or even if it's not even a bad intention situation, the best protections in place against fraud are the may not even be sophisticated in dealing with taxpayer money. At the end of the day. This is all of our money. This is the United States citizens, the taxpayers money that's being used. And it's it's, you know, it's precious, and it's limited. And so you're going to have an outlay of funds to new companies, to companies that are trying to develop certain products that don't have a familiarity with dealing with the government. And they're going to think, Well, I've been in business for a long time we've seen I've seen plenty of CEOs and managers in the C suite think I'm very smart. I've been in business for a long time. I don't think that those regs really, you know, mean, what they say, and then put their company in a spot where the government's coming after him for that money. Separately, similar to the case that I just tried the promissory fraud theory, you're right Dina, it's not necessarily going to hinge on disproving that a certain science or certain mechanism or system works the way that they say it works. It could be that you know, that the that they're that they're promising that they're going to comply with certain standard regulatory environmental clauses. But you know, that they're saying internally in emails, we have no, we have no ability to do that we're not going to do it's fine, just sign the contract. If you did that. And that provision is in the you end up proving that as material, then that would implicate all payments under that contract under the False Claims Act. One caveat that people need to be aware of your listeners might be thinking, well, aren't there penalties set up where you know, the EPA can come in and find companies are fine violators of environmental laws? Yes, there are. But oftentimes, and most the time, you can't file a false claims act suit for penalties that should be instituted, there is something called an alternate remedy. But ordinarily, there has to be an outlay of funds for it's usually under a contract or a claim for payment, not a potential future penalty.

Dina Rasor: 39:10

Okay. I just it just, you know, that's what's I sort of started thinking about this. And climate activists are environmentalists and environmental, you know, Sierra Club sues companies all the time for dumping stuff in the river or claiming they're going to abate this asbestos and then dispose of it properly. So they already know it's kind of a natural thing you get, get a federal, you know, get the contract and look at it and see if you see anything that they're doing, where they're polluting, there's probably a government clause or an EPA clause in that contract that they can't do that, that they have to do all the local and state and federal environmental laws. And so that's a way you can bring a lawsuit without having to go into this engineer. It's just like a medical you know, They get a bunch of doctors on one side and get a bunch of doctors in the other and found a lot of technology. When you're going on the technology, especially new technology like this, they will just line up a bunch of engineers to say, you know, it's fine. It's everything we want, you know, it's we did a good job, blah, blah, blah.

Josh Russ: 40:15

I'll say I'll say one of the similar areas that we're seeing this is these, these regulations usually pop up in the far the Federal Acquisition Regulations. These are requirements that agencies often pass. We're seeing it also with cybersecurity, right, there's additional requirements placed for contractors to have cybersecurity protections in place. If it's a defense contractor, for instance, we don't want other countries or non allied nations to get access to our military secrets or rocket designs, right?

Dina Rasor: 40:49

Our grids power grids, cybersecurity is big time.

Josh Russ: 40:53

Right? So the Department of Justice has a new cybersecurity fraud initiative, we actually I helped represent I was I was a small part of this case, one of the first cases that the department justice settled under that initiative. And there are some cases that have settled sentence in there a lot of times premised on the same thing you promise, you're gonna have these cybersecurity fraud, Cybersecurity Initiative and protections in place, you don't have them. And we started, you know, giving you all this money for for your work, I think it's going to be similar with you know, HIPAA type protections with pH, I personal health information, and I think it will likely if it's not being used, now, it will be in the future, for these types of protections on the environment, that you're promising that you're going to put these things in place, the environments just as important to the agency or the agency that's affected, as you know, PHSI, our military type of, you know, specs. And so I could certainly see that that's the type of case that ends up being brought particularly as more regulations are incorporated in these contracts.

Greg Williams: 41:59

So in case anyone isn't understanding what the difference between, you know, what's in the, in the case of this helicopter manufacturer case, the government was paying this manufacturer to, let's say, Make helicopters, we're not questioning whether or not they made helicopters or whether or not those helicopters were any good. It's that the the manufacturer also claimed that they would be free of conflicts of interest. While they did that, and they in fact, were not free of conflicts of interest. And they knew they were not free of conflicts of interest. And therefore all the money that the government spent to have them make those helicopters is subject to recovering under false claims. If I got that, right. That's pretty

Josh Russ: 42:48

it's a pretty good description. Pretty summary

Dina Rasor: 42:50

is really great, because he hasn't done doesn't do a lot of law. I still fall even though I'm not a lawyer. I still fall into that law jargon because of it. Okay. And I think we're getting close to the end here, Greg? Yes. Okay. We

Unknown: 43:02

try to keep I asked him about an hour.

Dina Rasor: 43:05

Okay, about an hour, we try not to go over an hour. Although we'd love to talk about it all day. I asked him was everybody this question in there, whatever their subject matter is, if you are king for a day, what parts of the key tam law would you change or improve?

Josh Russ: 43:26

Probably a lot of the things that are that I've mentioned or alluded to, over the course of the last hour that have been subject to hotly contested litigation, and in different judicial opinions are certainly splits on things like materiality. There is a proposal at least a year ago, there was a proposal working through I think Grassley was champion, naming a lot of these changes to address materiality arguments, the same thing that you brought up, Dina, that will a low level official at the government news. So therefore, you can't bring in false claims act on behalf of the entire United States for all the taxpayers, because one person was purportedly okay with it. Something about that just seems disproportional inequitable, particularly when that low level employees job a lot of times doesn't encompass being able to sign off and say that it's okay, what the contractors do. You know, and also, I'd also probably advocate for codifying damages. One of the issues that no, this is very legalistic, and I'm sorry, but one of the things that comes up a lot, or it's how you calculate damages in these cases, and defendants often want to say, Well, you got to offset the amount that the government received first. So Greg, the example you just gave there, when the defendant argues it's not a problem with the helicopter, so the helicopters value has to be subtracted before you trouble. There's an old case called Bornstein for 1976. Back when the statute was double damages, not treble damages that that that said you you double now treble first and then you apply the offset Well, there's cases that now across the country that go net, traveling, gross traveling then an offset. And there's, I understand that there needs to be some leeway, some flexibility for courts every case is a little different. But if we had a statutory definition of what damages are, and when you travel, and when you apply offsets, which under Bornstein would be trebled first and then apply the offset, I think that will be helpful for a lot of relators. And a lot of relators counsel and the courts frankly, in approaching these cases.

Dina Rasor: 45:33

Well, I think that's really important because if you don't get the fines and the fines and the the amount, so that you know trebling the damages, and the damage is being paid back and stuff, if you don't get that high enough, those big companies, especially to see it as cost of doing business, we're gonna keep doing this, because there, you know, there isn't gonna be a Josh, Russ may not find this. And so therefore, you know, it's like when automobile FET manufacturers wouldn't fix a defective part because they did the math, and no, it might kill a few people. But, you know, recalling would be more expensive. And I, so I think that is the higher amounts of money you can get by traveling it or getting a truth, the truth to the goal of the law, you just got to have the electric effect, because they then don't want to try to do it again. Because I have seen so many big companies, small companies are not like this, because they don't have the money. But the big companies this, they just seem like it's cost of doing business I eat. One of the biggest cases, a bunch of cases is pharmaceutical companies, and they pay out huge amounts of stuff. And it's just really kind of a kickback with the government because people keep filing cases and keep filing cases, and they just settle, settle, settle, because they are making so much money making these drugs that you know, trying to do anything about these make these pesky cases go away. And you know, that this still that still threatens the health of people in the country. So we got to make gotta make them bleed a little bit.

Greg Williams: 47:11

change their attitude, enough to care blade enough to change their behavior. That's right.

Josh Russ: 47:16

I mean, look, that's what in court say this is one of the purposes of the traveling is there's supposed to be a deterrent effect, limited resources, limited government personnel. And if it's profitable, we all know that there are bad actors out there that will will violate the law if it's profitable, and do certain fines or certain lawsuits as a cost of doing business. So certainly just getting the money back. And maybe even double damages wouldn't be enough in most cases.

Dina Rasor: 47:44

And one last thing I'd like to say and specialist jobs, because this is hard work. This is long, grinding, hard work. But when you do a loss suit like this, and you're successful, then the CEO knows that if he's sitting in it, you know, sitting with all his officers and financial officers, and this person, that person, this person, he knows that if he does something wrong, those people can go out and file a qui tam case. And you can get you know, they could become a millionaire. So a lot of times, it makes them let them decide not to do not to cut the corner. And you never know that you never know how many cases that you brought that were successful, how many you made, you got rid of, because the people aren't going to try it again. So that's one of the what I think is one of the noble parts of doing this.

Josh Russ: 48:36

Well, I appreciate you saying that. And I certainly enjoy what I do, it is difficult work. It's not driven by the money, we'd obviously like to see less fraud and less misconduct. And one of the things that you know, I think is worth listening to maybe not your listeners, but people out there that might consider, you know, bending some some corners and cutting some corners a little bit is that, you know, my firm and our practice really is mirrored on Sally Yates, his individual accountability initiative to that she rolled out in approximately 2015, which the department justice recognized that we can't just keep having companies pay fines. it at the end of the day deterrence effects individuals and companies only act or individuals. And so if you're if you're a CEO, or somebody that are our potential whistleblower comes forward and has evidence that you're the one making these decisions, you're you're probably going to find yourself on the other side of the V with the company as an individual and individuals can be sued under the False Claims Act as well.

Dina Rasor: 49:38

Okay, great. That's, I think that's it, but I do want to say that we're going to put Josh's contact information on our blog with long thing so if you want to call, call her do an intake or go to his website and do an intake but please do not send the documents without talking to them first, and never send originals like can't tell you how many times somebody will send originals to some law firm who doesn't take the case and then they throw them out so don't you know don't make sure you call you call up someone like Josh and injustice firm and so you can go through the right steps to do it but it is a I think there's going to be a huge amount of money spent on climate that that's why Greg and I started this thing and you've got to have some kind of Governor something else because we don't have do overs and climate in our defense doesn't make something okay, the plane doesn't work right. But this is the world you can't we there's not enough time to do over so I'll do it right. And I think this is a good way to start checking on the contractors once they get the the money.

Josh Russ: 50:49

Appreciate you both having me on.

Greg Williams: 50:51

Thank you very much for joining us and I hope to see you again sometime in the future. Likewise.

Dina Rasor: 50:58

Okay, thanks.