Businessweek Report Highlights Whistleblowers’ Need for Courage, Patience

Whistleblowers, unfortunately, not only have to be right and courageous, they must also be extremely patient. Every lawyer who represents False Claims Act clients will tell you that the process can take years and we all have the cases to prove it.

That is why it’s kind of hard to find a false claims lawyer who is under 30 years old.

Anyway, today’s lesson in perseverance comes from a case covered by Businessweek:

“Education Management Corp. (EDMC:US), the for-profit college operator partly owned by Goldman Sachs Group Inc. (GS:US), must face a 7-year-old lawsuit alleging it engaged in a fraud to wrongfully obtain more than $11 billion in student aid.”
“U.S. District Judge Terrence McVerry in Pittsburgh today said that it would be premature to grant the company’s request to end the lawsuit before the plaintiffs were allowed to gather evidence. The U.S. has intervened in the suit along with 11 states and the District of Columbia.”

The issue of how the defendant “must face a 7-year old” suit cuts both ways. The government, the whistleblowers, and their attorneys have also been affected by the long wait as well.

The docket report shows the case was first filed in 2007, by whistleblower Lynntoya Washington, who was later joined by Michael T. Mahoney. Since that time, there are some 390 entries on the docket. The United States intervened in the case in 2001 and several of the plaintiff-relator’s bar’s most prestigious names are on the case. And kudos to everyone involved for staying with it this long. The fact that the case has been around and investigated by the government for this period of time does not in and of itself indicate a reason why the defendant should be let off the hook. That neither proves nor disproves the allegations. The case was filed in a timely manner and the government proceeded with its investigation. It seems beyond debate that this is highly complex and sweeping case to investigate.

It is true, and absolutely nobody is happy about the fact, that this amount of time to get to the point of discovery and litigation is a burden on everyone involved, both plaintiff and defendants alike. The False Claims Act’s unique procedures — which allow the government to investigate the case “under seal” or in secret if you prefer — do add time to cases.

The seven year-and-counting wait to get to trial and actually complete discovery in this particular case is at least as much a problem for the whistleblowers, and the U.S. government, as the defendant. It hardly means that the defendant has lost.

Indeed, this denial of summary judgment does not mean that the case is over. The judge’s decision was made carefully and makes clear that there are many areas of fact to be pursued and that the United States – which has intervened — obviously still must prove its case. Discovery has not even been completed, as the ruling revealed:

“The Court shares EDMC’s concerns regarding the time and expense of discovery in this case, and it is certainly possible that EDMC has properly compensated its Assistant Directors of Admissions (“ADAs”) in compliance with all government requirements. Unfortunately, the instant summary judgment motion — prior to the close of discovery and based on EDMC’s proffered “statistical evidence” — cannot provide that avenue for finality.”

To read a copy of the latest ruling please click here.

So while seven years is a long time, it’s clear this case is still a long way from being resolved and the government is still asking some serious questions. What if the United States and the plaintiff-relators and all their attorneys are right? Is it ok that a company might have abused the student loan program to the degree alleged over several years and to the tune of billions of dollars? Should the case have ended at this point?

The company still can to go to trial and demonstrate they are in fact not guilty and somebody still has to prove that they are guilty to collect anything in court. It seems they can even file for summary judgment again after discovery closes.

So yes, seven years is a long time. The process takes time. Nobody wins anything easily under the federal False Claim Act. I hope this case helps demonstrate the absurdity of the myth of anyone collecting anything easily under this law.

That’s why when the United States wins a False Claims Case, (and there is no guarantee of that in this case or any other) through the long and difficult judicial process, the plaintiff-realtor’s will have earned their reward.