In a long-running False Claims Act qui tam lawsuit involving a provider of pharmaceuticals to long-term care facilities, a Texas federal judge on Tuesday determined that the defendant could not escape liability by arguing that the purported whistleblower was involved in the alleged misconduct.
In Ruscher v. Omnicare, Inc., Omnicare asserted in an “unclean hands” or “inequitable conduct” affirmative defense that the plaintiff cannot proceed with her claims under the False Claims Act (FCA) because she was involved in the alleged illegal conduct her lawsuit purports to unveil. Treating the plaintiff’s motion for summary judgment as a motion to strike the defense, U.S. District Judge Keith Ellison of the Southern District of Texas ruled that the FCA does not bar whistleblowers who take part in wrongdoing from pursuing litigation.
Judge Ellison recognized that neither the Fifth Circuit nor the FCA itself directly resolve whether unclean hands is a defense to a FCA suit. However, because the statute provides a mechanism for reducing a prevailing plaintiff’s share of the proceeds if she participated in the underlying wrongdoing, it strongly suggests that unclean hands is not a bar to suit. Therefore, although a whistleblower’s share of the ultimate proceeds may be reduced because of her participation in the misconduct, that participation may not be a legally viable defense to fraud claims under the FCA.
Ruscher v. Omnicare, Inc., Civil Action No. 4:08-CV-3396 (S.D. Tex.)