The Ninth Circuit affirmed the district court’s dismissal of a relator who pleaded guilty to a felony that involved the same fraudulent conduct that gave rise to the relator’s qui tam suit in U.S. ex rel. Schroeder v. CH2M Hill. The FCA’s § 3730(d)(3) requires dismissal of a relator from a qui tam lawsuit and precludes the relator from any recovery in the lawsuit, “[i]f the relator has been convicted of criminal conduct arising from his or her role in the violation of section 3729.” In Schroeder, the Ninth Circuit concluded that this provision applied even to minor participants in the underlying alleged misconduct, who neither planned nor initiated the fraudulent scheme.

The relator, who was employed by the defendant government contractor, was involved in an underlying fraudulent scheme to bill the Department of Energy (DOE) by submitting false time cards to DOE for hourly work. After his interview by investigators, the relator pleaded guilty to a felony count of conspiracy to commit fraud. After his interview, but before pleading guilty, the relator filed suit under the FCA against his employer concerning the DOE fraud scheme. The United States intervened and moved to dismiss the relator from the lawsuit under § 3730(d)(3) as a result of his felony conviction.

Because § 3730(d)(3) does not bar those who “planned or initiated the violation of section 3729” from receiving a relator’s share (but only affords the district court the discretion to reduce the award in such circumstances), the relator urged that the district court likewise should have the discretion to overlook felony convictions of those relators who only played only a minor role in the underlying fraud. Based on a plain reading of the language of § 3730(d)(3), the Ninth Circuit had no difficulty in rejecting this argument.

The Ninth Circuit also raised and rejected the possibility that § 3730(d)(3) was amenable to a second plausible interpretation that would support the relator’s position. While concluding that legislative history provided some support that the drafters did not intend for § 3730(d)(3) to require dismissal of minor fraud participants, that history could not overcome the plain language of the FCA’s relator bar.