As attorneys that practice in this area know well, false-claims actions are a procedural minefield. One wrong procedural step, such as failing to file the initial complaint under seal, and the relator may become jurisdictionally barred from pursuing his or her qui tam case in any forum. As with actions filed under the Federal or California False Claims Act, there are issues such as intervention, first-to-file, and original source. The small business lawyers are those who specialize in solving the business law matters.

The "whistleblower” provisions are contained in subsections (e)-(h) of § 1871.7. The relator, known under this statute as the "interested person,” may bring an action on behalf of the person and for the State of California. (§ 1871.7, subd. (e)(1).) To commence an action under this code section, the attorney for the interested person (aka the realtor), files the original complaint in camera and under seal with the court.

Simultaneously, the attorney serves on both the district attorney and the insurance commissioner, a copy of the complaint and a written disclosure containing all of the material evidence and information in the relator's possession.

The district attorney or the insurance commissioner has 60 days to decide whether or not to intervene in the matter. {Ibid.) As in all false claims cases, the government may ask for additional extensions to the 60-day seal and they are often routinely granted by the court. (§ 1871.7, subd. (e)(3).) [Practitioners should note that since the length a case has been on a court's calendar is often used to evaluate judicial performance, especially in California state courts, and to move congested calendars along, many state and federal judges are beginning to resist automatically extending the seal without a showing for cause.

Before the seal expires, the district attorney or the insurance commissioner may elect to intervene in the matter. If the state authorities decide to proceed with the action, they have the primary responsibility for conducting the action. (§ 1871.7, subd. (e)(4)(A).) However, the interested party or relator still has the right to continue as a party to the action subject to certain restrictions. (§ 1871.7, subd. (f)(1).) The governmental authority that intervenes in the case has the sole right to dismiss, settle or otherwise dispose of the case only subject to allowing the relator to be heard on the matter.

The district attorney or the commissioner may notify the court that they will not intervene. If they decide not to intervene, then the person realtor that originally brought the action shall have the right to proceed and conduct the action. The district attorney or insurance commissioner can request to be served with copies of all pleadings filed in the action including deposition transcripts, although at their expense. Even if the relator proceeds with the action, the state authorities can still intervene at a later date upon a showing of good cause.

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