No. A-5-16 (077506)

June 7, 2017 (Date Decided)

Per curiam

FOR APPELLANT: John M. Falzone, Assistant Attorney General (Christopher S. Porrino, Attorney General of New Jersey, attorney; Andrea M. Silkowitz, Melissa H. Raksa, and Brian F. McDonough, Assistant Attorneys General, of counsel; John M. Falzone, Joan E. Karn, Janine Matton, and Kent D. Anderson, Deputy Attorneys General, on the briefs).

FOR RESPONDENT: Kevin H. Marino (Marino, Tortorella & Boyle, attorneys; Kevin H. Marino and John A. Boyle, on the brief); Elizabeth J. Hampton (Fox Rothschild, attorneys; Elizabeth J. Hampton and Alain Leibman, of counsel and on the brief).

The Attorney General appealed from the decision of the appellate division that reversed the trial court’s judgment to enforce administrative subpoenas issued by the Attorney General in a qui tam action under the False Claims Act. Relator Paul Denis, a former Medco Health Solutions, Inc., employee, commenced a qui tam action in the U.S. District Court in Delaware. Relator later amended his complaint to assert claims on behalf of the state of New Jersey, alleging that Medco perpetrated a massive fraud on the state by retaining rebates it was required to pass through, in violation of the federal False Claims Act.

The New Jersey Attorney General was required to determine within 60 days whether to intervene and take control of the state’s claims, or request an extension of the period. The attorney general sought and received nearly 600 days of extension, with the trial court ultimately placing an intervention deadline of June 2, 2015. Medco was timely served with a subpoena, but the attorney general did not seek enforcement by June 2, 2015. Medco and its associates refused to comply with the subpoenas, and so the attorney general sought enforcement of his subpoenas, which the trial court granted.

The appellate division reversed, concluding that with the passing of the intervention deadline and the unsealing of the qui tam complaint, the plain language of the New Jersey False Claims Act precluded the attorney general from issuing or enforcing subpoenas to investigate claims alleged in the qui tam action. The appellate division noted that the NJFCA required the attorney general to either proceed or decline to proceed with the action, and provided no other options. The appellate division further noted that the NJFCA did not grant investigatory powers once the attorney general declined to intervene, and held that once the relator was placed in control of the litigation by the attorney general’s declining to intervene, the attorney general had to stand down.

On the attorney general’s appeal, the court affirmed for substantially the same reasons expressed by the appellate division, rejecting the attorney general’s contention that there was no limitation because the NJFCA did not contain the same precluding language as the federal FCA.

Justice Fernandez-Vina dissented, arguing that the NJFCA did not limit the attorney general’s authority to issue subpoenas following an intervention decision or the unsealing of the qui tam complaint, noting that no such temporal limitations found in the federal FCA appeared in New Jersey’s version.