The Third Circuit Rules that the FCA’s “Alternate-Remedy Provision” Does Not Provide a Relator the Right to Intervene in a Criminal Proceeding for a Piece of the Criminal Restitution

On October 28, 2019, the Third Circuit became the most recent circuit court to determine that the False Claims Act’s (“FCA”) other alternate-remedy provision, 31 U.S.C. § 3730(c)(5), does not give a relator the right to intervene in a criminal proceeding. United States v. Wegeler, 2019 WL 5538568, — F.3d — (3d Cir. Oct. 28, 2019). The Third Circuit, in an opinion written by Judge Joseph A. Greenaway, Jr., joined the Ninth and Eleventh Circuits in prohibiting a relator from intervening in a criminal proceeding.

The relator, Jean Charte, filed a qui tam lawsuit against defendants American Tutor, Inc., James Wegeler Jr., James Wegeler Sr., and Sean Wegeler, alleging that the defendants submitted false reimbursement claims to the United States Department of Education. Charte cooperated with the government as required under the FCA statute and provided the government with information that “directly led to an investigation that resulted in the criminal prosecution of Wegeler, Sr., for tax fraud and tax evasion.” Id. at *1. Wgeler Sr. ultimately entered into a plea agreement that required him to pay $1.5 million in restitution. Charte tried to intervene in the criminal proceeding, claiming that the criminal plea was an alternate-remedy under the FCA and that she was entitled to a relator share of the recovery but was denied.

Charte appealed based primarily on the theory that a criminal proceeding constitutes an alternate-remedy, entitling her to intervene in the criminal action and recover a share of the proceeds. The Third Circuit rejected her claim on the grounds that “[s]uch a holding would be tantamount to an interest in participating as a co-prosecutor in the criminal case of another.” Id. at *2.

The Relator’s Position

The relator asked the Court to adopt the position that a relator has the right to intervene to recover a share of the proceedings derived from a proceeding that the government pursues under the alternate-remedy provision. Id. at *5.  The relator did not seek to “intervene in the criminal proceeding proper.” Id. at *7.The relator merely wanted to intervene “to protect her interest and that of the United States in her share.” Id. The Third Circuit did not find this argument persuasive holding that the relator did not have standing to intervene in the criminal prosecution of another and that even if the relator did have standing, the sole remedy would be to commence or continue an FCA action.

The Courts Decision

In denying the relators appeal, the Third Circuit reviewed the plain text of the FCA statute as well as Article III of the Constitution. The FCA provides a relator the “right to continue as a party to the action.” 31 U.S.C. § 3730(c)(1). This encompasses “a suite of rights to participate in a proceeding pursuant to the alternate-remedy provision” and the “right to 15 percent but not more than 25 percent of the proceeds that result from such an action.” Wegeler, 2019 WL 5538568 at *5.

According to the Court, asserting the rights provided to a relator under § 3730(c)(1) would be squarely at odds with Article III of the Constitution and the “long held tradition of American prudence that ‘a private citizen lacks a judicially cognizable interest in the prosecution or non[-] prosecution of another.” Id. at *6 (quoting Linda R.S. v. Richard D., 410 U.S. 614 (1973).

The Court analyzed the relator’s contention that her vested interest in a share of the restitution confers standing to the relator on matters relating to FCA complaints. See Vermont Agency of Natural Resources v. U.S. ex rel. Stevens, 529 U.S. 765 (2000). The Court recognized that the relator has standing to prevent the violation of the relator’s award but found that “the district court in the FCA suit remains responsible for adjudicating the Relator’s share of the alternate proceeding.” Wegeler 2019 WL 5538568 at *7. Since the District Court was the appropriate place to adjudicate the relator’s share under the statute, relator did not have standing to intervene in a criminal matter.

The Third Circuit expressly did not opine on whether criminal restitution constitutes an alternate-remedy, or whether the relator would have been precluded from receiving proceeds from a claim ultimately resolved under the Internal Revenue Code.


While the Third Circuit did not rule on whether criminal restitution ultimately constitutes an alternate-remedy as defined by the FCA, Wegeler provides a reminder to relators that their rights in criminal matters are extremely limited. In light of the instruction in the “Yates Memo” that the government seeks to hold individuals who perpetrated the fraud responsible, often criminally, it is important for whistleblowers to be cognizant of the fact that they may not have a right to criminal restitution and that a proactive and diligent counsel can help ensure that the government recognizes their contributions.

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