You remember the Branch Consultants v. Allstate et al. whistleblower case? The one where the plaintiffs make allegations of insurer fraud in transferring wind damage onto federally backed flood insurance policies? If you don’t, here’s a post I did not long ago that has all the refresher information you will need.
In the lawsuit, today was the day set by federal Judge Peter Beer requesting the United States Attorney’s Office to intervene in the lawsuit, or face a July 11 show cause hearing explaining why not. You may remember I questioned whether a federal judge has any authority to order employees of the Attorney General to prosecute specific cases. Apparently the U.S. Justice Department is of the same opinion: in this brief filed July 5, the Justice Department says it is still investigating the allegations in the lawsuit but has insufficient verification of the claims to intervene. More significantly, the filing requests that Judge Beer vacate his prior order, on the ground that he has no authority to issue it in the first place. Here’s a snippet from the Government’s brief:
The Government also respectfully submits that its decision not to intervene in this case at this time was an exercise of prosecutorial discretion that is not reviewable by this Court. The Government has not been able to locate any case law precisely on point, apparently because no court has ever previously entered an order requiring the United States to intervene in a qui tam suit. However, controlling law in analogous contexts is quite clear.
Here’s a pdf of the Government’s brief. Read it, it’s only eight pages. The good stuff is in the last three starting with subheading III. Also take a look at this preliminary report by the Department of Homeland Security regarding allegations insurers ripped off the treasury by classifying wind damage as flood damage. This report was attached as an exhibit to the Justice Department’s memo, and basically says DHS so far has found no evidence of this rip-off, although investigations continue. I’ve mentioned this preliminary report before, so I won’t go into great detail in this post, and I intend to return to the subject of this report later this week. I thought the report was pretty well-written and easily understandable, salutations to whoever put it together.
I got a chuckle out of this Chicago Tribune story, which tried to spin the Justice Department’s filing as a hopeful sign the government is highly interested in intervening in the case. If your read of the brief is like mine, the Justice Department is saying it doesn’t have anything to go on at this time and isn’t going to accept the plaintiffs’ allegations at face value, plus a federal judge has no authority under the False Claims Act to direct specific prosecutions of civil claims. Translation: get up off my back, Judge Beer. All that talk in the brief about remaining interested in the case? Sure, what else are they going to say, we intend to blow off the whole thing and ignore it no matter what the facts?
The next day, July 6, the plaintiffs filed a brief in response to the government’s brief. It didn’t argue the law about whether Judge Beer has authority to force the government to intervene, but instead said the Justice Department’s brief did not specifically address the properties named in the lawsuit through which fraud occurred.
What will Judge Beer do? Let’s wait and see, I suspect it may not take long to find out. However, if you look carefully, the judge’s original motion is not self-styled as an order at all, and is phrased as a mere request and a motion by the judge (although the court’s docket classifies the document as an order). So perhaps the judge does not have to vacate anything, which would provide an escape hatch to this mess.