## Facts

- A former employee filed a qui tam action under the False Claims Act (FCA) against a Nevada health system, alleging improper Medicare inpatient billing for services that should have been billed as outpatient.
- While the FCA case was pending and after the government declined to intervene, the United States pursued administrative recoupment through Medicare Recovery Audit Contractor (RAC) audits addressing the same general billing subject matter.
- The RAC audits covered a continuous period (October 2010 to June 2013); the relator’s qui tam complaint was filed in June 2012, splitting the audit activity into pre- and post-complaint periods.
- The relator moved in district court for a relator’s share of the RAC proceeds under the FCA’s “alternate remedy” provision, 31 U.S.C. § 3730(c)(5).
- The district court initially dismissed the relator’s alternate-remedy effort on jurisdictional and sovereign-immunity grounds, but later vacated those rulings under Rule 60(b) after the United States acknowledged the FCA’s waiver of sovereign immunity for such claims.
- The district court later awarded the relator a 29% share of a stipulated RAC-recovery amount.
- The United States appealed, disputing whether the RAC recoupment qualified as an “alternate remedy” to the relator’s qui tam action, particularly for audit activity occurring before the complaint was filed.

## Issues

1. Whether RAC audit recoupments constitute an “alternate remedy” under 31 U.S.C. § 3730(c)(5) entitling a relator to a share of the recovery.
2. Whether a government proceeding begun before a relator files a qui tam complaint can qualify as an “alternate remedy” under § 3730(c)(5).
3. Whether the district court erred by awarding the relator a percentage share of RAC proceeds without separating pre-complaint from post-complaint recoveries.

## Decision

- The Ninth Circuit held that a proceeding qualifies as an “alternate remedy” under § 3730(c)(5) only if the government selects that proceeding after the relator files the qui tam complaint.
- The court ruled that RAC audit activity and recoupments initiated before the complaint was filed are not an “alternate remedy” under § 3730(c)(5).
- The court concluded the district court erred by treating the full RAC recovery as an alternate remedy for purposes of calculating the relator’s share.
- The Ninth Circuit reversed the relator’s award to the extent it included pre-complaint RAC recoupment and remanded for further proceedings consistent with the temporal limitation.

## Legal Principles

- Under 31 U.S.C. § 3730(c)(5), a relator has rights in an “alternate remedy” pursued by the government in lieu of continuing the relator’s action.
- An “alternate remedy” requires a government choice made after a qui tam complaint is filed; government recovery efforts already underway before filing do not retroactively become an alternate remedy.
- In evaluating a relator’s entitlement to proceeds under § 3730(c)(5), courts must distinguish between recoveries tied to post-complaint government action and recoveries from proceedings begun before the complaint existed.
- Rule 60(b) relief may be appropriate where prior jurisdictional or sovereign-immunity rulings rest on an incorrect legal premise later conceded by the government, permitting renewed adjudication of the relator’s claim to alternate-remedy proceeds.

## Conclusion

The case established that FCA “alternate remedy” entitlement depends on timing: only government recovery proceedings selected after a relator files a qui tam complaint can trigger a relator’s right to a share, requiring separation of pre-complaint and post-complaint administrative recoupments on remand.


United States ex rel. Guardiola v. Renown Health, 849 F. App’x 616 (9th Cir. 2021)