Background
Relators Mei Ling and the Fair Housing Council of the San Fernando Valley brought this qui tam action alleging that Los Angeles falsely certified compliance with federal housing-accessibility laws while receiving HUD housing grants. The United States intervened and continued the action.
HUD separately investigated the City’s accessibility violations and, in 2019, entered a voluntary compliance agreement requiring the City to spend at least $200 million over ten years on accessible housing remediation or construction. The agreement expressly excluded the FCA claims. After further discovery, mediation, and negotiations, the government, the Fair Housing Council, and the City settled the FCA claims for $38,266,989; the district court approved the settlement over Ling’s objection.
The Court’s Holding
The Ninth Circuit affirmed. It held that HUD’s voluntary compliance agreement was not an “alternate remedy” under the FCA because an alternate remedy must take the place of the FCA action or remedy. Here, the VCA did neither: it expressly carved out the FCA claims, the FCA litigation continued for years afterward, and the VCA addressed the City’s underlying accessibility violations rather than its alleged false certifications to obtain federal funds.
The panel also held that the district court did not abuse its discretion in finding the $38.3 million settlement fair, adequate, and reasonable. The government reasonably considered litigation risks, its revised damages analysis, the City’s defenses, the costs of continued litigation, and public-policy consequences of a larger payment by the City.
Key Takeaways
- An FCA alternate remedy generally must replace the qui tam action or its remedy.
- A separate administrative agreement addressing underlying regulatory violations is not necessarily an alternate remedy for FCA fraud claims.
- Courts afford substantial deference to the government’s settlement judgment in intervened qui tam cases.
Why It Matters
The decision limits relators’ ability to claim a share of value obtained through related administrative enforcement when that proceeding does not replace the FCA case and resolves different legal claims. It also confirms that nonmonetary remedial commitments alone do not establish an alternate remedy.
For FCA settlements, the opinion underscores that the government may weigh litigation risk and broader public interests, not simply the highest possible damages estimate.