Overview
In an opinion last week, Judge Pauley dismissed a second amended False Claims complaint brought by a former Moody’s managing director who claimed that Moody’s false ratings caused various government overpayments (our coverage of the dismissal of the original complaint is here).
The opinion notes that, as a consequence of the dismissal, the plaintiff was not eligible to share in an $864 million settlement between Moody’s and the government for violations of FIRREA and parallel state laws, even though the plaintiff was apparently helpful to the government:
[The plaintiff] contends that the [FIRREA] settlement constitutes an “alternate remedy” to this proceeding. See 31 U.S.C. § 3730(c)(5) (“If an[] . . . alternative remedy is pursued in another proceeding, the person initiating the action shall have the same rights in such proceeding as such person would have had if the action had continued under this section.”). No alternate remedy is available here, however, because the Second Amended Complaint fails to state a valid FCA claim as a matter of law. See Bledsoe, 501 F.3d 493, 521–23 (6th Cir. 2007) (providing that a “valid qui tam action must exist with respect to the FCA violations covered by the Settlement agreement” for entitlement to alternate-source relief) . . . . This Court acknowledges that this a harsh result. The role of a whistleblower is never an easy one. [The plaintiff] provided enormously helpful information to various congressional committees and government investigators. This Court is particularly sympathetic to [the plaintiff’s] position in light of the serious and far-reaching effects that Moody’s conduct had on the American economy. This observation does not, however, cure the deficiencies in [his] pleadings or enable him to collect a share of the FIRREA settlement.
